From August of 2008 into 2009, as the financial crisis battered the global economy, many of us felt as though we were in the throes of a pivotal life experience. Well, we were. And much like the Great Depression, most of us felt that the events we were witnessing would reshape our financial thinking and behavior for years to come.

How could it be otherwise? Pervasive, gut-wrenching fear was the overriding theme of the most recent recession: fear about losing our jobs or even our homes, fear about not being able to retire well, or at all, fear about what would replace the tried-and-true strategies that had now failed to protect our hard-earned investments.

Today, more than a year after the fall of Lehman Brothers, investors seem to be breathing a bit easier. Stocks have rebounded smartly, the U.S. economy appears to have actually touched bottom and the financial system, by most accounts, has been pulled back from the edge of the abyss.

Still, however, it would be a grave mistake to see last year's crisis as merely a one-time stumble along one of this world's familiar and cyclical paths. Instead, the international markets and economies are in the midst of a broader seismic shift, and it is up to us as financial advisors to help our clients recognize these fundamental changes and avoid repeating another painful loss to their retirement savings. As financial professionals, we carry a deep responsibility to guide our clients toward the right decisions for their financial futures.

LESSONS UNLEARNED?

Fortunately, inflection points-such as the one we are in now-provide unique opportunities to add the value and support our clients expect from us. To that end, we wanted to find out as the crisis receded, whether and how retirement investors have altered their views, assumptions and expectations about the markets, along with what effect the downturn may have had on their key retirement goals. We examined those questions in-depth by polling some 1,000 investors and 500 financial advisors this past summer.

What we found suggests that, for investors and clients, there are indeed plenty of urgent lessons of the financial crisis that have yet to take hold permanently. Our crash course in market volatility notwithstanding, many individuals seem to be unrealistically sanguine about their existing strategies, as well as their ability to secure the retirement of their dreams.

Although investors say they lost an average of 30% of their retirement savings at the bottom, their retirement outlook is nonetheless overwhelmingly positive. In fact, most believe the situation will turn around and they will one day have a great retirement. And nearly eight out of 10 say they are at least somewhat confident that they will have the money they need when they want to retire.

Bolstering that confidence is the belief by nearly two-thirds of investors that the market dislocation was only a temporary phenomenon and that things will eventually "go back to normal." And while they may be right, they should still expect "normal" to look quite different from what it used to.

NOT BACK TO NORMAL

In fact, we are moving toward what Mohamed El-Erian, chief executive officer of PIMCO (an affiliate of Allianz Global Investors), has dubbed "a bumpy journey to the new normal," a series of global changes that will last for many years and change the way in which we need to think about investing going forward. As El-Erian says, "markets are recovering from a shock that goes way, way beyond a cyclical flesh wound."

So what will the new normal look like? In PIMCO's view, we can expect muted growth in the United States as our financial institutions take on the heady task of wringing out the risk that almost brought many of them to their knees. That means less credit will be available for corporate expansion.

Inflationary pressures may increase as the government attempts to reduce the fiscal stimulus, putting the dollar in a relatively weak position. We can also expect to see a rebalancing of economic dominance away from the United States and Europe and toward rich emerging nations, such as China, India and Brazil.

The combined effect of these "handoffs," as PIMCO calls them, will be far-reaching. Equity values will dip below their pre-crisis levels, increasing correlations among all asset classes and creating a profound paradigm shift away from the high-growth/low-inflation boom we have all been enjoying over the past two decades.

In the new normal, our clients' expectations for retirement investing need to see a paradigm shift as well, from reaching for extremes to focusing on what truly matters. That means we need to rely less on traditional asset allocation models, even though according to our survey, nearly half of all investors still consider stocks to be the foundation of their retirement portfolios. More troubling, about one in five mature investors-those primarily older than 65 years-says that 91% to 100% of their retirement account is held in stocks.