Monday Morning: Advisers fell short after towers toppled

So says a recent report commissioned by Merrill Lynch & Co. Inc., which surveyed 2,300 investors to find out if they heard from their adviser in the three weeks immediately following the attacks. As you may recall, the stock market was shut down for almost a week. When it finally opened on the Monday following the attacks, stocks tumbled in a sell-off reminiscent of the great crash in 1929. Nobody knew where the market was going to end up. Yet, only 16.9% of the investors surveyed said they had received a telephone call from their financial adviser during that three-week period. Not that it's any consolation, but the investors who made up that response were small fry. They generally had accounts that ranged from $100,000 to $1 million. They say the rich really are different from you and me, but even those with $1 million or more in assets, didn't fare much better, according to the report. Only 25% said they had received a call from their adviser. Surprisingly - or perhaps not - the findings mirrored a similar survey that was taken after the stock market slump in 1997. In that case, only 18.3% of the investors surveyed said that they had heard from their financial advisers. More is at stake here than simple hand holding. According to CBS MarketWatch, which first reported this story, if an investor had sold their equity investments within a week of the market's Sept. 17 reopening, the sale would have come when the Dow Jones Industrial Average was at its lowest point - it dipped below 8000 during trading on Sept. 21 - in three years. Since then, however, the market has staged a remarkable recovery. The Dow has regained all of its post-attack losses, and is up almost 20% since Sept. 21. Anyone who panicked and got out of the market could have taken a substantial hit. The findings are disturbing enough. They suggest that financial advisers are falling down on the job in a big way. At least according to the survey, few seem to realize that this is a relationship business, and during times like these, advisers should be spending more time on the phone with clients, not less. But, frankly, I'm not totally sold on the report's findings. And here's the reason: The term "financial adviser" is being thrown around far too loosely. Over the past few years, companies from Merrill Lynch to many small regional broker-dealers have slapped a financial adviser title on people who the day before were merely stockbrokers. Last week, in fact, an independent, fee-only financial adviser called me to complain about a story in which the reporter mentioned Series 7 securities license holders in the same breath with financial advisers. Those people, the reader insisted, are not financial advisers, especially if they are paid by commission. His point - which was well taken - is that too many people are going around calling themselves financial advisers without having a clue about what a financial adviser does. And it's quite possible to interpret the Merrill Lynch survey as supporting that contention. A Merrill Lynch spokesman could not provide the report by deadline, so there's no way of knowing who was surveyed. But there's no question that being a financial adviser has increased cachet these days. Stockbrokers, lawyers, accountants and even tax preparers are moving into the field. And no wonder - we are in the midst of an incredible intergenerational transfer of assets. The demand for financial advice is on the rise and is likely to continue as the baby-boom generation ages. But you have to wonder whether the financial services industry is up to the task of providing sound financial advice. Unless it can set and maintain standards, or at least more clearly define who is and who isn't a financial adviser, it's courting a major disaster.