For the last several years, the major wirehouses have promoted fee-based business rather than the traditional transactional approach. It was a strategy that seemed to make sense on a number of fronts. The fee approach aligned client and advisor interests and allowed the firms and their financial consultants a steady and, hopefully, growing stream of revenue. Furthermore, the fee approach encouraged parties to stay the course for the long run.

The crown jewel of the fee-based arsenal has been the separately managed account. The preferred role of the financial advisor was that of a relationship manager who was to profile clients and use the firm's tools to allocate to the appropriate approved managers. Thereafter, it was all about quarterly meetings, reallocations, and bringing in more assets. Advisors were taught that it was not about timing the market, but rather time in the market. However, the financial meltdown we have experienced has forced all parties to rethink these strategies. Unfortunately, most money managers failed to significantly outperform during the downturn and, as a result, we are experiencing changing behavior on Wall Street.

To remain successful, consensus says that wealth managers will have to add more value. Rather than just being strategic, they must be tactical as well. It is becoming incumbent upon the advisor to be more engaged. They must know more about specific industries, companies and trends. The popularity of news shows like CNBC and its competitors tells us that clients want this information. Back in the heyday of separately managed accounts, it was almost chic to tell clients and colleagues: "I don't follow individual stocks."

This crowd professed the disciplines of diversification and staying the course. Today, though, staying the course is an unpopular notion. Clearly, professional money management will continue to play an important role in the majority of customer accounts. But, the lesson that needs to be understood is that these managers get wet in a rainstorm like everyone else, and the advisor must take responsibility for cash allocations.

What are the firms doing?

Wealth managers at the major firms are seeing a proliferation of practicable ideas in recent months.

In a movement reminiscent of "the fund of the month" activity seen during the post '87 crash period, firms are manufacturing products that are a call to action for both their advisors and clients.

Rather than the closed-end fund mania we saw in 1987 and 1988, this season's favorite flavor is structured notes. Most majors are creating these profitable gems at a robust pace, and we are seeing them promoted with varying degrees of vigor. I understand that one of the big four is sending gentle reminders to their managers that contain branch rankings to try to inspire the competitive spirit.

It should be noted that structured notes offer clients and advisors the world of investment options while providing the underwriting firms access to very cheap capital. These vehicles are, at their core, debt instruments with a rate of return tied to a particular outcome. Since the underwriter can hedge these outcomes, their costs are predicable and attractive. There seems to be a note for almost every opinion or strategy. Therefore, no matter your market view, there is a potion for you.

In addition to structured products, firms are promoting short-term unit investment trusts. These are usually thematic and are often being packaged with structured notes as "portfolios designed to prosper in today's new economy." These unit- investment trust structured note packages define a strategy and help create revenue today, which will hopefully be rolled into a future theme when these relatively short-term commitments conclude. This, for many, will be the new fee business. Much like laddered bond portfolios, commissions are based on regular maturity and corresponding revenues.

What are the trends?

In this post-crash era, the primary trend is change. Many clients will be changing advisors if their advisors do not make adjustments. So investment advisors who were using separately managed accounts and are now managing client assets themselves, either with or without discretion-are the ones that are meeting client demands.

Often they are charging a fee, but without a third-party money-manager involved. Advisors are discovering that one can charge less and still net the same or perhaps more for the client.

Others who have relied on managed mutual fund programs, for example, are herding clients into separately managed portfolios. Some who have managed customer funds themselves are switching to managed ETF accounts. Indeed, wise wealth managers are offering new options.

As far as fees are concerned, firms have developed a new hybrid fee-based pricing that seems to appeal to some. This new account structure charges a fee based on the gross value of transactions, rather than the traditional fee, based on total assets in the account. After some examination, one understands this account to be commission-based pricing disguised in a fee-based package.