After the so-called flash crash on May 6, and leading up to the $1 trillion debt bailout extended to Greece, the pros at Moss Adams knew how to react. They largely did nothing. There was no dumping of equities across the board. They did not pull up stakes and hunker down in cash positions.

“We don’t change our allocations based on the markets dropping or increasing,” said Sheryl Rowling, a San Diego-based partner at Moss Adams Wealth Advisors.

The company generally takes a passive approach to investing, and uses institutional mutual funds for their low costs to investors. The firm does believe in using talented managers when the markets are less efficient, Rowling said, but there was no overwhelming sense that clients were clamoring for change.

After the flash crash on May 6, and leading up to the $1 trillion debt bailout extended to Greece, Moss Adams e-mailed letters to its clients assuring them that such market upheavals happen, and that they should not react by changing their positions.  “Not surprisingly, we got zero phone calls and e-mails expressing concerns,” Rowling said. “They understand that the market will be volatile, and they understand that what they have is a long-term strategy to meet goals in the long run.”

Certainly, the markets have given advisers and clients enough to spur them to action. The MSCI EAFE Index, a benchmark used by many international mutual funds, was down 13% through Wednesday night. Negative currency exchanges made matters worse, said Alec Young, an international equity strategist at Standard & Poor’s. On Monday, the Euro was down 20.3% against the dollar, and by Wednesday had hit a four-year low below $1.22. Early Friday, the Euro had recovered briefly against the dollar.

“That is more currency risk than clients are used to taking,” Young said. S&P, which lowered its recommendation on international stocks from overweight to market weight, now says clients should hold back on making new investment decisions. “We are not recommending initiating any new positions.”

Further upstream, executives at PIMCO in Newport Beach, Calif., said independent advisers on a whole are not shifting their portfolios around dramatically. Instead, they are making changes on the margins. They are hedging for inflation by picking up Treasury Inflation-Protected Securities.

To ensure that clients will have money on hand for short-and longer-term needs, they are buying staggered durations of money markets, Doug Ongaro, a managing director at PIMCO, said in a phone call. Ongaro is head of its registered investment advisor channel and a member of the management team for the firm’s global wealth management group.

Aside from that, PIMCO advisers are mainly asking a lot of questions about what their appropriate allocations should be. “They have strategic allocations and methodologies that they stick with,” Ongaro said. “They are trying to be smart about what those allocations mean, and they are trying to be more flexible, in terms of what the markets are providing.”

But some professionals, like the ones at Rockingstone Advisors, a wealth management firm that manages separate accounts for high-net-worth clients, felt they had the answers to those questions: overhaul the portfolio. Rockingstone, based in Larchmont, N.Y., slashed its European equity positions, holding on to just one stock, the AerCap Holdings the Dutch aircraft leasing company.

Emerging markets positions, which used to account for 15% of its clients’ holdings, were also dumped. But it did hold on to emerging market government bonds from markets like Chile and Vietnam. It kept long positions on large-cap technology companies like Apple and Intel, said Brandt Sakakeeny, the firm’s managing partner.

The market was disappointed with the $1 trillion debt bailout, and felt that Greece should have been allowed to default and leave the Euro, Sakakeeny said. But Germany’s unilateral ban on naked short selling of securities two weeks later really undermined the market’s confidence in European leadership during the crisis. In that practice, a trader sells assets he or she does not own hoping to buy them back cheaper at a later date.

“I confess, we were on the long side of this,” Sakakeeny said. “We thought the initial European response would have been sufficient, but clearly it was not.”

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