At this year's Financial Advisor Symposium in Orlando last month, Morningstar's Don Phillips was moderating a panel of All-Star mutual fund managers, and he asked Pittsburgh mutual fund maven Ron Muhlenkamp where he was investing.
Muhlenkamp responded that one reason he was going to lots of financial advisor conferences these days was that he thought the entire advisory industry, from independent advisors to mutual fund companies, would be the major beneficiary of the savings boom. Recalling the savings spree that followed the 1990-91 recession, Muhlenkamp noted, "For the next five years, Merrill Lynch grew faster than Wal-Mart." Back then, Wal-Mart was still a growth company, not the proxy for U.S. retail sales that it is today.
Muhlenkamp also asked advisors for a show of hands as to whether they had cut their own spending by 5% or more in the last year. Most attendees raised their hands. Then he asked whether their reductions in personal consumption were painful. Few people raised their hands.
Another keynote speaker at the conference, economist A. Gary Shilling, offered similar thoughts about the next decade. Higher savings rates, combined with anemic consumer spending, put financial advisors in the sweet spot of a new economy.
Everyone is trying to figure out how permanent the changes wrought by the 2008 financial crisis will be. We don't know exactly where Pimco's "new normal" will settle out, but the idea that Americans will return to their old free-spending ways seems far-fetched.
The point here is not to urge advisors to run out and overweight their clients' portfolios with financial services companies. To the contrary, it's just to say that after experiencing what for many probably has been the most stressful year of their professional lives, there would appear to be some tailwinds gathering that could turn in your favor.
As I write this, Thanksgiving is a week away and if you don't think you have something to be thankful for, I'd urge you to think again.
As for me, I have a great editorial staff here to be thankful for, starting with our managing editor, Dorothy Hinchcliff. This string of good luck extends to our senior editors, Ray Fazzi, Jeff Schlegel and Eric Rasmussen, as well as our award-winning creative director, Laura Zavetz, and her staff, including Jodie Battaglia and Merri Chapin, and our production manager Aimee Melli.
We're also lucky to have so many great contributors that I can't list them all, but Roy Diliberto, Mike Martin, Dave Lawrence, Joel Bruckenstein, Mary Rowland, Dick Wagner, Dave Drucker, Caren Chesler, Andy Gluck, Mitch Anthony, Gail Liberman, Bruce Fraser, Alan Lavine and Karen DeMasters. And this month our all-time favorite columnist, Nick Murray, writes the Parting Shot column on the best books of 2009 on page 100.
To them, and to everyone else here in our sales staff, production and operational staffs, I'm not just grateful. They and you are the reason I'm looking forward to 2010.