Whether you loved the Super Bowl outcome or not, I hope you had a great Valentine's Day this past week!

This weekend, we'll stick with the relational theme, answering the question, "Is financial planning as helpful as couples counseling?" While we're certainly having a little fun with the headline, there are surprising relational benefits to be derived from an earnest pursuit of financial planning as a couple.

And we'll also ask the question, "Where's the love?" in the markets this week. The short answer: small caps. But there's a lot more to it, as you'll read below.

In this FLiP weekly you'll find:

• Financial LIFE Planning:
  • Financial Planning As Couples Counseling?
• Quote O' The Week:
  • Mignon McLaughlin
• Weekly Market Update:
  • Where's The Love? (Small Cap)

Financial LIFE Planning

Financial Planning As Couples Counseling?

“This has been more helpful than couples therapy!” is something that good financial advisors will inevitably hear in their work with couples.

It’s a powerful testimony, and it shouldn’t come as a surprise with more than 50% of marriages ending in divorce and most of those citing “disagreements over money” as the chief reason for the split.

Therefore, if you can help couples manage money better, it only stands to reason that more marriages will be preserved and fewer dollars will be spent litigating breakups, the combination of which leads to greater household wealth, health, and happiness.

But the benefits couples can derive from financial planning don’t stop with simple math. Here are three additional reasons that good financial planning can be great for couples:

1. Good financial planning has life planning at its center.

When was the last time you and your partner dedicated time to discussing the stuff in life that is most important to you, individually and collectively? It’s not your typical table talk over a candlelit Valentine’s Day dinner.

But good financial planning necessarily has life planning at its center. That’s because without a discussion of your “values, attitudes, expectations, goals, and priorities”—all words that I’ve stolen directly from the Certified Financial Planner™ handbook—your plan is not so much yours, but someone else’s.

Therefore, if you’re not having these types of conversations with your financial advisor, you’re missing out.

Advisory Note: Advisors, try to address your couple clients individually when gathering qualitative data, before merging it together. In almost every couple, there is a financial spouse and a non-financial spouse, and too often, the non-financial spouse becomes wallpaper in meetings. But regardless of their mastery of financial concepts, or lack thereof, their input into matters beyond the spreadsheets is no less valuable. And, you might be making them feel heard for the first time in an advisory setting.

2. A good financial advisor can act as an effective referee in what can be challenging conversations.

“He’s a spendthrift!” “She’s a miser!” Pick your stereotype, but we all know that financial conversations can be emotionally loaded. But when you’re sitting there with an objective third party, it’s harder to throw your beloved under the proverbial bus.

Advisory Note: Advisors, please remember that this is hallowed ground, and you must not take sides. Objectivity must be preserved, and you’ll be better served by keeping the peace rather than making a point. It’s especially important to uphold the non-financial spouse’s positions because they are probably the ones whose opinions are underweighted on the home front. Yes, this is delicate territory that is worthy of receiving some dedicated research and training.

3. Tackling finances together is less likely to cause division.

“And the two shall become one…”* may be one of the top wedding readings…but how soon we forget. Especially as those who prize efficiency, self-sufficiency, and the division of labor, we’re often too quick as couples to tear the to-do list in half and go our separate ways. Especially when dealing with money.

Therefore, the mere act of making money management a joint endeavor makes it a common cause, rather than the divisive wedge it often devolves into.

Advisory Note: Is it possible that your client experience may be a little less efficient when prioritizing the input of both members of a couple? Absolutely, but there’s also no question that it is more effective—yes, now, but especially if and when the financial spouse predeceases the non-financial spouse.

Yes, I fully understand that it’s a stretch to paint couples financial planning as a romantic endeavor, but of this I am sure: It will do a great deal to help preserve the romance in any relationship.

*Mark 10:8 (NKJV)

Quote O' The Week

Mignon McLaughlin

Weekly Market Update

• - 0.28% .SPX (500 U.S. large companies)
• - 0.26% IWD (U.S. large value companies)
• + 1.48% IWM (U.S. small companies)
• + 1.29% IWN (U.S. small value companies)
• + 0.49% EFV (International value companies)
• + 0.33% SCZ (International small companies)
• - 0.39% VGIT (U.S. intermediate-term Treasury bonds

Contributed by John Marske, CFP®, a Notre Dame grad and generally good guy.

Where's The Love? (Small Caps)

The Financial markets found love on Valentine’s Day. But then wondered if they made a mistake two days later.

There can be no denying the stock market has been on a tear since last October. From October 1 through Valentine’s Day, the S&P 500 has returned 13.1%, while the index for International stocks (MSCI EAFE Index) has risen 20.8%.

The significance of this rally is accented by the fact that so many large institutions (Morgan Stanley, Goldman Sachs, Schwab, etc.) have been telling their investors to avoid the stock market since October. Even now, they say this is nothing more than a bear market rally.

So, what is an investor to do? You know our answer is to stick to your plan. And this past week is a good example of why. No one expected the market to move much on Monday, in front of Tuesday’s CPI inflation report. While the trading volume was low, the markets slowly climbed throughout the day, with all the major indicies ending up over 1%.

Tuesday’s CPI report confirmed inflation is still moderating. But that moderation slowed, and the report showed inflation a little higher than expected. The good news is that both the headline rate (+6.4%) and the core rate (+5.6%) were down vs. last month's year-over-year prints of 6.5% and 5.7%, respectively. And let's remember where we came from – back in July of last year, the headline inflation rate was up 9.1% year-over-year, while the core rate's summer high was 6.5% year-over-year.

Nonetheless, the markets have been accustomed to these monthly reports surprising on the downside, and this report surprised on the upside. The markets were not sure how to react, moving between positive territory and negative territory most of the day. By day’s end, only the NASDAQ and the smallcap Russell 2000 ended in the green. While stocks seemed unfazed, bond prices fell (yields went higher). Surprisingly, yields initially fell, with the ten-year yield hitting 3.62%, before eventually ending the day at 3.76%.

While one might have expected a hangover after Tuesday’s Valentine’s Day surprise, love for this market remained. The most significant economic report released on Wednesday was a surprisingly strong retail sales report.

I find it interesting the most recent Gallup poll showed 50% of Americans said they were “worse off” than a year ago. Since 1976, the only other time we have seen this number as high as 50% was during the 2008/09 financial crises. And yet, the retail sales report, released on Wednesday, showed consumers continue to spend at a healthy clip. All the major indicies ended the day in the green.

The second widely followed inflation report, the Producer Price Index (PPI) was released on Thursday. Similar to the CPI report, the numbers were higher than expected. The +0.7% monthly increase represented a big reversal from the -0.5% reported for December. This is the highest figure we’ve seen since June of last year, but still well off the +1.7% we saw in March of 2022. Stocks opened lower on the news and spent most of the day trimming those losses. But in the last hour of trade, stocks headed back down making new intraday lows by the close. I guess it’s true: Love is fleeting.

We started 2023 with markets expecting a final Fed rate hike of 0.25% in March, a pause, and potential rate cuts by end of year. Following recent data of a strong jobs market, rising retail sales, improving housing and services, the outlook on rate cuts is gone. Markets now think another 25-bps hike in May, and maybe in June, is possible. This has made the bears even more bearish – but worried in the face of the past months’ rally.

If the economy can continue to perform well, while inflation continues to decrease, that's a bullish scenario. And that gives credence to the idea that we might very well see a soft landing for the economy. And that's why stocks have gotten off to such a great start this year.

The selling on Thursday initially carried over to Friday, but stocks finished at their best levels of the day, with the Dow and Russell 2000 index ending the day higher. The Dow ended slightly down for the week, as did the S&P 500. The Nasdaq and Russell 2000 finished the week higher.

The markets will be closed for President’s Day on Monday. We'll get another look at inflation with next week's Personal Consumption Expenditures (PCI) index, which is the Fed's preferred inflation gauge.

The recent rally has shown that more and more people are believing that a soft landing is possible. But the higher rates have to go, or the longer they have to stay there to tamp down inflation, the harder that soft landing narrative becomes. I guess that’s why they call it tough love.

Ok, so I missed the Super Bowl projection of an Eagles' win--but arguably only because of that crazy holding call, right? :-) But what a game, and congratulations to the Chiefs!

Best,

Tim

Tim Maurer, CFP®, RLP®

Head of Wealth Management

​Triad Financial Advisors​

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Oh, and BTW, The information in this article is for educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. That should really come from your financial advisor. I'm thrilled to work for Triad Financial Advisors, but what I write is my opinion, and not necessarily theirs.