Most financial advisors are preparing to add more financial planning services to their practices as a result of the recent recession, according to a report on practice management by Cerulli Associates.  

In addition, advisors are looking into adding alternative investments to client portfolios as a way to help them recover lost ground.

A majority of those advisors surveyed or 57%, say they will add more financial planning services to their practices. They are broadening the focus of their practices beyond investment performance.

However, investment performance is still vital. Most advisors, 51%, said they would adopt more conservative portfolio allocations, and 43% of advisors said they are turning to alternative investments as a result of the recent market downturn. Some products under consideration are hedge funds, venture capital funds and managed futures, Bing Waldert, a director at Boston-based Cerulli Associates, said. “Advisors are using them as a way to diversify portfolios,” he said.

Although alternative investments haven’t all lived up to their marketing, they have beaten broader equity benchmarks, the study found. There has been a lot of discussion among advisors about how to use them in their own practices, Waldert said. “Broker-dealers should be thinking about this,” as a way to educate and serve advisors, he said.

The Cerulli report, which was released yesterday, surveyed 1,900 advisors from February 2009 through September.