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The Globe and Mail

Your financial adviser should have contacted you by now

So, how did your financial adviser do this past week?

One of the perks of using an adviser is the hand-holding you get during times of crisis in the markets.

Even if it was just to dispense platitudes such as "don't panic" or "hold for the long term," a good adviser should have contacted you in one way or another by now.

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Mike Morrow, a financial adviser in Thunder Bay, sent a letter to clients by e-mail and regular mail telling them that the assassination of President John F. Kennedy and the start of the Persian Gulf war caused serious volatility at first, but the markets later rebounded.

He has also been calling clients on the telephone to calm jangling nerves.

"I've been telling people that we've been through this before, that if you have a long-term plan, you should just stick to it."

John Soutsos, who works in Mississauga for a firm called Investment Planning Counsel of Canada, said he dashed off a letter to clients Sept. 11, just after the terrorist attack on the United States. The basic message: Don't make any decisions in the heat of the moment.

Heard from your adviser yet?

You absolutely should have heard by now, said Kelly Rodgers, a consultant who finds money managers for high-net-worth clients.

Clients of full-service brokers should have already received an e-mail or fax outlining the firm's view on what's ahead for the markets and the economy, Ms. Rodgers said.

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She's talking here about what the brokerage firm's economists and strategists think, not the individual broker.

"One e-mail I saw was from a retail broker giving his opinion and very clearly saying this was not the opinion of [his firm]" Ms. Rodgers said. "I didn't even bother reading it. I looked at it and thought, 'What is some retail broker in Toronto going to be able to add to this situation?' "

Financial planning firms that sell mutual funds don't generally have their own economists and strategists on staff. Still, they do receive commentaries from individual fund firms that look at prospects for the markets and specific funds.

Ms. Rodgers said planners can easily pull these commentaries together and distribute them via e-mail to clients.

In Mr. Morrow's case, he sent clients a graph prepared by the fund company Fidelity Investments that showed the course of the markets since 1925. The graph documented a clear upward trend over the years, even with temporary drops caused by periodic shocks.

A good adviser will have a lot of clients to contact, so don't expect a detailed analysis of how your portfolio may be affected.

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Still, Ms. Rodgers said you should get at least an analysis of how various stock or fund sectors might behave in the months ahead.

She said larger accounts, say, those ranging from $50,000 to $100,000 and higher, should have received a phone call from an adviser. A voice-mail message is fine, so long as it invites you to call to discuss any concerns you have about your investments.

Smaller accounts may deserve equal time, but Ms. Rodgers said they often don't get it. Instead, the tendency is to call big-producing clients who generate the most in fees and commissions.

Should you expect any attention if you're a brand new client with a small account?

"From a practical point of view, no," Ms. Rodgers said. "Not unless you're 26 and you're making $100,000 a year, or you're about to inherit money, or you're an accountant or lawyer who can refer them other clients."

If you didn't hear from your adviser, you might want to ask why. After all, you're paying for personalized service, either through commissions paid when you buy funds or other investments, or through a fee-for-service arrangement.

Investors who own mutual funds bought through an adviser may not even realize the extent to which they are paying for advice.

Ms. Rodgers uses the example of someone who has $100,000 worth of equity mutual funds sold with a deferred sales charge. This means the broker receives an up-front payment from the fund company of up to five per cent, while the client pays nothing unless he or she sells in the first seven or so years.

On that $100,000, the adviser would likely have received as much as $5,000 in up-front commissions, then annual payments of $500 through trailer fees.

"If you've had those funds for three years, the adviser is looking at total compensation of $6,500," she said. "The question is, have you had $6,500 worth of time and advice?"

One way to answer that question is to look back over the past week and see how your adviser did.

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