Confidence in Achieving Client Investment Goals on the Rise; Enthusiasm
About Energy Sector and ETFs Abounds
SAN FRANCISCO, Aug. 27 /PRNewswire-FirstCall/ -- Advisors are less
optimistic about the economic and political landscape in the U.S.,
according to the latest study of independent investment advisors by Schwab
Institutional. One-third (33%) of advisors do not expect the S&P to rise
during the next six months, up 11 points from the 22 percent of advisors
who held this view in January. Likewise, 66 percent say the nation will be
more divided in the next six months, up 13 points from the 53 percent of
advisors who expressed this concern in January.
Schwab Institutional is a leading provider of custodial, operational
and trading support for more than 5,000 independent investment advisors.
The semi-annual Independent Advisor Outlook Study measures the views of
independent Registered Investment Advisors (RIAs) on a variety of topics.
Nearly 1,100 independent investment advisors with $235 billion in total
assets under management participated in this study in late July.
Other economic findings:
-- 80 percent (up from 71% in January) feel that the housing market will
continue to soften in the next six months
-- 57 percent (up from 40% in January) say it's unlikely that energy
prices will go down
-- 53 percent (up from 45% in January) say inflation will increase in the
next six months
-- 37 percent (up from 29% in January) say it's unlikely that consumer
spending will increase
Although advisors expressed less enthusiasm for the U.S. economy
overall, more advisors say it will be easy to achieve their clients' goals
-- 29 percent versus 21 percent in January -- during the next six months.
"Independent advisors tend to take a long-term view, which may explain
why their confidence is on the rise during this time of market
uncertainty," said Charles Goldman, executive vice president of Schwab
Institutional. Goldman also noted that fewer clients of advisors needed
reassurance during the past six months -- 12 percent versus 15 percent in
January.
Advisors embrace energy sector and ETFs
Advisors see opportunities in a number of market sectors and investment
products. Forty-four percent of advisors name energy as the top performing
sector for the next six months, a leap from its #5 spot in January. At 34
percent, information technology (ranked #2 in January and July) and
healthcare at 33 percent (#1 in January and now at #3) round out advisors'
top sector picks. Financials, the #3 sector pick in January at 34 percent,
fell to #7, with just 17 percent of advisors citing it as a future top
performing sector.
On the product side, ETFs are the investment vehicle of choice, with 78
percent of independent advisors using them today. Of these advisors, 32
percent say they'll allocate more to these vehicles over the next six
months. Only 19 percent of advisors indicated that they will not begin to
invest in ETFs in the near future.
Advisors' fondness for ETFs stands in stark contrast to their
ambivalence about alternative vehicles such as private equity and hedge
funds. Only 32 percent of advisors currently invest in private equity
deals; of these advisors, only seven percent plan to invest more over the
next six months. Sixty-five percent of advisors have no plans to step into
the private equity arena with investor assets in the near future.
Similarly, only 31 percent of advisors currently invest in hedge funds,
with eight percent planning to invest more in the next six months.
Sixty-six percent of advisors say they have no plans to invest their
clients' assets in hedge funds.
"Even subtle shifts in advisors' investment perspectives are
interesting to watch," remarked Goldman. He pointed out that advisors
aren't of one mind, noting that while 16 percent of advisors say they'll
increase their cash holding in the next six months (up from 11% in
January), the same number (16%) say they want more exposure to mutual funds
with hedging strategies.
About Schwab Institutional
Schwab Institutional is a leading provider of custodial, operational
and trading support for independent investment advisors. Since 1987, Schwab
Institutional has supported independent investment advisors by offering
support and services to help grow their businesses and help their clients
reach their financial goals. As of June 30, 2007, client assets custodied
with Schwab Institutional stood at $556 billion. These assets, managed by
the approximately 5,000 independent advisor firms Schwab Institutional
currently serves, represent approximately one-third of total client assets
custodied with The Charles Schwab Corporation. Brokerage products offered
by Schwab Institutional are not FDIC insured, are not guaranteed deposits,
and are subject to investment risk, including the possible loss of
principle invested. Schwab Institutional is a division of Charles Schwab &
Co., Inc.
The Independent Advisor Outlook Study, conducted for Schwab
Institutional by Koski Research in July 2007, has a 3.09% margin of error.
Koski Research is not affiliated with or employed by Charles Schwab & Co.
Inc.
About Charles Schwab
The Charles Schwab Corporation (Nasdaq: SCHW) is a leading provider of
financial services, with more than 300 offices and 6.9 million client
brokerage accounts, 1,169,000 corporate retirement plan participants,
187,000 banking accounts, and $1.4 trillion in client assets. Through its
operating subsidiaries, the company provides a full range of securities
brokerage, banking, money management and financial advisory services to
individual investors and independent investment advisors. Its broker-dealer
subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org),
and affiliates offer a complete range of investment services and products
including an extensive selection of mutual funds; financial planning and
investment advice; retirement plan and equity compensation plan services;
referrals to independent fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based investment
advisors through its Schwab Institutional division. The Charles Schwab
Bank, N.A. (member FDIC) provides banking and mortgage services and
products. CyberTrader(R), Inc. (member SIPC, http://www.sipc.org) is an
electronic trading technology and brokerage firm providing services to
highly active, online traders. More information is available at
http://www.schwab.com. (0807-1199)
Important disclosures:
Please call the Schwab Institutional Mutual Fund Trading Desk at
1-800-757-9847 to order a prospectus. You should carefully consider the
investment objectives, risks, charges and expenses carefully before
investing. The prospectus contains this and other information. The
prospectus should be read carefully before investing.
Exchange traded funds are subject to risks similar to those of stocks.
Investment returns will fluctuate and are subject to market volatility, so
that an investor's shares, when redeemed or sold, may be worth more or less
than their original cost. Alternative investments, such as private equity
and hedge funds incur special risks and may not be suitable for all
investors. Sector funds focus its investments on companies involved in the
specific sectors, which may involve a greater degree of risk than
investments with greater diversification.
The Standard and Poor's 500 Index is a broad-based measurement of
changes in stock market conditions based on the average performance of 500
widely held common stocks. The index tracks industrial, transportation,
financial and utility stocks; it is a large cap index. The composition of
the 500 stocks is flexible and the number of issues in each sector varies
over time.
The views indicated are for general information purposes only and are
not intended to provide specific financial, accounting, tax or legal
advice. Schwab makes no representation about the accuracy of the
information or its appropriateness for any given situation. The advisor and
investor should consult with counsel to determine whether a particular
investment is permissible or suitable for an investor.
SOURCE Charles Schwab
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Related links:
http://www.schwab.com
http://www.sipc.org
CONTACT:
Alison Wertheim of Charles Schwab,
+1-415-636-5812, alison.wertheim@schwab.com
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