In the wake of last fall's financial crisis, mass-affluent investors are more out of step with the financial services industry than they have ever been. That was the message Spectrem Group's president George Walper gave to top marketing and strategic planning executives at the first Innovation and Growth in a Post Economic Crisis Era Forum in Boston on October 21.

No fewer than 90% of investors surveyed by Spectrem say that "the last 18 months have been the biggest setback of their lifetimes," Walper said. The level of anger among investors was "something we'd never seen before." Wall Street and Washington would appear to be the primary targets of the anger, he added.

While the psychological changes caused by the crisis are not as deep as the scars the Great Depression left in a previous generation, some changes could be permanent. "The panic has subsided and this means people have adjusted their living standards," Walper continued.

Investors' attitudes and behavior are unlikely to return to their pre-crisis disposition. "Young investors are more concerned with protecting principal and are increasing their savings," Walper continued.

All investors want to be "more involved than ever." In fact, between 2008 and 2009, the percentage of mass affluent that say they want to be more involved in "day-to-day management of my investments" jumped from 42% to 67%. When asked whether investment management is something they enjoy and don't want to give up, the number climbed more modestly from 43% to 53%.

Nonetheless, there are some striking contradictions in the way investors are reacting. Some providers of defined contribution plans reacted to the crisis by enhancing the online tools they offer 401(k) plan participants.

"Folks don't use them," Walper noted. Plan participants say they want more advice about their 401(k) investments, but they don't seem to turn to their provider, perhaps indicating that they want more personalized advice.

Still, contributions to 401(k) plans have remained surprisingly constant, even though many companies have curtailed their matching contributions. And while other monies fled the equity markets for money market funds, defined contribution plans' asset allocation levels haven't changed that dramatically.

By some measures, advisor satisfaction is lower than it has ever been, Walper said, adding that part of the reason is that client expectations are higher than ever. "But people aren't changing advisors-yet," he acknowledged. "It will take folks many years to decide what to do."

It may also take them years for their portfolios to get back to even. Between 2007 and the end of 2008, the number of mass affluent households with more than $100,000 in investable assets fell from 34 million to 24.5 million, according to research compiled by Spectrem. Among those with over $500,000 of net worth, which Spectrem defines as affluent, the number fell from 15.7 million to 11.3 million. And among those with more than $1 million in investable assets, it dropped from 5.98 million to 4.4 million.

The remarkably strong stock market rebound may have caused some improvement in those numbers, but it hasn't been accompanied by a similar change in attitude. When the mass affluent are asked when they will decide the recession is over, 70% say the signal will be a drop in unemployment rates. Only 30% think it will be a rise in stock market averages.

A prolonged economic downturn remains the mass affluent's top fear, with 82% citing it as a financial concern. Next on the list is maintaining their current financial position and having enough money set aside for retirement, mentioned by 74% and 71% of those surveyed, respectively. Fully 49% fear that they or their spouse could lose their job.

Baby boomers are the most challenged investor segment, and 42% of mass affluent individuals aged 51 to 64 years old say they are delaying their retirements. But almost half of all mass affluent investors say they are saving more, a trend that is particularly pronounced among younger investors under 50 years old, of whom 59% say they are saving more.

Protection of principal is a goal that now encompasses almost two-thirds of all the mass affluent people surveyed, or 64%. Remarkably, as many as 54% of the under-50 age group now feel it is important, while 58% of over-50 investors want guaranteed returns on their retirement investments.

What about advisors? Of the 69% of investors in the Spectrem survey who use advisors, only 61% currently are satisfied with who they use. Responsiveness, or the lack of it, tops the list of complaints about advisors.

Clients who are professionals can be particularly demanding. "Doctors and lawyers expect a response within three hours, even on Sunday-or especially on Sunday, and they'll use e-mail," Walper observed.

There was one notable bright spot of sorts for advisors. Fewer than 30% of all investors surveyed by Spectrem think their fees are too high. In fact, the average amount that respondents thought they were paying in fees was 3.1%, and investors under 50 thought they were paying 3.7%.

When asked what fee structure their advisor should use, 50% said their current arrangement was fair, while 23% wanted performance-based fees. And 28% said their advisor should not charge any fee unless the account was growing.

Investors' attitude toward new financial products was mixed. About 56% of respondents saw a need for new products, while 44% did not. Asked to rate what attributes they considered important in new product development, more than 90% cited performance, security, safety and ease of understanding as features they'd like to see.