In a volatile market, advisors are told to take the macro view for their worried clients. (Photo: AP)

“We have to take the macro view for our clients.”

So said Susan John, chair of the National Association of Personal Financial Advisors, at NAPFA’s Practice Management & Investments conference last week in Brooklyn, which hosted more than 200 advisors, scores of exhibitor booths and a large roster of seminars and speeches.

John pointed to the current climate of disconnection between the public and big institutions as seen in the Occupy Wall Street demonstrations taking place on the other side of the Brooklyn Bridge as the NAPFA conference was taking place.

More than ever, John said, fee-based advisors have a responsibility to work in the best interests of the people they serve.

Here, then, are top tips culled from conference speakers who were taking the macro view:

Nader Mousavizadeh, chief executive, Oxford Analytica: Looking at the politics of the global economy in his opening keynote address, Mousavizadeh considered the European debt crisis, the Arab Spring and China’s growing right-wing movement. And yet his greatest concern for the NAPFA conference goers was the unstable U.S. political situation in Washington. The disturbing debt ceiling debate is a foretaste of what will be a polarized and partisan presidential election season next year, he predicted.

Tip for advisors: “I would recommend that you not pay attention to what’s happening in U.S. politics for the next year,” Mousavizadeh said, noting that what’s more important is U.S. politicians’ apparent willingness to put the full faith and credit of U.S. sovereign debt at risk. “We are not in a world anymore where the United Sates is setting the rules alone.”

Jerry Miccolis, principal and chief investment officer, Brinton Eaton Wealth Advisors: Author of “Asset Allocation for Dummies,” Miccolis said that hidden under his book’s cover is his true subject: a book about enterprise risk management (ERM), including topics such as natural hedging, risk exploitation and catastrophe protection. “More than ever, wealth management is risk management. It is our obligation to apply risk management to our practices,” Miccolis said.

Tip for advisors: Bucketing of assets is a mistake when considering a client’s investment strategy, Miccolis said. Rather, advisors should use up-to-date ERM tools to find uncorrelated asset classes and customize them around a client’s individual objectives, he said.

Prof. Russell James, Texas Tech University: A professor of behavioral finance who has conducted neurological imaging experiments in economic behavior, James noted that an advisor’s job is to help clients identify their conflicting short-term versus long-term desires. The short-term, impulsive self is emotional and fears loss while the long-term, reflective self is a patient planner. “The experience of loss physiologically changes a person’s risk tolerance,” James said when asked a question about clients’ higher risk aversion since the 2008 financial crash. “And it happens generationally. Look at Japan. Once you put your hand on a hot stove, it permanently changes your brain.”

Tip for advisors: When working with clients, advisors would be wise to reframe their aversion to money spent on fees, James said. “Perform a cost-benefit analysis showing the consequences of not setting long-term goals,” he suggested.

Finally, NAPFA offers this tip for budget-conscious advisors looking to cut down on conference-going costs: in 2012, look for the online NAPFA-Forbes iConference: Core Elements of Financial Planning. The joint program hosted by NAPFA and Forbes Media will be conducted in a virtual environment and allow attendees to collect valuable Continuing Education credits.  

The NAPFA-Forbes iConference is tentatively scheduled for early August 2012 and will include a day and a half of keynote presentations and breakout sessions on investment and financial planning topics. Sessions will also be made available to advisors looking to understand the fee-only planning compensation model and how to effectively make the transition.

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