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| News & Scoreboards |
Wary But Hopeful
01/01/2004
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Affluent Americans no longer place much credence in the advice they receive from Wall Street firms, according to a recent survey by U.S. Trust. But although we regard banks’ investment recommendations and advice as  tainted, we are nonetheless increasingly optimistic about our investment prospects, especially in light of the nearly year-long bull run in the stock markets.
U.S. Trust spoke with individuals with at least $5.9 million in net worth, comprising the wealthiest 1 percent of the nation’s families, in November 2003. The results were not good news for our banks and brokers; the survey revealed deep ambivalence toward the financial services industry overall.
Most of the respondents—83 percent—believed there is an inherent conflict of interest in a firm providing both investment-banking services to corporations and investment advice to individuals. This is a serious perception problem for financial conglomerates to overcome when pursuing our business. Another 79 percent question the reliability of corporate financial statements, and a like number no longer trust the stock recommendations of equity analysts in the wake of the scandals that revealed how they worked to obtain investment banking business, not to serve their ostensible clients, the investors.
Two-thirds of those surveyed no longer trust corporate management and more than 40 percent are wary of investing in public companies. Yet 31 percent believe the market is less risky now than it was a year ago. Slightly more than 40 percent said it was neither more nor less risky.
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