Much to manage: independent firms proliferate in valley financial industry.

The Valley's money management industry is made up of a broad spectrum of provider types that all seem to overlap at varying points.

This diverse group of businesses include wire houses, independent investment advisors, estate planners, financial planners and advisors, investment brokers, money managers, wealth managers, pension fund managers, private equity firms, and even insurance companies, attorneys and accountants that also offer financial services or advice.

The Valley is ..." not a money center in the classical sense," said Dr. Somnath Basu, director of California Lutheran University's California Institute of Finance. "While the big companies are headquartered in New York and Chicago, here there are many more smaller companies, especially registered investment advisors."

So it's not surprising that most of those interviewed for this article work with independent advisory firms.

It didn't help that compliance departments in the big firms like Merrill Lynch or Fidelity have effectively muzzled most of their staff and make getting rating information on any kind of regional basis next to impossible.

So we set about identifying what makes an advisory firm truly independent. Most concurred that it generally refers to those who work on a fee basis rather than on commissions.

"That can mean two things," said Bill Barry, senior vice president of Ameriprise Financial in Woodland Hills. In some situations, he said, "an advisor might receive a fee based on a percentage of the assets they have under management; the other type is charging hourly rates for advisory services, similar to a CPA or an attorney."

Keeping up

Anybody with a string of letters after their name likely needs to complete a certain number of hours of continuing education units to maintain their certification or charter. An entire industry putting on breakfasts, lunches, weekend retreats and even cruises has arisen to meet this need. The latest entry into the category, online seminars, or webinars as they're now known, can even inform and educate an entire office without anyone having to leave their building.

"It's a never-ending process of keeping informed," said Geordie Crossan, president of NBS Financial Services. Just last week he brought in lunch for everyone and they dined in the conference room while watching a webinar about IRA beneficiaries. "It may not sound exciting," said Crossan with a chuckle, "but it was really informative for us."

That sentiment was echoed by Dorothy Strackbein Koetz, a certified financial planner since 1972. "A client is going to pretty much sign anything you put in front of him or her because they trust you," she said. "And that's where the fiduciary aspect comes in. You can't give knowledge to your clients that you don't have."

She and more than 200 others rely on the Financial Planning Association-West Valleys chapter to fulfill much of that educational requirement. "In our monthly meetings we try to have CEUs," she said. "Sometimes they're insurance-oriented, sometimes they are investment-oriented."

In addition to formal presentations on new products or regulations, members of the chapter take advantage of the wide range of knowledge to educate one another and share experiences with products and providers.

"We're always sharing ideas about, 'this company has a great product,' or 'that company does not have a great product,' Strackbein Koetz said.

They also keep each other informed about bad apples that have the potential of spoiling the whole financial industry basket.

"Unfortunately, there are many more bad advisors than good advisors," said Prof. Basu. "You have to really make sure that when you choose someone that you have very good references from people you trust."

Slaying the course

On a day-to-day basis, investment managers are more concerned with keeping things on an even keel than chasing after the latest, greatest stock pick.

They're generally dealing with the totality of a person's financial life and have prepared a long-term plan. Getting their clients to stick with that plan, however, is the biggest challenge they face.

"That's the difficult part of their business," said Basu, "trying to tell (their clients) that just being consistent, staying with the bitter medicine is much better than having a knee jerk reaction."

Crossan said it's not only the most difficult part of the business, but it's also what they spend much of their time doing. "We keep people on track in terms of volatility," he said.

But that doesn't mean getting stuck in a rut.

Conventional wisdom used to be that over the long-term, the S&P stock index would generally outperform any other type of investment. But that's been changing.

"Look at the S&P over the last 10 years," said Lon Morton, CEO and founder of Morton Capital Management in Calabasas. "Its return has been only a little over 4 percent."

Morton said one of the big trends today is finding investment opportunities that that go beyond the traditional stocks and bonds. He cited reports on the success that very conservative institutions like Harvard and Yale have had growing their holdings through alternative investments like private equity, real estate, hedge funds and structured notes.

"We really try and act as a team captain of our clients' financial planning team," said Morton, "so we tend to take a broad macro view of the world and the world economies."

To learn more about the Financial Planning Association-West Valleys or the Estate Planning Council of the Conejo Valley (now forming), contact Anita Lebby at [phone].

PROFESSIONAL DESIGNATIONS

The Financial Industry Regulatory Authority (FINRA) website lists 86 different professional designations and cautions that state securities regulators may prohibit or restrict their use in different ways.

Our personal favorite: Certified Anti-Money Laundering Specialist.

Following are a few of the most widely accepted designations and their actual meaning.

CFP: Certified Financial Planner

CFA: Chartered Financial Analyst 

ChFC: Chartered Financial Consultant

CIC: Chartered Investment Counselor

CIMA: Certified Investment Management Analyst

CIMS: Certified Investment Management Specialist

CLU: Chartered Life Underwriter

BY LINDA COBURN

Staff Reporter