Recession to end in within 2 years - survey

Most independent advisors say the recession ought to be over in the next couple years, according to a new study.

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By Catherine Clifford, CNNMoney.com staff writer

Is President Obama right to say stocks may be a good long-term investment?
  • Yes, prices are low enough to buy
  • No, the market will be down for a long time

NEW YORK (CNNMoney.com) -- Independent financial advisors see a light - however dim - at the end of the current recession tunnel, according to a new survey.

In an online study conducted for Charles Schwab, 85% of advisors believe the downturn will end within the next two years. Fifteen percent see it going longer.

The financial advisors who completed the survey manage more than $300 billion of assets.

When will stocks rebound? While most of the respondents expect the recession to end by the end of 2010 at the latest, stock market portfolios may need a while longer to return to pre-Lehman Brothers collapse levels.

Only 4% of advisors expect to see their client portfolios recover by December of 2009 from the drop that started in September 2008, while another 18% of respondents expect to see portfolio losses recover by December 2010. Another 32% of respondents don't expect portfolios to bounce back until December 2011.

Where are advisors moving cash? With the Dow Jones Industrial Average and the S&P 500 Index at 12-year lows, the number of financial advisors who are looking to invest more capital in the perceived safe-haven of the fixed income asset class has more than doubled.

In January of 2009, 42% of advisors said they plan to invest more in fixed-income assets, up from 20% in July of 2008.

The percentage of financial advisors who plan to invest more in domestic stocks has increased in the past 6 months, while it has fallen for international equities.

In January 2009, 38% of financial advisors said they planned to invest more in stock of large U.S. companies, compared with only 30% in July of 2008.

Meanwhile, only 17% of financial advisors anticipated investing more in stock of large international companies in developed markets in January 2009, compared with 21% in July of 2008. And 14% of advisors plan to invest more in large international companies in emerging markets, compared with 20% in July 2008.

A move away from big brokerage houses. Independent financial advisors said that 45% of their new assets came from full-service brokerage houses.

Clients that left big brokerage houses for independent advisors cited a loss of trust in the previous firm and a desire for more personal advice as the most popular reasons to move to independents.

The Independent Advisor Outlook Study is an online study conducted for Charles Schwab by Koski Research. It surveyed 1,240 independent advisors from Jan. 20 through Jan. 30, 2009.

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