Wealthy U.S. investors avoiding stocks -survey

Wealthy U.S. investors are optimistic about the outlook for the stock market but worries about terrorism and other geopolitical factors have kept them from opening their wallets, according to a survey released on Tuesday,
The survey, sponsored by United States Trust Co., polled a sample considered among the wealthiest 1 percent of the population, based on adjusted gross income of more than $325,000 per year or a net worth greater than $5.9 million.
The respondents said they expect annualized stock market returns of 10 percent over the next three years and over the next 10 years. Their expectation over a one-year period was 8 percent.
But the optimism did not match the behavior of wealthy investors, said Paul Napoli, executive vice president and head of personal wealth management for U.S. Trust.
"They have taken a very defensive, very conservative posture," Napoli said in a telephone interview. The wealthy investors have about 40 percent of their portfolios in cash and bonds. About 33 percent is allocated to domestic equities. . . .
But the index's measurement of the U.S. economic outlook for the next 12 months fell dramatically from 40 in April to 15 in May -- the same level seen shortly after the 9/11 attacks. . . .
Questioned about their attitudes toward various financial advisers, only 19 percent rated stockbrokers or brokerage firms as very trustworthy. Insurance companies fared only a little better with 20 percentage rating them very trustworthy, and mutual fund companies were third from the bottom with 21 percent saying they were very trustworthy."