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Retail Investors Were Raring to Go in First Half: Schwab

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A new report from Charles Schwab finds the firm’s retail clients more confident in decision making and better off financially in the first half of this year than they were in 2015 and 2016. Many think it’s a good time to invest.

“Our retail clients are increasingly optimistic and have spent the first half of the year expanding their exposure to the market,” Charles Schwab’s head of investor services Terri Kallsen said in a statement.

“They have their eyes on Washington and express some concern about the possibility of a market correction, but despite those factors, investor confidence is at a three-year high.”

Thirty-three percent of retail clients surveyed said the Trump administration’s performance was their top concern, and 18% thought the market was overdue for a correction.

At the same time, the vast majority of respondents expressed at least some confidence that they would reach their financial goals, with 40% saying they were very or extremely confident.

The findings were based on an online internal survey conducted in June by Koski Research of 988 retail clients with at least $2,000 in statement equity.

Net Buyers

Schwab retail clients overall were net buyers during the first half, with a buy/sell ratio of 1.12. Millionaire clients had a ratio of 1.18, millennials 1.09 and active traders 1.04.

The survey found that retail investors’ outlook for the U.S. stock market was up in the second quarter, with 42% feeling bullish, compared with 33% during the same period last year.

Bearish sentiment declined from 39% in the 2016 second quarter to 35% a year later.

The average cash allocation among all clients in the first half fell to 19.8% from 21.1% at the end of 2016. Among investor types, millennials held more cash, 27% of their portfolios, than millionaires, with 16.6%, and active traders, with 18.2%.

Twenty percent of Schwab clients said they expected to move money to individual stocks over the next three months, while 30% said they would hold steady.

A majority of those surveyed said periodic advice from an advisor would give them the most confidence in reaching their financial goals.

Schwab reported that clients seeking planning and advice in the first half increased by 9% year over year, to some 73,000 conversations, while the number of Schwab retail advisory accounts rose by 15% year over year.

— Check out Are Stocks Overvalued or Poised for More Gains? on ThinkAdvisor.