Financial advisors may be able to call their own shots, but that doesn't mean they don't need help. When they make those decisions, they are typically also reviewing tons of investment reports for ideas and insights.
Morningstar's information, which analyzes risk, return and performance in the mutual fund market, is relatively standard. Beyond that, each advisor gravitates to his or her favorite sources.

Mike Martin, president and chief investment officer of Financial Advantage Inc. in Columbia, Md., can't live without the Outstanding Investor Digest, Grant's Interest Rate Observer and Strategic Economic Decisions. Martin, a former director of research at T. Rowe Price, the Baltimore-based investment company, invests in individual stocks, cash and a short-term bond fund. He also hedges his clients' equity positions during periods of overvaluations with ProFunds and Rydex bear market mutual funds for short periods.

Martin, who has $260 million in assets under management, is an active manager. So Outstanding Investor Digest helps him identify trends. This publication prints a series of long interviews with excellent investment managers such as Bill Ruane of Sequoia Fund and Charlie Munger of WESCO.
"You get different points of view in the publication and can identify themes," he says. The publication "gave me the courage to invest in gold bullion a few years ago."

Martin also likes to read Grant's Interest Rate Observer because he likes the analysis of the credit markets. James Grant, the editor, gives readers a historical perspective and provides timely information on the money supply data. (Martin says he is keeping about 30% to 40% of his clients' fixed-income investments in cash, and in the Loomis Sayles short-term bond fund. He thinks rates could rise and long-term bonds could decline.)
Martin also reads Strategic Economic Decisions, published by Horace Brock, Ph.D. Brock specializes in applications of the modern economics of uncertainty. The publication helps Martin forecast risk assessment. It also gives him ideas about economic trends and offers credit insights and information about structural changes in the economy.

Another financial advisory firm, United Capital Financial in Newport Beach, Calif., uses high-power research to arm its 26 registered investment advisors, who are spread out in 15 U.S. cities. These offices collectively manage $2 billion.

Mike Capelle, United Capital's senior vice president of investment management, accesses Ford Equity Research for data on the intrinsic value of stocks held by mutual funds as well as individual stocks of interest. Reuters Knowledge provides forecast information on 16,000 companies and fundamental data on 39,000 companies. It also provides a global company screener and fixed-income and credit data, as well as news.

"We use [the] Morningstar [and] PSN [tools] to evaluate and draw our own conclusions about mutual funds," Capelle says. "But Ford gives intrinsic value models. We can input the XYZ mutual fund and get the intrinsic value, price-to-intrinsic value of individual holdings and the weighted average price-to-intrinsic value. These measures are more helpful than classic price-to-book values."

Ben Jacoby, president of Brinton Eaton Wealth Advisors, a Morristown, N.J., firm with $600 million in assets under management, takes a long-term investing approach. He does not rely on any investment newsletters, reports or market insights. Instead, he largely uses Morningstar to track mutual fund information and data, and finds its bond fund information helpful. Jacoby's company prefers well-managed bond funds rather than individual bonds.     He also invests in exchanged-traded funds to diversify into commodities and international small-cap asset classes.
Because he is on the Fidelity platform, he gets tons of market information from Fidelity Investments and Lehman Brothers research. He also uses the Standard & Poor's Stock Reports to help identify stocks that represent long-term growth and value. The S&P reports highlight companies' financial statements as well as their earnings growth and valuations.    

Jacoby developed his own investment tools to manage client money that use a number of fundamental and financial variables, and with his in-house program, he can allocate and rebalance assets.

"We started out with a good collection of tools," he says. "Others use commercial systems. But we monitor 600 different portfolios for 200 clients. We have the ability to rebalance portfolios, do tax-loss harvesting, and buy and sell assets ... based on our systems."

Jacoby says he uses information from the top financial publications, such as The Wall Street Journal, to aid his decision-making. "We spend a lot of time avoiding losses when things go south," he says. "We look at sensitive bits of information and glean bits of information from news reports, such as when a top executive resigns. Our goal is to perform as well as the market with less risk. We really want to protect on the downside."

David Carter, president of Carter Asset Management in Abilene, Texas, doesn't trust any single resource. "We use [investment tools and reports] as corroborative information. It's like eating a watermelon. You have to spit out the seeds."

  Carter, whose company has $150 million in assets under management, primarily invests in mutual funds. So like others, he uses Morningstar's mutual fund information. He has a core list of 20 funds and keeps an eye on another 40. He doesn't just go with four-star and five-star-rated funds. Rather, he invests in funds with stable management and good research.

"We can't overemphasize the importance of knowing the managers, research capabilities and corporate cultures," he says. "We like managers, like Wally Weitz and Chris Davis. Their funds many not be doing well over the short term, but have good long-term track records."

Carter also likes the Standard & Poor's Stock Reports and the Standard & Poor's Outlook newsletter because of the spectrum of data and the commentary. He reads Roger Conrad's Utility Forecaster and Lehman Brothers fixed-income research because he likes the quality of the analysis.
Although Carter uses Morningstar's mutual fund research, he does not like the company's stock research. "Their stock work is poor," he argues. "They are inexperienced and too new to the game to do it well."

He also likes the JayWalk Consensus. This online report aggregates opinions from a variety of sources with different research methodologies. He says JayWalk, unlike brokerage firm sell-side reports, is unbiased. The balanced reporting gives him a perspective on investment strategies, portfolio pitfalls and investment opportunities. The metrics give him access to information on more than 5,000 securities and covers a wide range of market sectors.
Since Carter is an accredited investment fiduciary, he also gets valuable inside information from the Center for Fiduciary Standards, which provides information for pension fund fiduciaries. The center's Fiduciary 360 report offers information about fiduciary grades, manager tenure, portfolio manager turnover and fund performance against benchmarks. It also monitors performance with specific guidelines that Morningstar does not.

The research he has gleaned from this report has led him to avoid several investment companies. "Fidelity has a corporate cultural problem with high portfolio manager turnover," he says. "Janus Funds are not the same since Tom Bailey left the firm. American Century is not the same firm, since James Stowers isn't there. But then you have firms like Thornburg, which have a strong corporate culture, stable management and good research."
Carter is also enamored of the Callan Periodic Tables. These help him explain asset allocation to his clients. The tables list relative asset class performance over the last 20 years. One of them depicts annual returns for eight asset classes, ranked from best to worst. He uses the chart to help clients understand diversification and how asset classes perform in different years. Clients can get a picture of how investing in different asset classes can reduce risk and improve performance.

"I have a copy on my desk, on my colleagues' desks and in our meeting room," Carter says. "We are able to show our clients we need to be in all areas of the market because investment cycles are not predictable."

Unlike other money managers, Richard Ferri, CFA, president of Portfolio Solutions, Troy, Mich., uses his own asset-allocation software and generates his own equity and bond reports using financial data from various sources. Ferri manages $800 million for clients in index mutual funds and exchange-traded funds. He strips out data from Morningstar Principia to help himself make asset-allocation index fund decisions. He also uses data from Standard & Poor's, Lehman Brothers and Dimensional Fund Advisors to generate his own financial analysis reports. He uses correlations and expected rates of return developed in house to make changes in asset-allocation mixes.

"I run internal stuff and don't rely on off-the-shelf programs," he says. "What is the point? I would rather use raw data and come to my own conclusions about investments and asset-allocation decisions."