Investor and Adviser Optimism on Rise

Study finds high-net-worth investors confident in advisers, who are also "bullish" about market.  

High-net-worth investors have confidence in their advisers’ ability to meet their investment goals in the current environment, according to two new companion surveys by Charles Schwab Advisor Services.

The Independent Advisor Outlook Study surveyed some 900 registered independent advisers (RIAs) representing $204 billion assets under management and found that 45% of them are bullish about the market in the next six months. Another first-time survey of 504 high-net-worth investors, however, found that only 29% are bullish about the market.

High-net-worth investors are confident in their advisers’ ability to meet their investing goals in the current market. One-third (32%) believe it will be difficult for advisers to do so, and 25% feel it will be easy.

Investors perceive barriers to achieving primary investment goals to lie within the broader investing environment, not the adviser specifically. The largest perceived barrier is a low return on investments in this market (57%), followed by market losses (37%). Almost three out of five (59%) independent advisers say they feel it will be difficult to meet their clients’ investment goals.

“It matters less whether clients are optimistic or pessimistic and more that they are realistic about the outcomes they are working towards. This is where advice really takes center stage—providing perspective and expertise within the context of an individual client’s long-term goals, which is what many RIAs do so well,” said Bernie Clark, executive vice president and head of Schwab Advisor Services.



Women Key Decision-Makers in Most Client Relationships

For the first time, theOutlook Study asked RIAs about the role of women in client relationships. According to surveyed advisers, women are part of decision-making around finances nearly 60% of the time, either as the primary or sole decision-maker (21%) or as part of a couple making decisions jointly (38%). Concerning meeting with individual members of a couple separately, 79% of advisers feel it is not important at all, 13% consider it somewhat important and 8% see it as extremely important.

More than half of advisers do not think it is important for their firm’s advisers to match the demographic profile of their clients, but more than one-third consider it somewhat important (31%) or extremely important (4%). Almost half of all advisers report that there are no female advisers working at their firms.


Close to one-third (31%) of high-net-worth investors think unemployment will increase, versus only 18% of advisers; 27% of these investors believe there will be another or a “double dip” recession, compared with 14% of advisers; and 60% of high-net-worth investors see inflation increasing versus only 44% of advisers. Advisers are twice as likely as high-net-worth investors to believe energy prices will go down, but the two groups are in sync on expectations for an increase in consumer spending and that consumer savings will increase.

While more independent advisers are bullish on the market than they were six months ago, they have not yet regained the bullish level of a year ago. More than two-thirds (67%) of advisers believe the S&P 500 will increase, up from 58% in the previous study, but still below the 77% high reached a year ago.



Forty-one percent of advisers plan to invest more in domestic large cap equities in the next six months versus 32% six months ago. Interest in domestic small cap equities also almost doubled over the past six months.

When asked about the investment vehicles they plan to invest in more in the next six months, independent advisers’ interest in exchange-traded funds increased (34% compared with 26% six months ago), while interest in foreign currency dropped to 4% from 8%. Independent advisers continue to see IT (48%) and energy (37%) as leading market sectors over the next six months. Twenty-seven percent of advisers said they expect financials to perform best in the next six months.

Demand for Advice Continues to Grow

Over one-third (37%) of high-net-worth investors say their desire for investment advice during the past four years increased. When asked what words first come to mind about working with a financial adviser, investors cited "knowledge" (71%), "advice" (59%), "investment performance" (49%), "trust" (48%) and "service" (47%).

High-net-worth investors say they are worried about headline-grabbing risks at home and abroad, such as Federal government deficits (58%), political gridlock (57%), the economic crisis in Europe (54%) and uncertainty about taxes (41%) and inflation (37%).

Nine in 10 independent advisers say they have discussed the economic crisis in Europe with their clients, and eight in 10 have discussed Federal government deficits. In the past six months, over a quarter of advisers' clients (27%) needed reassurance that they would meet their investment goals, up slightly (4%) from six months ago when this study was last conducted and also year-over-year. Advisers also note that evidence of a market recovery (35%) and an end to political gridlock (30%) would boost investor confidence.

Almost all advisers (93%) reported gaining new clients over the past year, with the biggest source being investors leaving full-service brokerage firms (39%). Other sources for new clients were DIY investors at 20%, banks at 10% and independent broker/dealers at 13%.

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