From recommending different products to rethinking their risk management strategy, some bank-affiliated financial advisers say they have changed their approach in the wake of last year's market slump.

"We have to be proactive as far as a new strategy, and that strategy certainly isn't, 'Hang in there,' " said Dennis Reeve, PrimeVest Financial Services' investment program manager at Lake City Bank in Warsaw, Ind.

Advisers' adjustments vary widely: Some are using a conventional approach with a bit more caution, while others are incorporating more annuities to safeguard portions of clients' assets. A few advisers are fundamentally re-evaluating their approach.

At Independent Bank in Ionia, Mich., wealth advisers are turning to corporate bonds, which they say have been unfairly sold off, in an effort to help clients recoup some of last year's losses. "We don't want to use the 'buy and hold/buy and ignore' strategy," said Julie Anderson, who runs PrimeVest's $230 million-asset investment program at Independent Bank. "We're trying to give them something different."

Independent reps are seizing what they see as promising opportunities in senior floating-rate bond funds, she said. They have historically used such funds as defensive investments. But their beaten-down net asset values have a lot of potential, she said.

Independent has not given up on stocks, but its advisers — and their clients — are increasingly hedging their forays into the market by using variable annuities with features protecting against losses, Anderson said.

Lake City Bank, which manages $2.2 billion, is taking a similar approach, Reeve said. Its use of variable annuities has increased at least 25% since mid-2008, he said.

First Foundation Inc., the parent company of Keller Group Investment Management Inc., is also taking a more cautious stance toward the stock market. Victoria Collins, an executive vice president at Keller, said that after so many asset classes fell at once last year, she is re-evaluating what diversification itself should mean. "What we've learned is that the traditional model of diversification across asset classes is not as important as diversification across risk factors," she said.

Keller, which has $1 billion of assets under management for 1,200 clients, is relying less on the stock market for investments, Collins said. "Our best thought right now is that we need to look at reducing the amount of equities" in client portfolios," shes said.

While having 60% or more of a portfolio in equities was common in the past, Keller's moderately aggressive model now calls for 33% equities, with the rest put in fixed income and alternative investments.

F. Peter Brodie, the chief investment officer at Bryn Mawr Bank Corp. in Pennsylvania, said losing faith in the stock market is an overreaction. "In October of '87, we counseled clients not to get out, and by the end of the year, they were back to where they'd been" before the market correction, he said. "This time it's going to take longer, but the market is going to recover."

Investors have typically waited to return to the stock market until they were certain a rebound was under way. By then, most of the upside has already unfolded, said Brodie, whose institution manages $2.5 billion of assets.

Edward Cwalina, the director of the retail investment unit at National Penn Bancshares Inc. in Boyertown, Pa., said he thinks the stock market is still an attractive place to invest, because it has fallen far below its highs.

National Penn Investment Services, which has $285 million of assets under management, is leaning more on annuities that are more conservative or can guarantee retirement income, he said.

"People are concerned about running out of assets, so they are looking much more closely at products like single-premium immediate annuities," Cwalina said.

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Corrected June 10, 2009 at 5:21PM: An earlier version of this story misstated Keller Group's relationship with First Foundation Inc. First Foundation is Keller Group's parent company.<@SM>