The FPA also used the forum to present its members and the press with its 2002 Financial Performance Study of Financial Advisory Practices, which it undertook with SEI Investments and Moss Adams LLP. One encouraging aspect of the study was that advisors appear to be offsetting eroding assets and the down market by taking in more clients.

"This year's study really makes a statement about the ability of financial advisors to manage through the decline in the market," said Moss Adams consultant Mark Tibergien.

At the same time, he warned that it's more crucial than ever that advisors run their firms as a business, something many have failed to do. The study revealed a narrowing of profit margins. He cited one figure that could be dangerous for advisors in a competitive marketplace: The average advisory firm spends 45 cents of every dollar in revenue on overhead. "It's time to get your costs in line with your income," Tibergien told advisors.

Education sessions focused on topics that play a key part in whether advisors can prosper. Some of the themes the sessions followed included insurance and estate planning, investments, life planning, marketing and practice management.

In one session, entitled "How Banks, CPAs and Wirehouses Will Vie for Your Clients," Scott MacKillop warned advisors that they need to prepare for increased competition from different flanks in the marketplace.

"There is a war going on for the affluent investor," said MacKillop, of Trivium Consulting LLC in Evergreen, Colo. More specifically, he warned that the fee-based and fee-only marketplaces are no longer a cozy domain for independent advisors. All sectors of the financial services industry have gotten wind of the fact that products have become commoditized and advice is what will generate revenues, he said.

The trend of transaction-based enterprises moving into the fee-based arena is gaining momentum. In other words, advisors need to prepare for doing battle with the wirehouses. The recent partnership between E*Trade and Ernst & Young is only the beginning of what may be in store for the industry, he said.

"They've looked over the fence and seen what you've been doing, and here they come," MacKillop said. "They're pursuing the advisor-based, fee-based model."

He also noted that the number of fee-based advisors has grown from about 5,000 in 1990 to approximately 25,000 currently. (Some estimates are higher.) There's a reason, he says, that this trend will continue: fee-based businesses are making money. From 1996 to 1999, studies show that fee-based firms grew at an average annual rate of 80%, compared with 20% for the commission firms.

"It's not just because clients like it," MacKillop said. "It's because it grows faster and is more profitable."