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Survey: Advisors concentrate on business efficiency and remain optimistic despite turmoil

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Investment advisors are repositioning their business strategies to stay ahead of the market downturn. A recent Rydex AdvisorBenchmarking survey shows 61 percent of advisors are planning to automate certain tasks; forty-five percent plans to focus on a specific client base; and 39 percent plans on investing in employee training. Only 11 percent has no plans to change their current practice models.

“As the nation’s current financial situation worsens, advisors are exploring different avenues to offset any losses in revenue and to ensure that they are being as efficient and productive as possible,” says Maya Ivanova, research manager for Rydex AdvisorBenchmarking.

Amid market conditions, RIAs emphasize alternative investments, according to the survey, especially for retirement income planning.

“Alternative investments have historically demonstrated a low correlation to traditional stock and bond assets,” says Ivanova. “We’re seeing both advisors and their clients look to alternatives for their potential to mitigate risk and enhance returns through diversification.”

More than half of advisors surveyed (57 percent) rated the importance of being able to use alternative investment products within retirement solutions such as IRAs and 401(k)s as 3.5 on a scale from 1 to 5, with 5 being the most important. Twenty percent of their clients, who are mostly high-net-worth individuals, are expressing an interest in directing their own pension investments to alternative investments.

While 38 percent of advisors recommend 5 percent to 10 percent of their clients’ pension investments to be allocated to alternative assets, 22 percent recommend an even higher 11 percent to 20 percentallocation.

Effective time management is a priority for advisors, and retaining clients while attracting new ones remains the goal for many advisors. However, Ivanova points out, many strategies remain underutilized. Many advisors, for example, are not employing Web-based marketing. Seventy-three percent of advisors say none of their clients were acquired through online marketing and 77 percent do not use online social networks.

Despite the crisis, advisors are optimistic; 27 percent project the S&P 500 will be up 10 percent in November 2009 compared to November 2008.


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