Financial Advisers Roll Up Their Sleeves

Dealing with the toxic fumes from the sub-prime mess could be Job One for investment advisers this year. That's the message from this Dow Jones Practice Management column:

Typically, the bulk of financial advisors rely on sophisticated research reports, automated software and third-party money managers to monitor and invest their clients' portfolios. In recent months, however, many advisors have begun manually digging into the smallest details of their clients' holdings to ferret out any lurking exposure to subprime investments.

Diligence in scouring portfolios for subprime exposure can be a tedious diversion from normal business. But advisors who do so can win the loyalty of clients - and an additional share of their assets. And those who don't search for subprime exposure may end up alienating clients should problems emerge.

Because losses from the subprime meltdown are often indirect - say, when a construction company posts a loss on the back of slowing new home sales - some advisors are using painstaking methods to reevaluate every sliver of a client's portfolio.

The often laborious work includes drilling down into mutual fund holdings, vetting individual bonds and keeping tabs on the ratings of over-extended municipal bond insurers. In some cases, the job even includes scrutinizing typically ultra-safe money market funds.