Independent Advisors Turn Optimistic and Gain Ground

9 out of 10 independent advisors added new clients in Q3 and intend to take more risk with their client’s assets.

According to the semi-annual Independent Advisor Outlook Study, independent RIAs plan to move client assets out of cash (48% of advisors) and into emerging market equities (37%) and small cap U.S. equities (31%).

Independent advisors are gaining new clients from full service brokerage firms (45%) and clients who previously managed their own portfolios (23%).  Clients leaving full service firms cite loss of trust as the number one reason (68%) for moving to an independent advisor.

Other highlights from the study:

Market Outlook: Advisors’ six-month outlook for S&P 500 is most optimistic in two years.

Economic Outlook: 4 in 10 RIAs expect current recession to end in less than 12 months.

Client Outlook: Almost half of new assets coming to RIAs left full-service firms.

Investment Outlook: Intent to invest more in U.S. small-cap equities at all-time high for RIAs.

ETFs remain the favorite investing vehicle for independent advisors with 83% currently using exchange traded funds and 39% planning to use more ETFs.

The average firm participating in the study has 10 employees and $235 million under management.  The typical firm has 300 clients with an average age of 60.

The study is conducted for Charles Schwab by Koski Research.  The sixth wave of the study was completed by 1,197 advisors employed by independent investment advisor firms whose assets are custodied at Schwab.  The study was conducted from July 28 to August 7, 2009 and has a 2.89% margin of error.

For more information on the study, see the Schwab website.