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Schwab Survey Shows Optimism Gap Between Advisors, HNW Clients

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Schwab Advisor Services has conducted a semiannual Independent Advisor Outlook Study 11 times now, but the most recent study, released Thursday, includes a new and interesting twist: measuring high-net-worth investors’ feelings about the economy and markets, and the role of advisors, in addition to plumbing RIAs’ opinions.

In the survey of 882 advisors who work with Schwab’s RIA custody unit, and a separate survey of 504 high-net-worth investors, there were some interesting disconnects. For instance, 45% of the advisors surveyed said they had bullish feelings about the markets over the next six months, while only 29% of the HNW investors felt that way. (The surveys were conducted by Koski Research from late January to early February; the HNW investors had investable assets of $1 million or more.) On inflation, while only 44% of advisors expected prices to increase within the next six months, 60% of the HNW expected a rise in inflation. Twenty-seven percent of the investors surveyed expected a double dip recession to hit the U.S. within that time period, almost twice that of the advisors surveyed (14%).

Bernie Clark of SchwabIn an interview on Thursday, Bernie Clark (right), head of Schwab Advisor Services, said one of his key takeaways from the surveys was that “optimism is returning” among advisors, as measured by their expectations of an increase in the S&P 500, though it had not yet reached the same level of optimism that was recorded in January 2011. At that time, 71% of advisors surveyed expected to see a rise in the S&P 500; a percentage that dipped to 58% in July 2011 but rose to 67% in the most recent survey.

And while Clark notes that high-net-worth investors are not as optimistic about the markets as their advisors, they “remain confident” in those advisors. His assertion was evident in another survey finding: only 32% of the high-net-worth investors thought it would be “difficult” for their advisors to achieve their investment goals in the current market, while 59% of advisors said it would be difficult.

Combining those findings with another—that the HNW used the word “knowledge” 71% of the time to describe the benefits of working with an advisor—Clark said while advisors realize that they may need to “work harder” to achieve their clients’ investment goals, “what clients want from their advisors is knowledge and advice.” He further noted that a much lower percentage, 49%, of investors considered ‘investment performance’ as a benefit of working with advisors. “The relationships” between advisor and client, Clark argued, “are maturing.”

Further, Clark asked rhetorically, “who would have thought that nine out of 10 times advisors would be talking to their clients about Greece and Spain and Ireland, when they’re not even investing there?”

He was referring to two other interesting findings: that 92% of advisors said they had talked to their clients about the European debt crisis in the past six months, while advisors saw little change in their plans to invest in international equities in developed countries in both the large- and small-cap variety.

On investing, 41% of advisors said they expected to invest more in large-cap equities over the ensuing six months (compared with 32% in July 2011) and 34% said they expected to invest more in ETFs (compared with 26% last July).

 There was one more bit of good news for advisors in the survey. When asked to rank which professionals they had the most trust in, 27% chose their advisor; “my doctor” was chosen by 53%.


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