July 2018 Newsletter: The Times They are a Changin’


The Times They are a Changin’

This has been a rather exciting quarter on multiple levels.  The volatility in the stock market seen in the first quarter continues.  The market moved over 1% up or down 13 days this quarter and 36 days this year.  That compares to only 8 days all of last year.  Fortunately, global stock markets, in general, are close to their year-end values.  Interest rates crept higher.  As bond prices move inversely to yields, bond portfolios are struggling.  However, in the long-run, getting higher yields in fixed income and cash will be a good thing.  At White Pine, our office renovations are complete and we’ve made a great deal of progress on our new software implementation.  Finally, on a personal note, our oldest child is getting married this month; and yes, we love our future son-in-law.

Market Update

The stock market regained some of the 12% correction it suffered in the first quarter, though it is not materially higher than where it began the year.  The economy continues to gain momentum, and earnings are off the charts.  No recession is in sight, so this could continue for a while.  The one leading indicator we mentioned last letter did get a little worse.  The spread on the 10-yr Treasury yield tightened to about 0.33% over the 2-yr Treasury.  That is getting close to worrisome, but not yet.  Unemployment is now below 4% and, surprisingly, inflation has remained in check.  There are still rumblings of a trade war, which we will continue to monitor.

White Pine Updates

The finishing touches to our office construction were put in place as the quarter came to a close.  We’re now prepared to add new employees when we find the right fit.  We have been looking for a new business development officer and went pretty far in the interview process with a couple of highly qualified candidates.  Unfortunately, after several months of interviews, neither worked out.  While this is frustrating in the short run, we feel adding the right person who will fit the White Pine culture is more important than rushing this decision.  We are in the process of interviewing a few more candidates.

We are excited by Amy’s progress as she learns all the tasks and nuances of Debbie’s position.  Debbie’s exceptional and faithful 20 year service to White Pine’s clients leaves Amy with big shoes to fill.  We are grateful Debbie and Amy will have worked side-by-side for over a year before Debbie retires in January.  Amy’s training takes priority over a new business development officer, and it is already clear Amy will be ready to provide the same high quality care and service Debbie has for all these years.

An exciting new aspect of Amy’s position is training on our new software platform.  This quarter’s report package will be the first using this product, though we are presently running both in parallel to insure data integrity.  The reports will probably not look a whole lot different than before because the data provided in the basic package already summarizes the relevant figures in a concise manner.  The one change you might have noticed is the speed with which it arrived.  This will hopefully only get faster as we gain comfort with its functionality.

This new software platform does open up many more possibilities, some of which we will implement in the coming months.  Eventually, we plan on offering on-line access through our website (www.wpinv.com) that will provide a daily snapshot of your portfolio.  There will be more detailed reports available online that aren’t included in the printed version, and you won’t have to wait until quarter end.  It will also integrate with our financial planning software, so you will be able to see how the current market values affect your financial plan’s chance for success.  Spoiler alert – daily changes won’t move the needle unless we get a 1987 style crash on our hands.  Finally, there will be a document vault that will allow us to exchange sensitive material in a secure manner.  Quarterly reports will also be posted.  As an aside, Amy, Debbie, and I attended a training conference for this product in May, and the speedy implementation is due to Amy and Debbie and their tenacious attitude, huge investment of time, and impressive ability to quickly master this incredibly complex piece of software.

 Billing Changes

While the report may not look materially different, the fee structure this quarter has changed.  Our prior fee schedule had breakpoints for fee reductions at $3.0mm and $10.0mm of total assets.  The new software platform gives us a bit more flexibility with the fee structure, so we are changing the way you are billed in a couple of key ways.  First, the ranges for each fee reduction will be tighter making it easier to hit the next breakpoint.  Second, mutual funds and fixed income will be merged into one category, again so it is easier to hit the breakpoints.  Here is the new breakdown:

Mutual Fund & Fixed Income

Bracket Rate
$0.0       –   $250k 0.50%
$250k    –     $500k  0.35%
$500k   –   $1.0 MM 0.30%
$1.0MM   –   $2.0 MM 0.25%
$2.0 MM + 0.20%

                       Stock Rates

Bracket Rate
$0.0            –   $1.0 MM 1.00%
$1.0 MM   –   $2.0 MM 0.75%
$2.0 MM   –   $4.0 MM 0.65%
$4.0 MM   –   $8.0 MM 0.50%
$8.0 MM   +   $ 0.40%

As before, cash is not charged.  Most clients will either see a reduction in their fees, or no change at all if they are not at either of the breakpoints.

We look forward to hearing feedback from you as we implement these new changes.  If you’d like to discuss anything with me, I will be happy to do so in a couple of weeks after I return from my daughter’s wedding on Hilton Head Island.  We are all very excited for her and for the many enhancements taking place at White Pine.


tony sig

Anthony J. DiGiovanni, CFA

Chief Investment Officer

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