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market spotlight | quarterly review

The first quarter of 2018 began as the fourth quarter of 2017 ended: with strong market gains. The Nasdaq led the way by the end of January, posting a monthly increase of almost 7.40%, followed by the large caps of the Dow (5.79%) and the S&P 500 (5.62%). The employment sector remained strong, with 239,000 new jobs added in January and average hourly earnings climbing 0.3%. Consumer prices rose 0.5% in January, while personal income increased 0.4%. The trade gap continued to widen, which has proven to be a focal point of the current administration. Nevertheless, consumer confidence in the economy increased in January with expectations for continued strengthening in the coming months.

Volatility returned to the stock market in February, with each of the benchmark indexes listed here posting notable losses from the prior month. Nasdaq, while down, fared better than the large caps of both the S&P 500 and the Dow. Investor concerns over rising inflation and interest rates seemed to trigger volatility. A strong labor report in February revealed a 2.9% increase in average hourly wages over a year earlier, the addition of 313,000 new jobs, and decreasing unemployment insurance claims. These factors combined to prompt investors to conclude that higher labor costs may eat into corporate profits, which might prompt the Fed to raise interest rates at a faster pace. February also saw long-term bond yields surge as evidenced by a 16-basis-point increase in yields for 10-year Treasuries, as bond prices fell.

While many markets closed for Good Friday, March was not a good month for the benchmark indexes listed here, except for the small caps of the Russell 2000. Otherwise, each of the indexes closed March in the red, led by the Dow, which was followed by the Global Dow, Nasdaq, and the S&P 500. March brought more concerns for investors with the administration’s imposition of tariffs on steel and aluminum imports and the threat of a trade war with China. Much of the month saw retaliatory threats lobbed across the Pacific.

The first quarter as a whole saw only the Nasdaq post modest gains. The Dow fell by almost 2.50% by the end of the quarter, far outpacing losses suffered by the other indexes listed here. The Global Dow fell nearly 2.0%, followed by the S&P 500 and the Russell 2000. Prices for 10-year Treasuries fell by the end of the quarter, pushing yields up by 32 basis points. Crude oil prices closed the month and quarter at about $64.91 per barrel by the end of March. Oil began the quarter at $61.55 per barrel and remained over $60.00 for much of the first quarter. Gold closed the quarter at roughly $1,329.60 — ahead of where it opened the quarter ($1,305.10). Regular gasoline, which was $2.548 per gallon on February 26, soared to $2.648 on the 26th of March.

did you know?

Most companies continue to work under an outdated “product-centric” model, neglecting their most valuable asset—the customer. Four key factors have rendered the product-centric model as out of touch:

  • Technological advances and the speed with which new technologies are created and copied
  • Globalization and the geographic advantages that have been lost as a result
  • Deregulation and the way it has shaken up traditionally stable industries
  • The rising power of the consumer and their newfound ability to get what they want, whenever they want, from whomever they want.

Source: Customer Centricity: Focus on the Right Customers for Strategic Advantage by Peter Fader

bright ideas
Customer Centricity
What Advisors Can Do To Focus on Their Best Clients

All customers are not created equal. As advisors who care about your practice and care about your clients, you may want to believe that they are—and you may want to devote the same amount of time and resources to all of your clients—but to do so will most likely keep you from reaching your full potential. This idea is at the heart of a business strategy called “customer centricity.”

Author Peter Fader introduced customer centricity into the business world with the publication of his book of the same name. For decades, companies and producers have held to a customer-centric business model, but customer centricity takes that strategy to a different level by evaluating and analyzing customers or clients the same way you would analyze an investment.

Evaluating your clients in this way allows you to focus your time and money where it makes the most difference. As the book states, “you can’t be all things to all people, so you need to learn to find out who really matters to your success.” To get there, you first need to identify who are your best clients, and that’s not as simple as rating by their net worth.

Customer Lifetime Value

Customer centricity takes into account the lifetime value of a client. You may recall from our January newsletter, a top advisor we’ve worked with at Beacon who had numerous pro athletes as clients. Financially those athletes were A clients, but they were a drag on the advisor’s overall business because they did not fit his business model; he couldn’t see himself growing a synergistic referral business from these high-net-worth clients long-term.

As you analyze your own clientele, you could create a database based on the following questions and rank each category 1-5 to help you establish your tiers of clients:

  • What is their current financial picture?
  • What is their potential long-term financial picture? (factoring in salary potential, inheritance or other sources of income the client has discussed)
  • What clients do I most enjoy working with?
  • What does my ideal client look like, and how closely does this person fit that model?

As you analyze your database, an ideal client—your best client—should begin to emerge. What common traits do the clients ranked highest and lowest share? Do they have an identifiable niche(i.e., widows, federal employees, healthcare professionals?) Could you envision yourself becoming an expert in this niche and serving these clients, and the referrals they would bring, over the coming years and decades?

With your ideal clients clearly identified, you can “begin to increase profits from those best customers, find more like them and avoid over-investing in the rest.” To do so, you will want to implement the three core principles of customer centricity.

1. Focus on Your Best Customers. Some customers, simply put, are more valuable than others. And other customers are—to put it mildly—an absolute drain on your resources (and your patience.) When you strategically focus your energy on your best clients, you will reap the rewards.

2. Commit to Identifying Your Best Customers. You must have an ongoing process in place to discover customer lifetime value. In addition to understanding the traits of these best customers, you will also want to learn what matters most to them to meet and exceed their expectations.

3. A Willingness to Invest in Your Best Customers. It’s not enough to merely identify who your best clients are. You also have to make a commitment to allocate “a disproportionate amount of resources to them.” These clients with provide you with the best return on investment, so you must invest in them.

Remember, contrary to popular belief, the customer is not always right. However, the right customer is always right. To learn more about how you can implement a customer centricity strategy into your practice, contact your wholesaler today!

beacon news

Congratulations to all Beacon advisors on a successful Q1. Despite market volatility, our portfolios have remained stable, and you have continued to thrive thanks to your hard work and dedication to our investment fundamentals.

Don’t forget the videos and client materials we have available to you so you can continue sharing the importance of stopping losses before they become destructive.



Beacon Capital Management, Inc. is an investment advisory firm registered with the Securities and Exchange Commission. Additional information about Beacon Capital Management is also available on the SEC’s website at under CRD number 120641. Beacon Capital Management only transacts business in states where it is properly registered, or excluded or exempted from registration requirements.

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