This has been a year that will forever be etched in my memory for several reasons. Two notable reasons that this year will remain memorable includes the Coronavirus Pandemic, and this was also the year that we changed the brokerage firm we utilize to LPL. Changing brokerage firms is a massive undertaking. Between planning, filling out paperwork and auditing the transferred monies there are literally thousands of hours that have gone into the process. Due to the fact that this causes a serious interruption in our business coupled with the fact that this causes an interruption for you and the rest of our clients it is something we prefer to avoid unless the long-term benefits far exceed the short-term costs.
The catalyst for making the change can be attributed to the eventual purchase of TD Ameritrade from Charles Schwab. This eventual purchase required us to do due diligence on Charles Schwab and to contrast their brokerage platform against other solutions. This due diligence helped uncover the fact that our future with Schwab would have significant inefficiencies that LPL already has a solution for.
In the past 35 years of business we have changed the brokerage firm we work with on other occasions. Each time we do we swear that we will never do it again, but sometimes there are forces out of our control that helps makes the decision for us. There is no question that moving to LPL versus Charles Schwab will improve our ability to serve you better in the future.
Thank you very much for your patience through this transition. We will continue to wrap up outstanding issues related to this change over the next few weeks. Please let us know if you have any questions or things that we can help with. Listed below are a few reminders regarding the transition:
This broker/dealer change has not had any impact on your investments or how Bernicke Wealth Management works with you.
All costs have remained the same with LPL as they were previously.
In the past many clients who had TD Ameritrade accounts would check their accounts either through Emoney/Bernicke Website or by logging into TD Ameritrade directly. In the future people can continue to check their accounts in Emoney/Bernicke Website or you can check your account directly through LPL’s website. Please let us know if you would like to set either of these options up.
In the past we worked with Triad and Marketcounsel to help fulfill our compliance obligations. In the future we will work with Great Valley Advisors to help fulfill this need. Periodically you will get correspondence from Great Valley Advisors for this reason.
I am always intrigued with how the human mind works. Recently my youngest two children, Brody and Sadie, were told that they will only be physically going to school two days per week. This made both kids excited for a short amount of time until they found out that the two days that they have to go to school is Thursday and Friday of each week. This made both children unhappy because, according to them, all of their friends are going to school Monday and Tuesday. So instead of having two kids happy about their preferred two days in school per week I have two kids that are upset because they wanted Monday and Tuesday as the days that they go to school. I guess I need to have the is the glass half full or half empty conversation again.
The mind has an interesting way of playing tricks on us. One trick that I have seen it play on many of our clients happens every four years. The trick is related to a reoccurring concern that centers around the presidential elections. This concern also has a consistent theme. Generally, the consistent theme includes our republican clients sharing their concerns about the markets crashing if the democratic candidate gets elected, and clients who are democrats sharing concerns about the markets crashing if the republican candidate gets elected. An additional consistent theme that seems to come along for the ride includes the belief that this election is different and more significant than any previous elections.
There is no question that the current time period that we live in is different than past time periods, however attempting to extrapolate data that can help predict future market movements based on who wins the election is very difficult because the president is only one of several hundred factors that influence stock market movements. Additionally, history seems to tell us that the stock market doesn’t care as much about who gets elected as it cares about the whole thing finally being over.
Historically speaking the S&P 500 index has risen 83% of the time during presidential election years with the average rate of return approximately 11%. Additionally, the majority of the gains tend to happen in the latter part of the year.
A casual observer, of this above average performance, might wonder why the markets tend to do well in the latter half of presidential election years?
Although no one can answer the question of why this occurs one could argue that markets like certainty and dislike uncertainty. Once we know who the next president is going to be that reduces uncertainty and markets tend to go up as a result.
This election year is certainly unique from the perspective that we not only have the uncertainty associated with the elections but we also have significant uncertainty related to Covid. At first glance many investors would logically think that uncertainty related to Covid is bad for the markets. The counter argument to this belief would be that this bad news is already baked into the market, and for this reason the stage could be set for the markets to go up if the current high level of uncertainty related to Covid subsides.
As summer begins to wind down, I hope you and your family are able to find joy in these uncertain times. Please rest assure that our team here at Bernicke Wealth Management are keeping a close eye on your accounts. If you have any questions related to your financial situation, the current state of the markets or if you simply want someone to talk to you about your concerns please reach out and give us a call.