Rising financial literacy levels among both clients and the public at large has been a subject most financial advisors would prefer to avoid. In today's world, that's not longer possible. 

  Bombarded with multiple cable channels, nearly a dozen personal finance magazines and thousands of books, a new generation of investors suddenly is giving migraine headaches to many advisors who started building their practices in an era when the public's lack of knowledge about investing was rivaled only by its lack of interest in it. Advisors suddenly find themselves more worried about losing clients to CNBC than to another advisor or brokerage firm. 

  Given the lackluster returns from equities so far this year, clients' obsession with investing may wane from its feverish pace of the past few years. But it's not going to disappear. The new investor class, now more than 100 million strong, is going to continue to demand involvement in its investment decisions, and advisors who refuse to accept it are going to watch their universe of potential clients shrink steadily. 

  It's a very different world today, and advisors like Judy Shine of Shine Investment Advisory in Englewood, Colo., are already adopting an investment consulting process that allows for far more client participation. ''Twelve years ago, people came to us because we owned the information, and you didn't have to be that wise, because the public had no access to the information,'' she explains. ''Today they come because they have too much information.'' 

  The information advantage that existed a decade ago enabled that generation of advisors to assume an attitude toward their clients that today strikes many advisors as patronizing. ''It worked for them and it was what many clients wanted at the time,'' she recalls. ''People didn't make a ton of money in stocks, and they didn't view the stock market as a place that was interesting or fun.'' 

  Like a growing number of advisors with clients who are executives at high-growth companies, Shine is forging client relationships in which education is a two-way street. ''My clients in technology, telecommunications and biotech have educated me,'' she says, with no trace of embarrassment. Needless to say, these clients, executives at companies like Sun Microsystems, Lucent Technologies and Medtronics whom she calls ''middle-class millionaires,'' are playing with full decks. 

  Working with clients from Microsoft and America Online, Greg Sullivan of Sullivan, Bruyette, Speros & Blayney in McLean, Va., is experiencing a similar evolution in his relationships with clients. ''We have very smart clients, and it's a mistake to think they can't figure out things themselves,'' Sullivan says. ''They are sharp and perceptive. But they need and want to simplify their lives and to rely upon and trust someone. That's why you have to be comfortable in your competencies and be confident you can add value.'' 

  In a world in which millions of individuals are now conversant in financial lingo, it's not always easy to tell which clients are truly intelligent about financial subjects. After all, information doesn't always translate into knowledge. 

  Shine finds several indicators are useful in helping her discern how sophisticated a client really is, including the type of information they focus on and their level of emotional detachment. One obvious sign of clients' financial intelligence is how they view what has happened in the stock market between 1995 and 1999. If they don't recognize that five years of returns exceeding 20% are an aberration, a red flag should go off. 

  Truly smart, informed clients possess a lot more knowledge about investing than someone can get from CNBC or from personal finance magazines on the newsstand. ''Someone who is really knowledgeable about finance needs to have read books about the stock market, not just periodicals,'' Shine argues. ''They should be able to see the flaws in Harry Dent's arguments and know that when a stock or mutual fund goes up, 25% it can go down 25% just as easily.'' 

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