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Retail investors remain focused on long-term goals, says Schwab


More than three in five investors believe a market correction will occur in the next nine months, but nearly half think now is a good time to invest in equities, and 70 per cent say they are engaged in managing their money.

The latest findings on client sentiment by Charles Schwab, one of the country's largest investment services firms with more than USD2.08 trillion in client assets, reflect continued engagement in the stock market and a sense that investors remain focused on the importance of long-term investing.

"While our clients understand that short-term market swings and political drama may cause discomfort in the short-term, these events are not catalysts for knee-jerk reactions when it comes to their portfolios" says Rodney Prezeau, senior vice president of client experience, Charles Schwab & Co. "Many of our clients prefer to keep one hand on the wheel when it comes to their finances, so we're having more conversations with clients and that appears to be boosting their confidence levels. In fact, our survey showed that 70 per cent feel most confident when they have ongoing or periodic advice from an advisor, rather than flying solo or completely delegating their financial decisions."

Schwab's Q3 Investor Sentiment Survey, which polled more than 1,000 retail clients between 6 September and 18 September, 2013, showed only 15 per cent shifted their investing philosophy from the prior quarter.

"The government shutdown has certainly led to some frustration for clients, but fortunately, most recognise how important it is to not overreact to daily headlines. That's not to say clients aren't carefully adjusting their strategies, we are working with them in a variety of ways to fine-tune their portfolios and keep them on track" says Prezeau.

According to the survey, clients took the following actions with their portfolios during the past three months:

– 26 per cent rebalanced their portfolios, two per cent less than in Q2
– 17 per cent moved money into cash, a one per cent drop from Q2
– Nine per cent moved money into fixed income, the same number as the prior quarter
– Seven per cent moved to the sidelines, compared with nine per cent in Q2
– Four per cent moved into gold and other commodities, two per cent more than in Q2

In addition, 40 per cent of clients indicated that their investing strategies are not influenced by factors such as stock market performance, the interest rate environment and other short-term economic metrics, reinforcing the notion that investors are increasingly focused on positioning themselves to reach long-term financial goals over short-term gains.

According to Prezeau, Schwab's advice and planning capabilities have evolved and grown to help clients meet their long term financial goals. Schwab's suite of advisory programs, with USD145 billion in total assets under management, provides clients with ongoing investment guidance and portfolio solutions. Year-to-date, Schwab has delivered financial plans to nearly 75,000 clients, and the firm's 1,200 financial consultants in more than 300 branches across the US work one-on-one with clients every day.

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