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Bernard Madoff’s investors aren’t the only ones suffering through the aftershocks of his epic fraud. A cloud of suspicion hangs over the financial planning industry, forcing even longtime veterans adjust their business practices and reassure skittish clients.

"In the wake of that scandal, people don’t know whom to trust," says Michael Garry, who runs his own wealth management firm in Newtown, Penn.

For Roger Balser, managing partner of Balser Wealth Management in Avon, Ohio, the Madoff mess unleashed an avalanche of new paperwork demands.

Soon after the scandal broke, Balser met with representatives from a firm that had referred customers to him in the past. The accountants — whom Balser had known for some time — grilled him for 90 minutes about how their clients’ assets were protected from him.

"I explained that the only things I can do are execute trades and take management fees from their accounts after notifying the custodian in writing," Balser says. "The CPAs were adamant that we cease this practice of having access to the client account to withdraw management fees."

Now Balser’s firm bills the clients every quarter and waits for a mailed check to pay the fees. It’s been a big hassle for the small company, sucking up extra administrative hours and expenses.

The Madoff fallout is worst near the fraud’s epicenter. "We serve a number of higher-end North Shore clientele and have felt the ripple effects of Bernie pooping in our sandbox," says Benjamin Chafitz, a partner with The Signature Group of Companies in Garden City, N.Y. He’s seen clients affected by Madoff losses move out of homes, cancel insurance policies and change their lifestyle.

"On the investment end, we are being quizzed like never before about who the custodians are and where the assets are invested," Chafitz says. "Across the board, clients are rethinking their relationship with their advisers. It is no longer adequate to be friends; you need to be able to demonstrate that you have the ideas, resources and staff to achieve your clients’ goals."

New skepticism

Spooked by Madoff’s crimes, some clients are seeking safety in brand names.

Garry met recently with a prospect referred by a longtime customer of his. After a phone conversation, they followed up with a two-hour consultation that Garry felt went very well. But the potential client chose instead to go with a financial planner from Morgan Stanley (MS, Fortune 500). Her reason: An accountant friend told her to avoid small firms in the wake of the Madoff scandal.

"Of course, I don’t think that is necessarily good advice because Madoff was hardly a tiny enterprise, and he was able to commit the fraud because he was an investment adviser and broker, just like the other large brokerage firms," Garry says. "The problem for me and others in my position is that if people aren’t sure who to trust, they tend to go with names that they have heard of, like the Merrill Lynches and Smith Barneys."

Customers are more skeptical than ever before, says Ron Reuven, CEO of Reuven Enterprises in New York City.

"It seems like just a year ago, these same people did not even know some of these loopholes existed, and now they question everything that comes to mind," he says.

When pitching for new business, he runs into a Catch-22: Clients don’t want to do business with an investment manager who isn’t the very best, and they’ll shop around to find the most successful advisers. But if you present a plan for generating above-average returns, clients are dubious — is it another Madoff-like scheme?

The blame for this new wariness doesn’t lie only with Madoff, Balser says. If industry regulators did a better job at reigning in bad operators, customers wouldn’t need to be so guarded.

"The SEC and the government have not done a good enough job when the warning signs were there," he says.

Damage control

It’s not all doom and gloom, says Paul Tran, president of Focal Point Financial & Insurance Services in Monrovia, Calif. He thinks the combination of the Madoff debacle and the economic wipeout have created new opportunities for the best money managers.

When news of Madoff’s misdeeds broke, Tran leapt into action. His staff phoned clients to explain to them why Madoff’s investors fell and why they weren’t going to suffer the same fate. They also took the opportunity for a check-in on how customers were weathering the recession.

"That part is crucial, because people are talking about their account balances and the economy more than anything nowadays, and for people to hear that their financial adviser took measures to insulate them from fraud and do the right thing — expect referral calls," Tran says. "Even though account balances may have gone down with the economic downturn, bad news is almost always better than uncertain news. It’s all about communication."

Joseph Sarappo, owner of Retirement Planning Specialists in Philadelphia, sees that as the silver lining in this year’s streak of financial frauds.

"With Madoff and other pyramid schemes in the news, there was an overall a feeling of unease among some investors, especially those at or close to retirement age," he says. "As a result, most wealth managers will tell you that they’ve taken to more consistent communication with their clients."

In the long run, this year’s disruptive effects could pay off for independent managers, say Seth Asher Rabinowitz, senior vice president of investor relations for Silicon Associates in Beverly Hill, Calif. His take: "It makes long-established wealth managers’ clients question their relationships, and consider giving new guys a chance." 

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Despite rising fears of the U.S. falling into another recession, a survey of top economists found them more optimistic about growth in the fourth quarter of this year and throughout 2010. But job seekers will have to wait a little longer for employers to start hiring again.

According to the November survey by the National Association of Business Economics, 48 top forecasters now expect the economy to grow at a 3% annual rate during the last three months of this year, up from their prediction of 2.4% growth in October.

The economists also raised their forecast for growth during every quarter of 2010. They now expect a 3.2% rise in economic activity over the course of the next four quarters, up from their previous estimate of 3%.

But the outlook isn’t as good for the record 31 million Americans unable to find full-time jobs.

The economists pushed back their expectations for when U.S. payrolls will start to grow again to the second quarter of 2010. They previously had predicted a gain of 12,000 jobs a month in the first quarter.

The nation’s unemployment rate hit 10.2% in October — higher than expected. The continued problems in the labor market, combined with disappointing reports about housing and retail sales recently, have raised concerns about a so-called "double dip" recession pay day advance.

Despite this, the majority of experts surveyed by NABE said they felt the economy was on track and did not additional help from the government.

Asked if there should be another round of economic stimulus, only 15% said that would be appropriate, while 40% said they would leave the stimulus package approved early this year unchanged.

The other 45% said they would like to see a cut in the stimulus money already approved but not yet spent. Along those lines, 55% of the economists said they are extremely concerned about the amount of federal debt over the next five years

Still, the economists surveyed were slightly more optimistic about a recovery in housing and the likelihood that consumer spending would increase. They were also more bullish about the stock market, forecasting that the S&P 500 will reach 1,199 at the end of 2010, a gain of about 10% from Friday’s closing level. 

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One steady bit of good economic news: Inflation remains near zero. So who would want to pay extra these days to add a dose of inflation protection in their portfolio?

Plenty of people. It turns out sales are hot for Treasury Inflation-Protected Securities, a common hedge against rising prices known by their acronym TIPS.

New money from investors and market gains have boosted total assets in mutual funds investing in TIPS nearly 36 percent so far this year, according to Morningstar Inc.

It’s part of a broader shift by many investors who have been scared away by stocks, despite the market’s hefty rebound from its March low. They’ve been piling into the greater safety of bonds, and TIPS — while not without risk — are about as safe as you can get.
The value of the underlying investment in TIPS rises with inflation, providing an additional layer of protection beyond what Treasury bonds offer.

Hardly anyone expects inflation to re-emerge as a big threat anytime soon, so TIPS aren’t necessarily the best short-term investment. But historically low interest rates and the federal government’s growing deficit are expected to drive prices higher, especially once the economy truly gets back on its feet and spending rebounds.

Here are some common questions and answers about TIPS:

How do TIPS work?

Introduced by the government in 1997, TIPS are a type of Treasury bond — investments that are super-safe, provided you believe the government will continue to make good on its credit obligations.

TIPS adjust their yield based on changes in the Consumer Price Index. The principal in TIPS adjusts every six months. The so-called "coupon" rises when inflation grows, and decreases in the less-likely instance of deflation. When the bond matures, you’re paid the adjusted principal or the original principal, whichever is greater. TIPS are sold in maturities of five, 10 and 20 years.

Investors in "nominal" Treasury bonds get a fixed rate of return if they hold the bonds until they mature. For example, 10-year Treasury notes are now yielding about 3.32 percent per year.

On the other hand, 10-year TIPS are yielding 1.55 percent, which doesn’t seem so good, until you consider what havoc inflation might wreak no teletrack payday loans. The difference — or "break-even rate" — between those two numbers is 1.77 percentage points. That suggests investors are expecting inflation will average 1.77 percent per year over the next 10 years. So if inflation exceeds that amount and erodes Treasuries’ current 3.32 percent yield, TIPS investors will be glad they paid for the protection.

Inflation had historically averaged 2 to 3 percent until falling to near zero when the market tanked last fall and deflation fears set in.

How have TIPS’ values held up lately?

Inflation and interest rate expectations are constantly changing, which is reflected in the prices traders are willing to pay for TIPS. Lately, TIPS have generally been seen as a good deal. Mutual funds investing in TIPS have returned an average of 8.63 percent so far this year, according to Morningstar. That puts TIPS in the middle of the performance pack among fixed-income fund categories.

How can I buy TIPS?

TIPS are available for purchase from the Treasury at http://www.treasurydirect.gov to avoid brokerage fees. If you’re not sure you can keep the bond until maturity and are nervous about managing your investment over time, you can buy into a mutual fund that focuses on TIPS, or an exchange-traded fund. Like TIPS mutual funds, TIPS ETFs hold baskets of TIPS with varying maturities but can be traded like a stock.

TIPS appear to carry little risk. Is that the case?

Any bond is subject to risk from rising interest rates, and TIPS are no exception. If the Fed boosts interest rates faster than inflation grows, or before inflation sets in, TIPS’ values will erode.

They also can be hit in a falling market, as happened last fall. Many institutional investors had to come up with cash to meet clients’ orders to pull out their money, forcing them to sell their most liquid investments. TIPS often fit the bill, and massive TIPs sales reduced prices. But as seen this year, they’ve bounced back.

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New filings for unemployment insurance fell for a third straight week, the government said Thursday, surprising economists.

There were 530,000 initial claims filed in the week ended Sept. 19, down 21,000 from a revised 551,000 the previous week, the Labor Department said in a weekly report.

A consensus estimate of economists surveyed by Briefing.com expected 550,000 new claims.

The 4-week moving average of initial claims was 553,500, down 11,000 from the previous week’s revised average of 564,500.

"After two weeks of declines which seemed to be linked in part to seasonal problems connected to the late Labor Day, we expected a rebound this week, so these data come as a pleasant surprise," wrote economist Ian Shepherdson of High Frequency Economics in a research note.

"The downward trend in claims leveled off in the early summer but it now seems to be back with a vengeance, as it should if the economy really is growing at a (Cash for) Clunker-assisted 3%-plus rate in the quarter," he said.

Continuing claims. The government said 6,138,000 people filed continuing claims in the week ended Sept. 12, the most recent data available. That was down 123,000 from the preceding week’s revised 6,261,000 claims.

The 4-week moving average for ongoing claims fell by 1,250 to 6,187,250, down from the prior week’s revised average of 6,188,500.

The initial claims number identifies those filing for their first week of unemployment benefits. Continuing claims reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks.

The figures do not include those who have moved to state or federal extensions, nor people whose benefits have expired.

State-by-state data: A total of 21 states reported a decline in initial claims of more than 1,000 for the week ended Sept. 12, the most recent data available.

Claims in Texas declined the most, by 4,623, which a state-supplied comment said was due to fewer layoffs in the trade, service and manufacturing industries.

Claims increased by 1,573 in Wisconsin, which a state-supplied comment said was due to layoffs in the construction, service and manufacturing industries.

Outlook: Though job losses are tapering off, Shepherdson said claims still need to drop by 100,000 to about 432,000 to be consistent with payrolls.

"Claims still have a long way to go," he said. "But payrolls won’t keep falling forever — just until next spring, we think."  

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FedEx Corp., the world’s second-largest package delivery company, on Friday offered a signal that the global economy is improving, as it raised its first-quarter earnings forecast on better-than-expected international shipments and cost cuts.

The company’s performance is seen as a key indicator of overall economic health, but FedEx hesitated to predict when a recovery may ramp up.

"Despite some encouraging signs in the global economy, it is difficult to predict the timing and pace of any economic recovery," Chief Financial Officer Alan Graf Jr. said in a statement.

The Memphis, Tenn.-based company said it expects earnings of 58 cents per share for the first quarter ended Aug. 31. That’s down 53 percent from a year ago, but well above the company’s previous prediction of 30 cents to 45 cents per share.

On average, analysts were looking for a quarterly profit of 44 cents per share.

FedEx said it raised its forecast because of increased international priority packages and "strict cost management."

The company has cut salaries, laid off workers and made other cuts in the face of slowing demand.

The company’s international priority shipments are delivered between one and three business days.

International package shipments can be an indicator of how well economies are moving because they measure consumer and business activity.

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Pfizer Inc agreed on Wednesday to plead guilty to a criminal charge relating to promotions of its now-withdrawn Bextra pain medicine and will pay a record $2.3 billion to settle allegations it improperly marketed 13 medicines.

The world’s biggest drugmaker was slapped with the significant fines on Wednesday after being deemed a repeat offender in pitching drugs to patients and doctors for conditions not approved by healthcare regulators.

Pfizer had pleaded guilty in 2004 to an earlier criminal charge of improper sales tactics and its marketing practices have been under federal supervision since then.

The company, which is acquiring rival Wyeth, had warned in January that it had taken a $2.3 billion charge late last year to resolve allegations involving Bextra and other drugs, but did not provide details at the time.

The agreement was unveiled by the U.S. Department of Justice and Health and Human Services Department,

“The size and seriousness of this resolution, including the huge criminal fine of $1.3 billion, reflect the seriousness and scope of Pfizer’s crimes,” said Mike Loucks, acting U.S. attorney for the District of Massachusetts.

The settlement announced on Wednesday by Pfizer includes a $1.3 billion criminal fine related to methods of selling Bextra, which was withdrawn from the market in 2005 on safety concerns.

It also includes $1 billion in civil payments related to so-called “off-label” sales of drugs — meaning for uses not authorized by the U.S. Food and Drug Administration — and payments to healthcare professionals.

“We regret certain actions taken in the past, but are proud of the action we’ve taken to strengthen our internal controls,” said Amy Schulman, Pfizer’s general counsel.

It would be the largest settlement to date for improper marketing of prescription drugs, topping the $1.42 billion Eli Lilly and Co agreed to pay earlier this year for off-label sales of its Zyprexa schizophrenia drug.

Pfizer said it will pay $503 million to resolve practices involving Bextra, $301 million related to its schizophrenia drug Geodon, $98 million for antibiotic Zyvox and about $50 million for its blockbuster Lyrica used to treat nerve pain and seizures.

The company said most of the alleged improprieties took place during or before 2005. Company Chief Executive Jeffrey Kindler had been Pfizer’s general counsel from 2002 until taking the helm in 2006.

Pfizer had pleaded guilty in 2004 to an unrelated criminal charge of improper sales tactics related to its Neurontin seizure drug and its marketing practices have been under federal supervision since then.

In the earlier case, Pfizer’s Warner Lambert subsidiary had been accused of marketing Neurontin for unapproved uses. Pfizer acquired Neurontin through its merger in 2000 with Warner Lambert.

Pfizer agreed in 2004 to pay $430 million to federal and state governments and pleaded guilty to criminal charges of illegally marketing Neurontin for migraine headaches, pain and bipolar disorder. 

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Stocks struggled Monday, as investors turned cautious after pushing the Dow, S&P 500 and Nasdaq to new 2009 highs.

The Dow Jones industrial average (INDU) added 3 points, or less than 0.1%. The S&P 500 (SPX) index lost less than one point. The Nasdaq composite (COMP) lost 3 points, or 0.1%.

All three major gauges had risen soundly through the early afternoon, with rising oil prices and continued economic optimism lifting the market. But the gains dissolved in the afternoon, with only the energy sector remaining buoyant.

"We’ve got a lot of economic news coming out later this week and I think people are kind of waiting to see if the reports confirm the economy is bottoming," said John Wilson, chief technical strategist at Morgan Keegan.

Standouts this week include a consumer confidence report Tuesday, housing reports Tuesday and Wednesday and the revised read on second-quarter GDP growth Thursday.

Crude oil prices touched a fresh 10-month high and lifted oil services stocks, including Dow components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500). But big consumer names including Kraft Foods (KFT, Fortune 500), Coca-Cola (KO, Fortune 500) and Home Depot (HD, Fortune 500) all declined.

Stocks rallied Friday after Fed chief Ben Bernanke said the economy is near a recovery and existing home sales posted their biggest jump in two years. That sent the Dow to its highest close since Nov. 4, the S&P 500 to its highest close since Oct. 6 and the Nasdaq to its highest close since Oct. 1.

Stocks have had a surprisingly upbeat summer, as investors have welcomed a number of better-than-expected quarterly results and economic reports.

The S&P 500 is up 52% from the March 9 lows, as of Friday’s close. And the Dow is up 45% during that same time period. After a run of that magnitude in such a short period of time, many analysts predict that stocks are due for a pullback, perhaps by as much as 15%. However, the momentum remains up, and with historically high amounts of cash held in mutual funds, the advance doesn’t appear to be flagging.

"A lot of people didn’t get in at the March lows and there’s still a lot of buying interest out there," Wilson said. "We could see a number of 3 to 5% corrections, but I think people will use them to get back in."

Company news: Advanced Micro Devices (AMD, Fortune 500) gained 8% after Citigroup upgraded the chipmaker to "buy" from "hold." The brokerage said that while AMD is struggling now, its businesses are starting to stabilize.

Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) shares both surged on economic optimism and in reaction to Friday news that the Federal Reserve bought $5.6 billion of Fannie, Freddie and Federal Home Loan Bank debt.

Nokia (NOK) is planning to expand its traditional cell phone business by introducing a mini-laptop early next month. The Nokia Booklet 3G will use Microsoft’s Windows software.

Dow component Procter & Gamble (PG, Fortune 500) said its selling its pharmaceuticals business to drugmaker Warner Chilcott (WCRX) for $3.1 billion. P&G shares were little changed, while Warner Chilcott shares surged 27%.

Market breadth was mixed. On the New York Stock Exchange, winners narrowly edged losers on volume of 1.23 billion shares. On the Nasdaq, decliners topped advancers seven to six on volume of 2.06 billion shares.

This last week of summer is expected to bring low trading volume as market pros head out on vacation or hold off on making any big changes in their portfolios until the fall.

World markets: Global markets followed the lead of U.S. markets Friday. Asian markets advanced, with the Japanese Nikkei rising 3.4%. European markets rallied.

Oil: U.S. light crude oil for October delivery rose 48 cents to settle at $74.37 a barrel on the New York Mercantile Exchange, a 10-month high.

Bonds: Treasury prices rallied at the start of a week that brings over $100 billion in government debt auctions. The rise in prices lowered the yield on the benchmark 10-year note to 3.48% from 3.56% Friday. Treasury prices and yields move in opposite directions.

Other markets: COMEX gold for December delivery fell $11.10 to settle at $943.60 an ounce.

In currency trading, the dollar fell versus the euro and gained against the Japanese yen.

How does your portfolio look nearly one year after the collapse of Lehman Brothers? What investment choices hurt you or helped you? What strategy changes are you making for the future? Tell us your story. E-mail realstories@cnnmoney.com and your thoughts could be part of an upcoming story. For the CNNMoney.com Comment Policy, click here. 

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U.S. authorities announced what they believed to be the largest hacking and identity theft case ever prosecuted on Monday in a scheme in which more than 130 million credit and debit card numbers were stolen.

Three men were indicted on charges of being responsible for five corporate data breaches in a scheme in which the card numbers were stolen from Heartland Payment Systems, 7-Eleven Inc and Hannaford Brothers Co, federal prosecutors said in a statement paydayloan.

(Reporting by Daniel Trotta; Editing by Maureen Bavdek)

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U.S. stocks have entered a new bull market, and the S&P 500 index could rise as much as 10% from current levels by the end of this year, Abby Joseph Cohen, the head of Goldman Sachs’ investment policy committee, said on CNBC Thursday.

Goldman Sachs sees the benchmark Standard & Poor’s 500 index in a range of 1,050-1,100 points toward year-end, said Cohen, the firm’s senior investment strategist and president of its global markets institute. That range, she said, "is where we should be toward the end of this year."

Stocks have recovered sharply since hitting 12-year lows in early March, with the S&P 500 index now up 47% since trading as low as 666.79 points in March. In early afternoon trade on Thursday, the S&P was off 0.63% at 996.44 points.

"We do think the new bull market has begun," Cohen said free online credit report. "It may prove it began in March of this year."

Cohen also said she expects the labor market to improve, but in "an erratic way."

"It appears job losses are slowing, and there is some job creation going on," she said. But "we have many more months of difficult labor situation ahead, even if the recession, using GDP or industrial production, is almost over."

Employment data has been keenly watched for signs of improvement. On Friday, investors will get another look at the job situation with the Labor Department’s July employment report. 

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The pace of economic decline slowed substantially in the second quarter, as the U.S. economy shrank at an annual rate of 1% — far less than it did in the first quarter, according to a government report released Friday.

Economists surveyed on Briefing.com expected the GDP to contract by 1.5%.

GDP is the broadest measure of the economy, which has been mired in recession since December 2007, worsening in recent quarters. The fourth quarter of 2008 and first quarter of 2009 measured the worst two quarterly declines in 26 years — the nation’s gross domestic product fell a revised 5.4% and 6.4% respectively.

The slower second-quarter contraction was largely due to a smaller decline in exports and business inventories as consumer prices and government spending rocketed higher.

Businesses spending fell by 8.9% last quarter, compared with a 39.2% drop in the first quarter. The decline in business inventories also took a significantly smaller bite out of GDP in the most recent quarter than in the previous two.

Federal government spending grew by 10.9% in the quarter, after falling by 4.3% in the first quarter. That was only partially aided by the stimulus program, as very little of Recovery Act funds were spent between April and June.

That partially offset a 1.2% decline in consumer spending, which makes up about 70% of GDP. In the first quarter, consumer spending was actually up 0.6%.

GDP has contracted for four straight quarters — the first time that has happened since the Commerce Department began tracking that measure in 1947. But the most recent quarterly decline is the smallest since the second quarter of 2008, giving hope to some economists that the recession is at or nearing an end.

President Obama sounded a note of caution, saying at a news conference Friday afternoon that the economy has not yet begun to recover, but the GDP numbers were "encouraging."

"We won’t have a recovery as long as we’re losing jobs, [but] you need to have economic growth before you have job growth," said Obama. "Today’s GDP is an encouraging sign that the economy is heading in the right direction. That means, eventually, businesses will start growing and will start hiring again free business card. But this won’t happen overnight."

Farewell recession? Lakshman Achuthan, managing director of the Economic Cycle Research Institute, said the GDP number was encouraging, and he expects the recession to come to an end this summer. While GDP is a trailing indicator, he said the change in direction suggests the worst is behind us.

"As we suspected, things got a lot less bad in terms of economic activity. It means we turned a corner earlier this year in terms of the severity of the recession," he said. "The free market correction is abating quickly."

Achuthan said the recession turned into "an abyss" last fall as the credit market froze. But trillions of dollars in government programs to ease credit have largely succeeded, which helped normal business cycle dynamics take over.

"The vicious cycle is become virtuous," he said. "Confidence is returning, pent-up demand is creating higher prices, and the economy is getting stronger."

ECRI’s leading indicators, which predict future economic conditions, have rocketed to a five-year high. Achuthan said that suggests we have reached the bottom, bringing about an end to the latest round of economic contractions. He also said data suggest there will be no double-dip recession, or an ‘L-shaped’ recovery, in which the economy revives but stagnates.

Still, the labor market remains distraught, and the economy will need to stop shedding jobs to begin a real rebound. Since the economy still faces real challenges, Achuthan thinks it will be a "small ‘v’ shaped recovery instead of a big ‘V.’"

The National Bureau of Economic Analysis, which declares the beginning and end of recessions, takes into consideration more factors than just GDP, including job growth. It also doesn’t typically doesn’t officially call the start or end until several months later. 

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