Investors Cast Closer Eye On Their Money

(Dow Jones) Investors are taking a more hands-on approach to their financial lives.

The past 18 months have taught individuals harsh lessons about markets' ups and downs-and made clear that investment pros are no more capable than average Joes of forecasting the future.

Investors continue to look to financial advisors for guidance; some are seeking out advisors for the first time or shopping for new ones. And many want to be more engaged than they'd previously been in decision-making.

"I think investors are taking more ownership," says Ray Sclafani, president of ClientWise, a coaching and consulting firm for financial advisors.

Nearly seven in 10 investors want to be actively engaged in the day-to-day management of their investments, according to recent data from research and consulting firm Spectrem Group.

For their part, financial advisors are reminding clients that, while they can't control factors like capital markets and interest-rate movements, investors can control their spending and saving habits and focus on their long-term goals. Of course, clients are more likely to listen to advisors who have been conveying this message all along rather than emphasizing investment performance.

"We're not magic men," says David Bekenstein a financial advisor in Reston, Va. with Brewer Financial Services. "Our job is to make sure people understand everything to the extent they can make those informed decisions."

A reliable investment income stream is a higher priority for many investors today than super-size returns, Bekenstein says, echoing industry research showing that investors have adopted a more conservative stance.

Resource Advisory Services in Knoxville, Tenn., sends a net worth statement to clients every three months with details including bank account balance, changes in debt levels and securities and retirement portfolio performance, says President J. David Lewis. The firm also produces yearly reports for clients.

"That brings them into a partnership with us," Lewis says of this feedback, which he compares to stepping on a scale. "We're not the wizards who are supposed to make them rich. All we're doing is helping them take personal responsibility."

Armond A. Dinverno, a certified financial planner in Itasca, Ill., is among the financial advisors encouraging clients to cut spending on such items as clothing, vacations and country clubs. He uses charts to show them how long their money will likely last at various spending rates.

People tend not to change their behavior until they experience fear or pain, he says. And though investors experienced both over the past year and a half, change may be temporary.

"I don't think by any stretch we're permanently reformed," Dinverno says.

Prospective clients, meanwhile, are taking longer to sign on as clients than they have in the past, says Dan Moisand, a CFP with Florida-based Moisand Fitzgerald Tamayo.

A few years ago, it wasn't uncommon for investors to signal their interest in working with his firm after their first meeting, he says. Today's prospects are interviewing more advisors and taking a few weeks to make a decision.

Investors are also asking more questions about conflicts of interest, business continuity plans and how the firm's employees make investment decisions. And for the first time in a decade, two prospects have asked Moisand, before their initial meeting, for his firm's Form ADV-a regulatory filing containing information about the advisor's business, disciplinary history and fees, among other factors.

"People are learning what questions to ask and learning what to do with the answer," Moisand says.