One way to determine whether we’ve reached the end of a recession is to study consumer attitudes about money. Over the past year, I’ve blogged about how consumers are using less credit card debt. Another take on consumer attitude can be found in how people are investing. Q & A Research recently polled consumers on this topic and found reason for optimism. But there's also concern regarding the outlook for full service brokerage houses.
Almost half (41%) of people who invest money feel an economic recovery is at hand. Only 25% thought this was not the case. Warren Pino, President of Q & A Research says, “Recovery is not only tied to economic indicators, but is also dictated to some extent by what people believe or feel.” Simply put, the more people who feel optimistic and begin spending and investing, the more economic activity increases.
And consumers are once again allocating their investment portfolios to ‘near-normal’ levels. Typically, about 1/3rd of a portfolio is held in liquid investments which can be easily converted to cash. This includes CDs, savings, or money market accounts. Currently, most portfolios are loaded with about 36% in liquid investments.
Consumers are also turning to professionals for advice on how to invest. These days, discount brokerage houses are favored by investors. Since the Great Recession started, about 74% of consumers have maintained an unchanged opinion about these professionals. Only 13% of consumers view these businesses more negatively. On the other hand, full service brokerage houses have not fared as well. At least 30% of consumers have a more negative view of these businesses.
It’s easy to understand how consumers may be lumping full service brokerage houses into the same pool with big banks who got a bail-out at taxpayer expense. But as the economy recovers and investors look for help with where to place their money, full service brokerage firms could benefit by promoting themselves as ethical and responsible businesses.[Source: Survey Shows Investors Are More Optimistic About a Near-Term Economic Recovery, More Negative Toward
Full Service Brokerage Houses. QAR.com. December 2010. Web. 13 Dec. 2010; Benoit, David. Customers Opt In. Wall Street Journal. 26 Nov. 2010. Web. 13 Dec. 2010]