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September 05, 05 Reader Services |
Back to old times? Fee-based investment advice gaining in popularity
When the stock market collapsed in 2000 and the financial repercussions of 9/11 followed the next year, the need for financial advisers was stronger than ever. "The more difficult the times, the better it is for people like me," said Greg Werlinich, president of Werlinich Asset Management L.L.C., an independent investment advisory firm in Valhalla. "If times are great, people think they can do it themselves and don't need anybody. It's when the market is going sideways or just choppy that they recognize the need for someone who does this for a living to take control of these very important assets." Some of the niche advisers may have given up on the field following the downturn, but the industry as a whole remained strong with more investors seeking out advice on what to do next, local professionals said. "I think the good advisers were those who picked up the phone and called their clients even when their portfolios were cut in half because everyone was in the same boat," said Robby Morris, president of the Westchester Association of Insurance and Financial Advisers. "You call them up, explain what's happening and you try to adjust and maybe move things to be more conservative. I think those are the people who are still doing well. I think people got disenchanted because a lot of people didn't stay in touch with them. You have to talk to them through good and bad, you can't just coast." With the diverse options available for investing and the complexity of today's market, the U.S. Labor Department predicts that the number of financial advisers will grow faster than the average for all occupations through the year 2012, as more people will want help in managing their money and preparing for the future. "You're seeing more advisers moving away from the traditional wirehouse commission-based approach to advice and more toward kind of the independent adviser model, which is the fee-based approach," said Werlinich. "I think more investors are recognizing the benefits of the fee-based models because they are more closely aligned with their needs and objectives." Before the collapse of the market in 2000, people relied on the Internet, party gossip and tips from just about anyone when making their investing choices. Then nearly everything was making money and most people didn't prepare for what was to come. "When the market was going crazy and my 10-year-old kid could have picked a winner, people didn't think they needed advice," said Rich Hartman, agency director of Met Life in Elmsford. "The public now has seen that they can't just ride the wave for a couple of years and that they really need professional advice." For good or bad, the online information available to people remains a big part of the investing trade, but investors aren't as gung-ho about what they are reading as in the past. "What's happening in the financial services world, just like most segments of the world, technology is being put into its proper place and perspective," said Anthony Domino, managing director of Associate Benefits Consultants in White Plains. "Specifically, the people who were going to make their own millions by investing online without the help of a professional adviser, most of them have realized that that comes at a cost." The fear of what happened five years ago still lingers, but it's not causing people to hide their money under their mattresses; they still want to invest, but are getting the guidance on how to do it more safely. "What's so good about this industry is that when the market is doing poorly, we have a guaranteed fixed product to help them," Hartman said. "When the market is doing what it should do, and can do, we have the investment and the equity products to help them." "I saw the fear, but it has dissipated a little bit," Werlinich said. "We've had a nice little run over the past 10 months, since the election." Even with the market showing some signs of life, most experts don't see things heading back to the way they were immediately before the collapse. There's enough uncertainty in the world that will affect the way people invest, but they are still entrusting their money based on the word of the financial adviser. "Most people are aware of the fact that diversification is the key way to truly make money in the market overall," Domino said. Hartman agreed. "You have to sit down with a professional person and diversify your portfolio," he said. "That diversification will let you ride out what the industry will do." |
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Copyright 2004, Westfair Communications Inc. |