You've got a dirty little secret. During long lunch breaks, or after work when everyone else heads home to their families, you're sneaking out to a secret rendezvous. You know what you're doing is perfectly justified, but you still feel a little bad afterwards. You never thought it would come to this. But here you are -- cheating on your financial planner.

Thomas Keating knows that feeling. The 48-year-old lumber broker in Wareham, Mass. -- which he lovingly calls the "armpit" of Cape Cod -- had been with his previous adviser for about six years, faithfully following his buy-and-hold philosophy. But when his IRA started to "dive bomb" a couple of years ago and his adviser wanted to stay the course, Keating and his wife started soliciting a little advice on the side. "My adviser was a friend, a good guy, and those are awfully hard phone calls to make," says Keating, who has been slowly moving his business to Rajeev Kotyan at the Lexington (Mass.) office of NUA Advisors. "But we just had to stop the bleeding. It's almost like you're breaking up: 'You take the dog, I'll take the silverware.' " The new relationship is going well, and he's happy with changes they've made, such as adding a real estate investment to his self-directed IRA.

Keating is hardly alone. Shaken to the core by a market gone wild and scrutinizing performance and fees like they never had to do in a raging bull market, investors are more open than ever to getting a financial second opinion. A recent survey by consulting firm Oliver Wyman found that the number of affluent investors looking to switch advisers has tripled in one year. According to Spectrem Group, a scant 36% of millionaires think their advisers performed well during the market turmoil of the past year or so.

It's a recipe for relationship trouble. But switching advisers isn't as easy as, say, ditching your cell-phone provider. The ties are often decades in the making. "Money is such an emotional subject, and these planners have helped build their (clients') retirement or children's college funds," says Szifra Birke, a consultant in Chelmsford, Mass., who helps financial advisers develop rapport with their clients. "So investors feel like they're betraying their planners and don't even have the courage or the words to have a conversation about it."

A Delicate Approach

Getting a second opinion can cause gut- churning guilt. But just as a good doctor should respect your seeking a second opinion, so should planners. If they've put you in the right investments -- appropriate for your risk tolerance and goals, with reasonable fees -- then they have nothing to fear. [Except, of course, your understandable angst as one of the multitudes of investors traumatized by market turmoil.]

It's natural for an adviser to be taken aback, though, so bring up the subject with delicacy. Advises Birke: "An ideal conversation might sound something like, 'I'm really nervous, I don't seem to be able to relax, and all I can think to do is to get a second opinion. In a medical situation, even if I liked and trusted my doctor, I'd simply want to get more information. And this is as big to me as a medical situation.' "

But then you have to find the right second opinion and avoid sharks whose only goal is to steal your business rather than to give an unbiased review of your portfolio. If that's their objective, they're likely to point out a host of faults with your adviser that may or may not be there. They may also game their performance numbers by claiming what outstanding investments they would have put you into (with the benefit of 20/20 hindsight, of course).

"If you fire Fred and hire George, who's to say that George isn't even worse than Fred?" asks Jack Waymire, co-founder of the Paladin Registry, which matches investors with advisers in their communities. "They might just be trying to win your business, so there's a natural bias there. And if you ask for a sample portfolio, they're never going to show you a bad one. So you'll never really know what they've produced for an average client."

That said, there are some ways to protect yourself. Get an agreement up front, in writing, that the second adviser will evaluate your portfolio for a straight fee with no commitment to hiring him. "If they're willing to do that, your odds of getting good information have just gone up," says Waymire. And if your reviewer is highly critical of your portfolio, ask what they would have put you in instead, and why. Again, they have the benefit of hindsight, but the point is to see if their reasoning highlights issues that your adviser may not have fully considered.

Once armed with this new portfolio review, go back to your planner and use it as a jumping-off point for a forthright conversation. If you're not satisfied with the answers, it could be time to cut the cord. Try to keep emotions out of it, no matter how much of a buddy your planner is. "If I take you out to lunch, send you birthday cards, take you golfing, you're more likely to be tolerant of bad results," says Waymire. "You'll accept those results longer, because you want to preserve that relationship. Advisers figured that out a long time ago."

A Relationship Worth Saving?

Don't be knee-jerk in blaming recent performance on your original planner, though. If you wanted to be in the market no matter what your adviser said and the market went down, that's on you. And just as you would with a marriage, work hard on the relationship before calling it quits. Your planner may have no idea something is amiss: According to one joint study by the Wharton School of Business and State Street Global Advisors, 65% of planners think their clients are very or extremely satisfied, while only 31% of clients actually are. So give them a chance to alleviate your concerns, or tweak holdings based on a changing risk tolerance. "You don't want to burn bridges, because you may very well end up wanting to keep [your adviser]," says Birke.

That's what happened with Lexington (Mass.) wealth manager Michael Tucci. A couple he advised, a pair of social workers, wanted a second opinion on how to handle a multimillion-dollar portfolio (they have inherited wealth) after they got slammed in the market downturn. So Tucci took the initiative and set them up with another adviser for a fresh look. They also consulted advisers they'd located on their own.

What they found: The grass was not necessarily greener, because returns would have been comparable. "They went out and looked at a number of other firms," Tucci says. "But ultimately they said, 'We know these guys, they've done a reasonable job, the service is good, and the numbers are in line -- so let's stay after all.' "

ZURICH/BASEL (Reuters) –
Investors welcomed UBS plans to raise 3.8 billion Swiss francs ($3.5 billion) of new capital but said the bank will not turn the corner until it stems client withdrawals and settles U.S. legal problems.

UBS, the world's largest wealth manager and one of the hardest-hit major banks in the crisis, said late on Thursday it was to place 293.3 million new shares at 13 francs a share with a few big institutional investors.

It also said it expected to post a second-quarter loss due to debt and restructuring charges although its operating results, helped by improved investment banking conditions and lower losses and writedowns, should be better.

The Swiss National Bank and banking regulator FINMA have indicated they want UBS to strengthen its capital base before the government withdraws a 6 billion Swiss francs ($5.5 billion) investment made in October to bail out the bank.

"We welcome that the bank has strengthened its capital base," FINMA head Eugen Haltiner told Reuters on Friday on the sidelines of a banking event in Basel. "We can call the bank well capitalized ... The bank is now prepared to weather an unexpectedly difficult economic scenario."

UBS stock extended Thursday's 6 percent loss to fall a further 4.7 percent to 13.31 francs by 7:41 a.m. EDT (1141 GMT), while shares in rival Credit Suisse were up 4.3 percent at 48.40 francs and the DJ Stoxx European banking sector index gained 0.7 percent.

Analysts said UBS had to boost its capital base due to pressure from FINMA, which is imposing tougher standards than the international minimum, demanding a Tier 1 capital adequacy ratio of at least 12 percent of risk-weighted assets by 2013.

"We welcome the strengthening of UBS's rather thin capital base but we don't like the resulting dilution for existing shareholders," said Sarasin analyst Rainer Skierka.

"The second-quarter results indications do not surprise but show that UBS is not out of the woods yet."

UBS said the share placing -- a dilution of about 10 percent -- would help increase its Tier 1 ratio to a proforma 11.9 percent from 10.5 percent on March 31 although the quarter's figure should be higher due to continuing cuts in risk-weighted assets.

Credit Suisse said in April it has a Tier 1 ratio of 14.1 percent, making it one of Europe's best capitalized banks.

NEGATIVE NEWS CONTINUES

UBS also said on Thursday it had seen net client outflows in its three wealth and asset management units so far this quarter.

A string of negative headlines about UBS in the past year has prompted big client withdrawals, particularly over a U.S. case seeking the names of 52,000 Americans suspected of using the bank to hide nearly $15 billion in assets from the taxman.

The U.S. Justice Department denied earlier this week it was planning to drop the case and said it would file a brief seeking an enforcement of the summons on June 30 although it was still willing to consider a settlement.

Merrill Lynch analyst Derek de Vries said that to turn positive on UBS he wanted to see net new money inflows, a disposal of the Swiss government stake, a resolution of the U.S. tax case and a clearer communication of strategy by management.

"The decision to raise 3.8 billion francs in the market doesn't change our investment thesis as we continue to worry about a number of issues at the bank," he said.

Switzerland said earlier this month it was in talks over its investment in UBS with various parties but had not yet decided to convert its mandatory convertible notes -- that would give it a 9.3 percent stake in the bank -- or sell them.

To support the capital raising, the government said it had agreed not to sell any UBS shares before August 4 -- when second-quarter results are due -- without UBS's consent.

SNB Vice-Chairman Philipp Hildebrand said last week a sale of the government stake could be a positive signal but everything had to be done to improve UBS's resilience first.

"It's certainly something the national bank welcomes," SNB spokesman Werner Abegg said on Friday. "UBS's resilience has been improved in times when the economic situation could make things difficult."

(Additional reporting by Rupert Pretterklieber; Writing by Sam Cage and Emma Thomasson; Editing by Greg Mahlich, Dan Lalor)

($1=1.099 Swiss francs)

NEW YORK (Reuters) –
KB Home (KBH.N), the No. 5 U.S. homebuilder, posted a wider-than-expected quarterly loss on Friday, but said it saw signs that negative trends in the housing market were moderating.

"Although key economic indicators remain mixed, we are beginning to see signs that some negative housing market trends may be moderating at both the local and national levels," Chief Executive Jeffrey Mezger said in a statement.

The company's quarterly net loss narrowed to $78.4 million, or $1.03 per share, in the second quarter ended on May 31, compared with $255.9 million, or $3.30 per share, a year earlier.

Analysts on average expected a loss of 72 cents per share, according to Reuters Estimates.

Revenue fell 40 percent to $384.5 million, compared with Wall Street forecasts of $337.6 million.

The company said mortgage rates remained low, and consumer confidence appeared to be returning. But it noted that tight lending standards and job market weakness might constrain demand for homes.

(Reporting by Nick Zieminski; Editing by Lisa Von Ahn)