If you could communicate better with your clients and prospects with no additional effort and minimal cost, would you do it?

Well, you can (more on that below).

I don’t have to tell you that study after study reveals that clients value communication with their advisors as much, or even more, than performance and one of the most cited reasons investors switch advisors is because of poor communication.

And, right now, I think a lot of advisors are setting themselves up to lose clients due to poor communication.

I say that because I’ve learned over the years that, when markets are going straight up and accounts are growing, some advisors get a bit, well, lazy.  They don’t keep up on the communication and let the performance speak for them.

But, there’s a problem with that. 

Good performance doesn’t last forever, and there’s always going to be a competitor who will tell a client they can do better.

Especially right now, I’ve found that investors I talk to are much more nervous about the markets than they should be, given the strong performance.  I’ve found there are two reasons for this:

• They know the economy is slowing and they’re nervous about a future recession.
  
  
• The election is looming and they are worried about taxes, regulations, etc.

I believe this environment provides a unique opportunity for advisors to positively communicate with their clients and accomplish three, important goals:

• First, highlight the strong YTD performance account growth.
  
  
• Second, acknowledge these risks (and, in doing so, show them you’re on the same page).
  
  
• Third, remind them, with facts, that long term financial plans (including staying invested) can overcome any election disruptions or economic slowdowns. 

And, on the first day of the 4th quarter (October 1st) I’m going to deliver the Sevens Report Quarterly Letter to advisor subscribers that will accomplish all three goals for them, all with no effort and at a minimal cost! 

There’s a Big Difference Between Quality Client Communication and A Generic Form Letter from Someone They’ve Never Met.

I don’t think it’s a stretch to say that a unique, well written and researched quarterly letter sent to your clients from you, their advisor, is better than some generic, broad sweeping communication from a CIO they’ve never met before. 

That’s communication, but it’s not quality communication.

So, the trick is to do that in a succinct, engaging, and well-written way that helps demonstrate your market knowledge – while both relishing the recent performance but mindfully preparing for when times might not be this good – and commitment to achieving your client's financial goals.

If you’re at a bigger firm you can send your clients a generic market outlook from your firm’s CEO or CIO but it’s the same letter every other client is receiving from all the advisors at the firm.

Or, if you’re at a smaller firm, you can write your own quarterly letter. But writing a quarterly letter is both time-consuming and difficult. On average, the advisors we spoke to said they spent between six and 10 hours researching, writing, editing, and proofing their quarterly letters. If you’re as busy as most of the advisors I know, that’s way too much time and stress to devote to a quarterly letter.

That’s why many advisors don’t seize this opportunity to effectively communicate with their clients and show that they are on top of markets and monitoring risks to portfolios.

At Sevens Report Research, we have a solution to these problems…

The Sevens Report Quarterly Letter includes:

1. A complete, edited and finished client letter, delivered in a word document so it can easily be edited.
2. A comprehensive, backup documentation sheet to send to your compliance department, along with your letter, that cites statements on an as-needed basis and verifies all return data.
3. Instructions on how we think you should submit the letter to increase compliance approval chances.

More than 95% of our quarterly letters are approved by various firms’ compliance departments.

But for extra peace of mind, we offer a full refund if compliance rejects the letter for any reason whatsoever!

You literally have nothing to lose.

The Sevens Report Quarterly Letter was created to help advisors strengthen client relationships and increase quality communication all with no effort from them and with minimal expense and that’s exactly what we’ve done for the last five years.

And our quarterly letters have passed compliance at the biggest firms on Wall Street, including Merrill Lynch, Morgan Stanley, UBS, and more!

But don’t just take my word for it…

Here is what just a small handful of Sevens Report Quarterly Letter subscribers have said:

But we can only explain the letter so much. To get the real value of our letter, you need to see it for yourself.

So, we’ve included our Q2 2024 Sevens Report Quarterly Letter that was sent to paid subscribers on July 1st. This way, you can see exactly what the product looks and feels like:

Quarterly Insights – July 2024

Optional Title #1: Falling Treasury Yields and AI Enthusiasm Power the S&P 500 To New Highs in Q2

Optional Title #2: Expected Rate Cuts, AI Enthusiasm and Falling Inflation Push the S&P 500 to New All-Time Highs

Optional Title #3: More New Highs for the S&P 500 in Q2

Dear Client,

The S&P 500 experienced its first real dose of volatility early in the second quarter, but expectations for interest rate cuts by the Federal Reserve, solid economic growth and continued strong financial performance from AI-related tech companies ultimately pushed the S&P 500 to new all-time highs and the index finished the quarter with strong gains.

While the S&P 500 hit new highs in the second quarter, the month of April was decidedly negative for markets as fears of no rate cuts in 2024 (or even a rate hike) pressured stocks. The catalyst for these concerns was the March Consumer Price Index (CPI), which rose 3.5% year over year, higher than estimates. That hotter-than-expected reading reversed several months of declines in CPI and ignited fears that inflation could be “sticky” and, if so, delay expected Fed rate cuts. Those higher rate concerns were then compounded by comments by New York Fed President John Williams, who stated rate hikes (which investors assumed were over) were possible if inflation showed signs of re-accelerating. The practical impact of the hot CPI report and William’s commentary was to push rate cut expectations out from June to September and that caused the 10-year Treasury yield to rise sharply, from 4.20% at the start of the quarter to a high of 4.72%. Those higher yields pressured the S&P 500 in April, which fell 4.08% and completed its worst month since September.

On the first day of May, however, the Fed largely dispelled concerns about potential rate hikes and ignited a rebound that ultimately carried the S&P 500 to new highs. At the May 1 FOMC decision, Fed Chair Powell essentially shut the proverbial door on the possibility of rate hikes, stating that if the Fed was concerned about inflation, it would likely just keep interest rates at current levels for a longer period instead of raising them. That comment provided immediate relief for investors and both stocks and bonds rallied early in May as rate hike fears subsided. Then, later in the month, the April CPI report (released in mid-May) rose 3.4% year over year, slightly lower than the 3.5% in March and that resumption of disinflation (the decline in inflation) further increased expectations for rate cuts in 2024. Additionally, employment data moderated in May, with the April jobs report coming in below expectations (but still at healthy levels). The practical result of the resumption of disinflation, the supportive Fed commentary and moderating labor market data was to increase September rate cut expectations, push the 10-year Treasury yield back down below 4.50% and spark a 4.96% rally in the S&P 500 in May.

The upward momentum continued in June thanks to more positive news on inflation, additional reassuring commentary from the Fed and strong AI-linked tech earnings. First, the May CPI (released in mid-June) declined to 3.3% year over year, the lowest level since February. Core CPI, which excludes food and energy prices, dropped to the lowest level since April 2021, further confirming ongoing disinflation. Then, at the June FOMC meeting, Fed Chair Powell reassured markets two rate cuts are entirely possible in 2024, reinforcing market expectations for a September rate cut. Economic data, meanwhile, showed continued moderation of activity and that slowing growth and falling inflation helped to push the 10-year Treasury yield close to 4.20%, a multi-month low. Finally, investor excitement for AI remained extreme in June, as strong AI-driven earnings from Oracle (ORCL) and Broadcom (AVGO) along with news Apple (AAPL) was integrating AI technology into future iPhones pushed tech stocks higher and that, combined with falling Treasury yields and rising rate cut expectations, sent the S&P 500 to new all-time highs above 5,500.

In sum, markets impressively rebounded from April declines and the S&P 500 hit a new high thanks to increased rate cut expectations, falling Treasury yields and continued robust earnings growth from AI-linked tech companies.

Second Quarter Performance Review

The second quarter produced a more mixed performance across various markets than the strong return in the S&P 500 might imply, as AI-driven tech-stock enthusiasm again powered the Nasdaq and S&P 500 higher while other major indices lagged. The Nasdaq was, by far, the best performing major index in the second quarter while the S&P 500, where tech is the largest sector weighting, also logged a solidly positive gain. Less tech focused indices didn’t fare as well, however, as the Dow Jones Industrial Average and small-cap focused Russell 2000 posted negative quarterly returns.

By market capitalization, large caps outperformed small caps in Q2, as they did in the first quarter of 2024. Initially, higher Treasury yields in April weighed on small caps, while late in the second quarter economic growth concerns pressured the Russell 2000.

From an investment style standpoint, growth massively outperformed value in the second quarter, as tech-heavy growth funds once again benefited from continued AI enthusiasm. Value funds, which have larger weightings towards financials and industrials, posted a slightly negative quarterly return as the performance of non-tech sectors more reflected growing concerns about economic growth.

On a sector level, performance was decidedly mixed as only four of the 11 S&P 500 sectors finished the second quarter with positive returns. The best performing sectors in the second quarter were the AI-linked technology and communications services sectors. They posted strong returns, aided by better-than-expected earnings results from NVDA, ORCL, AVGO, TSM, MSFT, AMZN and others as AI enthusiasm continued to push the broad tech sector and S&P 500 higher. Utilities also logged a modestly positive quarterly return, as the high yields and resilient business models were attractive to investors given rising concerns about future economic growth, while declining Treasury yields made higher dividend sectors such as utilities more attractive to income investors.

Turning to the sector laggards, the energy, materials and industrials sectors closed the quarter with modestly negative returns. Their declines reflected growing anxiety about future economic growth as those sectors, along with small-cap stocks, are more sensitive to changes in U.S. and global growth.

Internationally, emerging markets outperformed the S&P 500 in Q2 thanks to optimism towards a rebound in Chinese economic growth and as falling global bond yields late in the quarter boosted the attractiveness of emerging market investments. Foreign developed markets, meanwhile, lagged both emerging markets and the S&P 500 and posted a fractionally negative quarterly return. Concerns about the timing and number of Bank of England and European Central Bank rate cuts, along with French and German political concerns later in the quarter, acted as headwinds for foreign developed equities.

Look, I know some of you are not planning on writing a quarterly letter at all.

If you’re in this camp, I’m worried you’re making a colossal mistake. As I showed you earlier, via a recent advisor-client survey, you’re potentially leaving yourself exposed to losing clients to advisors who communicate more effectively!

The rest of you are probably doing it, but begrudgingly.

It could take a day, a few days, or even a week or more to fine-tune and write this type of commentary.

Plus, you may be circulating it around the office for input and re-working it further after that. Your compliance officer or department will probably want to inspect it, too.

To top it off, you might still be unsure if it’s any good, contains the right mix of coverage, and if your clients will even understand what you’ve written!

I think we can all agree: No one likes this process. And that’s why we provide:

• A high-quality letter. With strengthening the client relationship as the main goal, our Sevens Report Quarterly Letter is written in a clear, crisp, and plain-English format (similar to how we write Sevens Report, Sevens Report Alpha, and Sevens Report Technicals).
  
  
• A timely letter. Our quarterly letter is always delivered to paid subscribers on the first trading day of the new quarter.
  
  
• A separate compliance backup document that provides the necessary documentation for any subjective claims, as well as any numbers or statistics referenced in the letter.
  
  
• A turnkey solution. You can literally put your firm name, address, logo, and your signature on it, convert it to a PDF, and let it fly. Naturally, if you want to make any edits to it, feel free. That’s perfectly okay.