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By Nathan Peck | MiBiz
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KENTWOOD — The world of finance has been turned upside down over the last two years.

Government and corporate bonds, once the “sure thing” investment in retirement planning, have turned sour for investors, as investments in derivatives fueled the near economic collapse of 2008.

For John Kailunas II, president of Regal Financial Group LLC, the last 24 months have led to a number of sleepless nights. The independent financial services firm headquartered in Kentwood employs 120 brokers in 11 states and manages $1.4 billion dollars of assets.

Kailunas recently spoke with MiBiz about his concerns for the U.S. economy, investment opportunities and where investors are looking for value.

MiBiz: What is the latter part of 2010 looking like — where are you seeing value?

Kailunas: I don’t see a lot of movement in the economy or confidence coming back quickly. It is going to be slow, since 70 percent of our economy is based on consumer spending. There is pending regulation in almost every industry, and until some of these are sorted out in the legislature, it will be a relatively flat year.

People are weak-kneed from this latest crash. There is still a lack of confidence and certainty about where we are going. There are a lot of industries that are poised to grow. What we’re seeing right now is that people are feeling that there is not any really good place to put money that is secure. There is a flight to insurance companies and managed money, ETF and managed funds. We are pretty excited about that, as it has given our clients some direction.

MiBiz: How are investors responding?

Kailunas: Brokers need to take the emotion away from clients. If you are 10 years or more out from retirement there is no reason not to be in the market. For those closer to retirement — people are interested in annuities, which used to not be the case. We’re seeing a lot of flight to that, whereas 10 years ago it was very contrarian. The last 10 years, with the market uncertainty, we’re seeing that they want a lot more certainty. It used to be that when you got close to retirement, you would put everything into bonds and live off the revenue stream.

Look at some of the municipalities and corporate bonds — I grew up in Detroit where the GM corporate bond was gold. Imagine that today. The rules have changed. We are now taking a much more holistic approach — working with clients and separating their accounts into different components. We are seeing a push for greater diversification, not just a traditional diverse portfolio of bonds. Clients are looking to adjust and change the mix in their portfolio and are taking a much more liquid approach.

Clients today are much more informed than they were even a decade ago. Information is easy to come by; it is the interpretation and customer services where the broker brings value to the client. Anybody can get any information — but how do you interpret it? Investors have to get a pragmatic interpretation in order to remove the emotion from it.

MiBiz: What has you concerned looking ahead?

Kailunas: Legislation is going to be key. It may be the November elections before we see how this (regulation) will be ferreted out. With the rise of the conservative Tea Party movement, if they make some gains, we’ll see if they will peel back some of the out of control spending. Government is sending a mixed message (about job growth and increased regulation) that leads to business not having a lot of confidence.

I would love to see slow, consistent growth like the late 1980s, but the market shows a lot of weight around 10,000. Will we see fluctuations? Will we lose 5 and gain 7 percent? Will we see corrections? Yes, but I think the market is around 10,000 pretty solidly.

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• john kailunas
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• money marshalls
• regal financial group llc