High-net-worth investors aren't as bullish about the markets and the economy as independent advisors, according to two companion surveys released today from Charles Schwab Advisor Services. At the same time, high-net-worth investors are worried about their investing goals, and an estimated 59% of independent advisors also said they feel it will be difficult for those goals to be met.
Schwab's 11th semiannual Independent Advisor Outlook Study found that 45% of independent advisors have been bullish about the market in the past six months. But Schwab's first-time survey of 504 high-net-worth investors found that only 29% were bullish.
"It matters less whether clients are optimistic or pessimistic and more that they are realistic about the outcomes they are working towards," said Bernie Clark, executive vice president and head of Schwab Advisor Services.
Advisors, the study says, see more good news in broader economic trends over the next six months than investors do. Only 18% of advisors think unemployment will increase while an estimated 31% of high-net-worth investors think it will. Meanwhile, an estimated 27% of high-net-worth investors believe there will be a "double dip" recession while only 14% of advisors see it. And 60% of high-net-worth investors see inflation increasing, while only 44% of advisors do. In addition, advisors are twice as likely as wealthy investors to believe energy prices will go down.
The two groups are in sync, however, on expectations that consumer spending will increase (57% of both groups) and that consumer savings will increase (33% of advisors say it will while 30% of high-net-worth investors do).
Still, advisors are not as bullish as they once were. While 45% of independent advisors currently have a rosy outlook, up from 37% in the same study six months ago, that number has not regained its 56% level a year ago. An estimated 67% of advisors believe the S&P 500 will increase, up from 58% in the previous study but still below the 77% high a year ago.
According to 57% of the wealthy respondents queried, the largest barrier to their goals in this market is a low return on investments, while 37% cited market losses.
Independent advisors plan to invest more in equities in the next six months. Forty-one percent of advisors plan to invest more in domestic large cap, up from 32% six months ago, representing an all-time high for the study. Interest in domestic small cap is also up significantly, almost doubling over the past six months from 12% to 23% in the current study.
When asked about the investment vehicles they plan to invest more in during the next six months, 34% of independent advisors indicated that their interest in ETFs had increased, up from 26% six months ago. Meanwhile, investor interest in foreign currency has dropped to 4% from 8% during the period.
Both surveys were conducted by Koski Research (Detailed findings can be found at www.aboutschwab.com/press/research/advisor_research and www.aboutschwab.com/press/research/advisor_research.)