Since its inception, the financial planning business has lavished the lion's share of its attention on the examination of the asset management side of the business.

There are a number of reasons for this. First, it is the primary reason most, though not all, clients seek financial advice. Second, many in the business trace their roots to the brokerage industry. Third, the liability side of the business is served partially by the insurance industry.

Many advisors went independent because they wanted to provide objective advice and felt the best environment to operate in was away from the product-driven focus of those industries. This emerging profession's signal achievement is that it has developed a more holistic approach to serving the public.

However, if advisors paid as much attention to the liability side of the equation, clients would be better served. Some very smart people are well aware of this. People like Barra co-founder Andrew Rudd.

In this month's cover story on page 76, Michael and Julia Carty scrutinize his approach toward balancing clients' resources against future claims. Rudd has created software that helps do this, and more products like it will probably come out from other software developers.
We're also lucky to have a contribution from David Armstrong on how conducting liability reviews with clients can build stronger relationships. David is an expert on this subject, and his article appears on page 61.

Another subject some of the leading lights in this business are focusing on in these uncertain times is scenario planning. When informed economists at the Federal Reserve can't agree on whether the biggest risk they face is inflation or deflation, it's challenging for both advisors and clients.

Andy Gluck explores the subject on page 45 with one of the smartest advisors I've ever met: Tom Connelly, who also serves as chairman of the investment committee at the Arizona State Retirement System, so he knows something about matching assets and liabilities as well. Tom walks Andy through a variety of scenarios that institutional investors are concerned about these days, so this article is well worth a read.

But we have many intriguing pieces this month, including Mitch Anthony's take on money and maturity on page 57 and Bill Bachrach's perspective on avoiding mediocrity on page 53. Riva Atlas, formerly of Forbes and The New York Times, investigates the turbulent municipal bond market on page 97, while Caren Chesler examines what to do when a husband and wife each have a different advisor on page 65.

Critics of socially responsible investing may have chortled when it emerged that a key holding in many SRI portfolios was the infamous "Beyond Petroleum." But Eric Rasmussen and Jerilyn Klein Bier present two different looks on what went wrong on pages 90 and 94.
So I hope you all had a great Labor Day weekend and can now enjoy the issue.

Evan Simonoff, Editor-in-chief
E-mail me at [email protected] with your opinion.

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