Maybe you should pity me: I recently had to spend a month analyzing a mountain of data for a significant research report. The goal was to evaluate how financial advisors of all stripes are rethinking the way they build portfolios since those exciting market events of 2008. In all, 1,090 advisors participated in a survey and answered dozens of questions on subjects that have important implications for fund companies and platform providers.

One of the key conclusions is that investment companies are going to be facing very different selection criteria than in the past. Those that have been primarily marketing their performance will have to address a lot of new qualitative questions advisors will be asking. Another is that these changes in investment ideology really do matter to everybody in the investment world - unlike, say, 15 years ago, when people in the fund and insurance industries would tell me dismissively that financial planners would be better described as "failed producers."

Did you know that, according to Tiburon Strategic Advisors, there are now more dually registered RIAs in the U.S. market than wirehouse/regional brokers? Or that roughly 10,000 independent RIA firms now manage in excess of $2 trillion of client assets?

Perhaps the most striking thing I learned is that, post-2008, activities once labeled "market timing" are now solidly in the mainstream. No, planners are not moving into or out of the market based on reading the entrails of animal sacrifices. But they seem to be taking a much more active approach to protecting clients from downside risk. The survey asked whether advisors planned to raise or lower their allocations to each of 35 different investment classes or vehicles in the next three months. A remarkable 83% are anticipating at least one tactical adjustment - and the great majority expects to make several.

In a follow-up survey, I asked advisors to describe what's going on. One said he couldn't answer questions seeking the asset allocation mix for specific clients. "If I answered the question based on today's data," he said, "it will be different from last month and probably be different next year." Another advisor appeared to be engaged in tactical portfolio management without realizing it. She wrote that she was seriously considering making changes, but wasn't sure about pulling the trigger. Later, she mentioned that, since 2008, she had taken her clients out of long bonds, increased exposure to emerging markets and created a more robust alternatives allocation.

STILL IN THE GAME

Beyond protecting clients from downside risk - and perhaps more important - advisors are trying to keep clients invested. If an advisor can take some of the edge off the scariest market free falls, and if clients see the manager of their portfolios taking proactive steps to protect them, they might be more likely to buy into the bigger picture concept of staying on the (safer-than-before) roller coaster.

But this raises an important question. How good are advisors at processing economic data and taking appropriate action? One of the most provocative set of responses came when advisors were asked to forecast the inflation rate and the real (after-inflation) return of both equities and 10-year Treasuries over the next 10 years. On inflation, the majority of responses clustered between 3% and 5%, and the remaining responses had a center of gravity on the 6% to 7% part of the chart. If there is wisdom in the crowd, the crowd of advisors seems to believe we will experience above-average inflation for at least the remainder of this decade.

But we also had responses as low as -4% a year (projecting severe Japanese-style deflation), several as high as 10% and one advisor who anticipates annual inflation of 13% over the coming decade. One or the other group on the fringes is going to be spectacularly wrong (or both will), and I suspect that damaging consequences will show up in the portfolios they recommend.

Advisors' real-return expectations were scattered even more broadly. The majority expected equity returns somewhere in the 3% to 7% range, while a sizable minority forecast 8% to 10%. Most advisors seem to think stock returns are going to be generous between now and 2020, and those making predictions of 7% or more (a not-inconsiderable 42% of the total) expect their clients to be blessed with a decade of greater equity performance than the long-term historical averages.

Yet again, I found myself returning to the outliers. Those who projected 0% real equity returns think stocks will do about as well as inflation for a decade or more. But what about those who are projecting 11%, 13%, 15%, even 20% annual returns, or their less optimistic counterparts who expect another Lost Decade of negative real equity returns? When asked to project total real returns on 10-year Treasuries, 0% and 1% were the most popular answers. But some advisors are expecting -5% (real) per year from intermediate-term government bonds and others were even less optimistic. Yet a handful on the other end of the spectrum say they expect the Treasuries in their clients' portfolios to return 4% to 8% above the inflation rate, each year, for a decade.