Advisors: Scandals, War Talk Hurting Markets

October 28, 2002 ( - Corporate wrongdoers and talk of war in the Middle East are casting a pall over the investing public, according to a survey of independent investment advisors.

The majority of the advisors who participated in the poll by Schwab Institutional said the two factors dampened both stock market performance an investor participation in it during 2002. Financial advisors are considered extremely influential in affecting plan decisions by small retirement plan sponsors.

The advisors who responded to the Schwab poll also contended that ongoing efforts to prosecute the accused corporate wrongdoers and implement reforms are important to bringing back investor confidence.

Key findings include:

  • 40% believe that US economic conditions are improving, and more than half, 57%, say they are advising their clients to buy cautiously
  • 82% of advisors rated “corporate scandals” as having the most impact on the stock market in 2002, followed by “disappointing corporate earnings”, cited by 70% and “fear of war”, according to 55% of responses
  • More than two-thirds (68%_ of advisors feel that the government must take additional steps to effectively separate research analysis and stock recommendations provided to individual investors
  • 43% said market forces aren’t strong enough to improve corporate management practices and investor confidence
  • 55% of advisors agree that Congress’ recently passed corporate reform legislation is helping to improve investor confidence

The survey was conducted online between October 14 and October 18, 2002 and included 1,476 advisors.