Attendees at the recent 2009 Financial Advisor Symposium were certainly more optimistic than they were a year ago about their businesses and were interested to hear from speakers on how to make the most of a slow-growth economy.
More than 500 financial advisors attended the 12th annual conference, which ran from November 8-11 at The Peabody hotel in Orlando, Fla.

Highlights of the show were keynote addresses from former presidential candidate Steve Forbes, economist A. Gary Shilling and practice coach Bill Bachrach. The panels discussed a wide range of topics, including retirement planning, marketing, client communication, technology, new regulations, investment outlook, exchange-traded funds, managed futures, green investing and more. A common theme throughout most presentations was the impact of the financial crisis on the subject at hand and what sort of economic recovery may develop in 2010.

Bachrach opened the conference in a general session and told advisors that when it comes to your business, "It's all about them [your clients]. Listen hard and listen with empathy," he advised. "When it's your turn to talk, be able to articulate your ideas and your advice with conviction."

One of his suggestions was that advisors ask clients if they can tape record client meetings. Often, when advisors play back to the tape after the meeting, they pick up issues they missed during the real-time conversation.

Taping client meetings can also impress both clients and regulators. "Do you think Bernie Madoff recorded himself?" Bachrach asked. "If you want to up the ante, put yourself on video."

Shilling, who founded the economic forecasting firm A. Gary Shilling in 1978, talked about why he thinks the United States will face slow growth for many years and where he thinks the best opportunities are for making money in such an environment.  
The recent stock market rally implies a big economic recovery and that consumers will soon return to binge spending, he said. "I don't share that view. I think consumers have crossed a watershed," he said. "The tectonic plates have moved."

Working against a strong 2010 recovery are the facts that U.S. consumers have too much debt, they've run out of borrowing power, and their net worth as a percentage of their disposable income is lower than it was in the 1950s, Shilling said. Also, the aging baby boomers, still a large percentage of the population, have a big impetus to save, he added. At the same time, layoffs, wage cuts and furloughs have resulted in deflation over the last six months, Shilling said.

He predicted a slow recovery, one in which consumers continue to retrench after a 25-year spending spree and the housing inventory reduces at a snail's pace. In fact, he thinks there's more of a chance that we'll see deflation continue rather than inflation take hold, as some observers fear.

Shilling then reeled off areas that would be hurt in a deflationary environment, including big-ticket consumer discretionary items, low- and old-tech companies, arts and antiques, banks, credit-card and consumer lenders, junk bonds, homebuilders, commercial real estate, developing country bonds and alternative investments.

Shilling believes the U.S. is in a long-term bear market, but there still will be cyclical rallies within it. Good investment possibilities in such an environment are dividend-paying stocks, high-quality bonds, consumer staples and factory-built housing, Shilling maintained. Investment advisors and planners will also see significant growth as the postwar babies-which he defined as people born between 1946 and 1968-seek help with saving and investment, he said.

Shilling said tax cuts won't work in a deflationary environment because they won't increase consumer spending.

Forbes, on the other hand, argued tax cuts are needed now to increase productivity and build wealth. He spent much of his presentation criticizing the Fed, particularly former Federal Reserve Chairman Alan Greenspan and current Chairman Ben Bernanke, for keeping interest rates artificially low and causing the housing bubble that was the precursor to the worst financial crisis since the Great Depression.

But now, a big reason problems are still persisting is that the regulatory system remains "anti-lending," and as a result, banks are still cutting lines of credit and raising interest rates for small businesses, he said.

Still, the biggest threat to the economy is the weak dollar, Forbes maintained. "We need a strong, stable dollar. A weak dollar means a weak recovery."

Another keynoter, well-known market analyst Ned Davis, said he believes that the U.S. is in a secular bear market. Nevertheless, big rallies, or cyclical bull markets, occur during long-term bear markets, he says, and his firm does not yet see evidence that the rally that began earlier this year is ready to end.

"There are a lot of similarities to 1938 and now," said Davis, president and senior investment strategist of Ned Davis Research Inc., during his presentation, entitled "Foundations of a Super-Cycle or Secular Lows?"

In the session "Lessons From Advisors Who Dodged The Bullet," advisors J. Michael Martin, Gregory Sullivan and Louis Stanasolovich agreed that one of their important goals is to minimize risk for their clients, particularly those at or close to retirement. In addition to financial planning, all three use a number of strategies to invest for their clients and are concerned about the "new normal" for returns over the next five or ten years.

"Most of our clients are financially independent, and one of our most important rules is not to allow clients to fall back over that line," said Sullivan, president of Sullivan, Bruyette, Speros & Blayney, an advisory firm based in McLean, Va., and owned by Harris Bank.

The stock market decline and poor economy haven't forced many, if any, of their clients to return to work, the advisors said. But some have decided to delay retirement and others have had to rein in their spending. "Spending on adult children is the number one problem we see in retirement. They're giving their children too much, frankly," said Stanasolovich, founder, CEO and president of Legend Financial Advisors in Pittsburgh.

Martin, president and chief investment officer of Financial Advantage in Columbia, Md., noted the amount of money varies that clients believe they need to retire, but many of them think they should have investments worth about $2 million.

In another session, "Bridging The Gap: Retirement Shortfalls," Frederick E. "Rick" Adkins, president and CEO of The Arkansas Financial Group in Little Rock, Ark., noted that clients don't always follow retirement plans, despite an advisor's best efforts to create sensible ones. "Client spending plans are not so predictable. Silly things can screw the model up, like when they give money to their kids or don't die at life expectancy," he joked.

Another panelist, Dan Moisand, a principal with the advisory firm Moisand Fitzgerald Tamayo in Orlando and Melbourne, Fla., said that an advisor should not try to correct a client's retirement shortfall by raising the portfolio's equity allocation because that increases risk. When the market drops, it's better to encourage the client to spend less and not increase their withdrawal rate, he added.