Financial advisors aren't an optimistic lot these days, according to Schwab Institutional's semi-annual survey of independent registered investment advisors. The survey, conducted in the second half of January, found that 41% of respondents believe the S&P index will drop in the next six months versus 18% who felt that way in July 2007.

Nearly four-fifths of surveyed advisors (78%) believe that unemployment will rise in the next six months, which is more than double the July reading. In addition, 81% think that the housing market will worsen.

Elsewhere, 62% expect inflation to rise in the next six months (up from 53% in July). But not all is gloomy: 42% think that energy prices will decrease in the next six months, which is almost double the number from July's survey.

Among other Schwab study findings:

·        26% of advisors say their clients postponed selling a home and 23% discussed postponing retirement; while 51% say their clients have experienced real property loss in the last 12 months and 67% of advisors say their clients are concerned about the impact of the sub-prime mortgage issue on their portfolios.

·        Large cap stocks from both the U.S. and developed international markets remain the preferred equity investments among advisors.

·        51% of advisors say their clients have asked for more conservative investments in the past year.

·        82% of advisors say they currently invest in ETFs, and 36 percent plan to increase their investments in ETFs during the next six months.

·        Hong Kong is the top pick for developed international market during the next six months, with Singapore second (32%) and Japan and Australia tied for third at 23%.

·        Among emerging markets, advisors expect the top four markets to be China and India (tied at 36%), Brazil (33%), and making its first appearance since the study began, Russia (23%).

More than 1,000 independent investment advisors with $231 billion in total assets under management participated from January 17-28, 2008.