Despite an increase in investor and retirement optmism overall, advisors are facing a growing challenge convincing clients that stocks are a winning strategy for long-term planning.

Nearly a third of investors say they “consciously avoid stocks in long-term investment accounts," according to the third quarter Investor and Retirement Optimism Index from Wells Fargo and Gallup released Wednesday. The sentiment is most prevalent among investors with less than $100,000 in assets at 42%, compared to just 20% of those above that level wealth level.

"The rewards are not enough to justify the risks for a lot of people," says Karen Wimbish, director of retail retirement at Wells Fargo. "People are still investing in equities, but they aren't doing it very comfortably."

Wimbish says when advisors deal with clients reluctant to invest in stocks, more conservative options may need to be considered. She adds that advisors also need to educate clients more about the impact of going with less equity exposure versus fixed income.

"If people are this nervous about the market the most aggressive return is probably not what they are looking for," says Wimbish, who adds that this was the first year the index gauged investor sentiment on stocks. "Advisors need to be very transparent with their clients on where money is going and why it is where it is."


The Wells Fargo/Gallup Investor and Retirement Optimism Index jumped 17 points from the second quarter to +46 and reached its highest level since December 2007. However, the index remains below the pre-2008 recession 12-year average of just under +100. Nearly half of the 1,011 investors with $10,000 or more in investable assets polled Aug. 15-24 indicated they are still feeling the effects of the recession with 19% saying it is impacting them "a lot."

"Advisors need to understand the trauma that the Great Recession has caused many Americans in general," says Wimbish. "Advisors should be cognizant that many people aren't over it."

Some other notable numbers from the new index are:

  • Sixty one percent of non-retirees with $100,000 or more in assets say they do not foresee a time when their income will be "significantly" higher than it is today.
  • Forty six percent of investors are "very" or "somewhat" worried about outliving their savings.
  • Thirty seven percent of investors are saving and investing more money in recent months than they did prior to the recession.

The Wells Fargo/Gallup index peaked at 178 in January 2000 at the height of the dot-com boom. Its low mark was -64 in February 2009.
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