Why your small ideas may be big

You can see it in many ways — the mood of the nation has changed.

You can see it in many ways — the mood of the nation has changed.
Even if Americans are optimistic about the changes coming from Washington and don’t fear the possibility of irreversible government growth and reckless spending, people have shifted from expansive and buoyant to careful and sober. They’re hunkering down.
Don’t blame me, or the media in general for that matter, for noting a shift or for harping on negativity and not pointing out how good things are for the 80% or 90% of the population that’s still working and paying their mortgages on time.
I’m not one of those who always see the glass as half empty. I’m just pointing out that even among the half-full types, there’s a sense of caution and concern.
People see friends and family members being laid off, stores closing and lots of for-sale signs planted on front lawns. They understand that their own financial health has become more precarious.
So what does this cautious public mood mean for advisers?
You know better than I, as you are on the front lines and interact with investors every day. But let me offer a few ideas.
As much as all of us would like to believe that somebody out there really understands what’s going on and can pick winning investments, the experience of the last year seems to have hammered home that such a genius doesn’t exist.
We’ve seen hedge fund savants demonstrate that they are just as fallible as the rest of us mortals. We’ve seen every equity mutual fund, save one, lose money. We’ve seen Warren Buffett admit he can’t buck the tide. And we’ve seen Wall Street giants who boasted about their brilliance run to the government so they wouldn’t go bust.
I don’t believe that most investors now expect that their adviser to be the extraordinary individual who will deliver above-market returns. (They have seen where that fantasy got Bernie Madoff’s investors.) While they might wish such results were possible, I think the new sober mood has chastened them and made them realize that such hopes are a pipe dream.
What they do want and would greatly appreciate are solid, practical money-making and money-saving ideas that most other people may not know about.
For example, you might tell clients how to capture a few capital gains, which are in pretty short supply these days, to take advantage of an oversupply of capital losses. Three ways to do that are explained in the March 9 issue of InvestmentNews in the Tax-Conscious Adviser column, by Robert N. Gordon of New York-based Twenty-First Securities Corp.
Finding some safe, high-return gems among municipal bonds is another way to impress clients, especially those who live in New York, California, New Jersey and other high-tax states.
You can impress your clients by knowing the ins and outs of individual retirement accounts and Social Security benefits, and offering tactics on how to maximize after-tax withdrawals.
What’s more, you can endear yourself to a client by knowing money-saving or tax-saving ways of financing their child’s college tuition or a new-car purchase, for example.
Being the expert at being smart-frugal — not necessarily being the expert at getting wealthy through investing — may be the new positioning for successful advisers. The times seem to point in that direction.