Investment Advisers Look Scared

Schwab's survey finds that 70 percent think it will be tough to meet clients' goals.

By + More

Updated on 3/5/08 at 5:30pm

Feeling a little overwhelmed by the market lately? You're in good company.

Charles Schwab asked more than 1,000 independent investment advisers about everything from the financial health of their clients to expectations for stocks and the economy.

The answers were a little depressing. A full 70 percent said it will be difficult to achieve their clients' investing goals in the current environment.

Forty-one percent expect the S&P 500 to drop in the next six months, though some cheered up after the Federal Reserve cut interest rates by three quarters of a point in late January.

Also, 51 percent said their clients have been hit by a loss in property values, and two thirds are worried about damage to their portfolios caused by the subprime crisis.

Other interesting bits:

• Eighty-one percent of advisers say it is very likely the housing market will continue to soften.

• More than twice as many advisers in the current study (78 percent) believe unemployment will increase in the next six months as did (35 percent) in a survey last July.

• A considerable percentage of those surveyed expect energy prices to decrease (42 percent, up from 24 percent in July) in the months to come.

• Sixty-two percent anticipate a rise in inflation in the next six months. That's up from 53 percent in July.

UPDATE: Schwab's PR team responds, taking issue with the use of the word "scared" in the headline:

"The headline used is wrong and misleading. We did not inquire about advisors' emotional state. We asked them how they would describe how easy or difficult they think it will be to achieve their clients' investment goals in the current market environment. And as you accurately captured in the body of your story, 70 percent said it would be somewhat difficult or difficult. To imply that this view means advisors are scared is not only wrong, it is irresponsible. If you look at the full study, you'll see that advisors are in fact quite confident: they say they expect to grow at roughly the same rate in 2008 as they did in 2007. These advisors are known to take a long-term view with their asset allocation strategies, and if anything, the calm state of their clients speaks to their state of mind. Just because many think the current market climate may make things somewhat more difficult does not mean they are "scared"—rather, they are merely paying attention. So go ahead and say they are less optimistic or more pessimistic—but to say they are scared is simply inaccurate and mischaracterizes both the industry and the study."