Broker Check

2017 Annual Newsletter

| January 18, 2017
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Dear Friends, Colleagues, and Clients of IIS Financial Services,
 
Our team at IIS Financial Services hopes you're having a great start to 2017! At the beginning of every year, we like to review the factors that influenced the financial markets last year, look forward to what we can expect this year, and update you on some of the steps we have taken to provide better service to our clients. 
 
2016 in review:
 
The S&P 500 had a banner year in 2016, rebounding from the worst-ever start to a year, to post its strongest performance in two years. The Dow Industrials surged 16.50%, its best year since 2013, while the NASDAQ Composite returned 8.87%. In fact, segments of all three markets (stocks, bonds, and commodities) together closed out the year with double-digit gains for the first time in 17 years.
 
A vast majority of the market gains arrived during the second half the year, as global angst over Brexit proved short-lived and the election victory of Donald Trump spurred the strongest equity rally following any presidential election in history. Investors widely expect that President-elect Trump will push Congress to enact his policies for infrastructure spending, deregulation and meaningful corporate tax cuts that together are expected to boost economic growth.
 
Looking forward to 2017:
 
Heading into 2017, optimism is high as the global economy appears to be finding its footing and forthcoming policies from the Trump administration are expected to be pro-growth. In particular, we believe economic growth may be boosted by tax cuts and relaxed regulation. Cuts to both corporate and individual tax rates are likely to encourage firms to repatriate cash, and the unwinding of many regulations recently enacted by the Obama administration on the beleaguered financial, energy, and healthcare sectors are likely to renew their growth. A large infrastructure spending program is also anticipated, but is likely to meet some resistance in Congress. Vocal opponents within the Congressional Republican caucus, who are concerned that entitlement spending programs and increasing interest expense are already pushing the federal deficit to troubling levels, may be reluctant to support any plans for additional expenditure.
 
We are mindful of several risks. While these aforementioned growth initiatives are likely to drive optimism, trade policy remains a wild card which could hamper global growth if protectionist policies such as tariffs are enacted on a widespread basis. Economic growth failing to meet rising expectations and sentiment turning somewhat more cautious could also challenge markets. More concerning is the possibility that growth-boosting policies may spark inflationary pressures, accelerate increases in interest rates, and bring forward expectations for future Fed rate hikes to create headwinds to growth. A more hawkish Fed might also push the US dollar higher, which could tighten global financial conditions in a manner similar to 2015.
 
Lastly, we are concerned that financial markets may have become too optimistic too fast. The 12-month forward PE ratio for the S&P 500 has surpassed long term averages, and, factoring in an aging economic expansion, the third longest domestic equity bull market on record and a rising interest rate environment, any disappointment may quickly reverse this euphoria. For now, we view these scenarios as tail risks that could disrupt our base case expectations of another solid year for global equities. 
 
What this means for your portfolio:
 
As always, it's best to treat these predictions with caution as projections this early in the year are always nebulous. What we can do right now is take a look at fundamentals and think about how these factors might play out in market performance. Part of our job as Financial Advisors is to stress the importance of being comfortable with your portfolio.  One of our main goals is to help you accumulate wealth without taking on undue risk. Markets rise and markets fall, but unless there have been changes in your circumstances or you've hit milestones in your life such as retirement, stay with the plan. By itself, a long run in stocks isn't a good reason to bail out of the market. Be comfortable with the level of risk you're taking as we set out to meet your objectives and overall financial goals.
 
Please contact us and let us know if major changes have happened or are about to happen in your life.  We want to make sure, we are meeting our client's expectations and part of that is making sure their financial portfolio matches up with overall goals.
 
Internal changes that were made at IIS Financial Services:
 
As most of you know, this past October we became affiliated with Cetera Advisors LLC. Cetera ensures that we, as independent financial advisors, have the autonomy and discretion to put our clients at the center of all investment strategies and business decisions. Our affiliation means that we have the tools and resources from our home office support team to better serve our clients, but we are not held to a sales quota or tied to selling only proprietary products.
 
Just as we stand behind you to help you pursue your financial dreams, we have teams and groups standing behind and partnering with us to support our business. One of these groups is Cetera Investment Management LLC who is an SEC registered investment adviser. They will be providing us with investment research, portfolio and model management.  Below is a link to our website that includes market recaps and Market Outlook, Cetera's quarterly outlook. Be sure to read their latest outlook for 2017: "Investing in a Trump Economy".
 
You will find that as we continue to grow, the relationship IIS Financial Services has with you, as a client, will not change. We are committed to helping you understand your financial situation and providing you with a high-quality, detailed financial plan. Our objective is to help you achieve your financial goals by simplifying the process while working closely with you to make sure you're on track to reach them.
Hopefully you found this review helpful. Let me emphasize, it is our job to assist you!  As always, if you have any questions or concerns about the financial markets or your own personal financial situation, please give us a call. We are honored by the trust you place in us and look forward to serving you in 2017.
Feel free to share our commentary to friends and family who will benefit from our services.
David Hanson & Carl Hanson, CFP®
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