June 20, 05

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Robert Kock, president of Investors Capital Management Inc. in Rowayton, says that with the fall of the market after 9/11, investors started looking for ways to protect their investments.

Need for conservative investment advice drives demand for financial planners

Investors' need for professional investment expertise when the market is in a downturn is driving demand for financial planning services.

The number of financial planners holding the certified financial planner (CFP) certification has risen from 42,800 in 2003 to 45,700 in 2004 and as of May 31 of this year stands at 47,127.

"Clients are looking for non-euphoric, sober expectations and are looking for a cautious and conservative investment approach," said Larry Greeley, financial planner at Financial Power Corp. in Norwalk. He said that his client base has remained relatively stable in the last six years. Although the decline in the market value of the total assets he manages has gone down in the wake of the market downturn following the Sept. 11 terrorist attacks, it has now reached levels seen in the late 1990s.

"One needs more expertise in a more difficult market," said Thomas Mayper, executive vice president at the RDM Financial Group in Westport. He said the fact that many investors have become more risk-averse as a result of the market downturn in 2001, led to the proliferation and mainstreaming of alternate investments, such as hedge funds and real estate, areas which most investors do not feel comfortable handling on their own. Mayper said the total assets under his management have increased steadily over the last few years.

Loretta Nolan of Loretta Nolan Associates in Greenwich said many of her clients have real estate concerns, more so than was the case in the past, supporting the notion that investors are looking outside traditional investment vehicles. "A lot of folks learned a lot of lessons (from the 2001 market downturn) and realized that diversification is very important."

"In the late 1990s, investors laid a heavier emphasis on equities," said Robert Kock, president of Rowayton-based Investors Capital Management Inc. With the fall of the market after 9/11, investors started looking for ways to protect their investments in case of a future downturn in the market. "Alternate asset classes became part of the asset allocation model," he said, which is to say that investors added new investment vehicles into their portfolios.

Kock currently has more than $55 million in assets under management, up from $15 million in 1997. Although he has seen an increase in the number of clients from 40 to 60 within that period, he said most of the increase comes from money from existing clients.

Arthur Norton of Business and Financial Services Inc. in Stamford said the total assets under his management peaked in July of 1999 and is now back to those levels. He said investors have a demand for "less aggressive" financial planners, but not a decreased demand for planners in general.

Mayper does not expect the demand for financial planning services to decline in the years to come. "Going forward, it's not going to be easier for individuals to meet their financial goals due to underfunded corporate benefit plans, so people will need professional guidance to meet their retirement needs."

According to U.S. Labor Department predictions, employment of personal financial advisers is expected to grow faster than the average for all occupations through the year 2012, a growth the Labor Department attributes to the notion that as the number and complexity of investments rises, more individuals will look to financial advisers to help manage their money. In addition, the continuing trend of individuals planning for their own retirement will make it likely for individuals to turn to certified financial planners for advice.