Sentiment toward Wall Street recovering-survey

Thu Nov 4, 2004

BOCA RATON, Fla., Nov 4 (Reuters) - Investor sentiment toward the U.S. securities industry is starting to recover after being rocked by the market downturn and a spate of scandals kicked off nearly three years ago with the downfall of Enron Corp., a leading securities industry trade group said.

More investors feel more positively toward the securities industry than in 2002 and 2003, according to the annual Securities Industry Association Investor Survey released on Thursday. Sixty-four percent of respondents expressed favorable opinions of the industry, up from 55 percent in 2002 and 2003.

But the industry has not fully recovered investor confidence, with ratings still lower than the period between 1997 and 2001, the survey found.

"Investors ... are encouraged by the industry's reforms but are guarded in their outlook about the potential benefits of reform," said SIA Chairman Richard Thornburgh in a press release. "We believe that the industry has made progress in addressing investor concerns, and we recognize that there is more to be done."

The majority of investors believe that recently adopted regulations will curb abuses in the securities industry, according to the survey, with 57 percent confident the regulations will reduce instances of wrongdoing, compared with 48 percent in 2003.

Forty-one percent of respondents were satisfied with the performance of their investments in 2004, up six percentage points from 2003.

But the survey found their expectations are higher than what long-term historical returns would suggest are realistic.

"The industry needs to continue its efforts to educate clients about what are realistic returns based on the degree of risk they are willing to assume," Thornburgh said.

According to the survey, nine out of 10 investors said they were "very" or "somewhat satisfied" with their investment professional. But fewer respondents said their advisers were doing an "excellent" or "good job" of teaching them "how to make better investment decisions."

As for the markets in 2005, investors' outlook is cautious, with almost half expecting an "average" year. Fewer expect a "good" or "very good" year, as uncertainties about the presidential election and the economy were affecting their investment decisions as the time the survey was taken in August.

The study was conducted by telephone between Aug. 2 and Sept. 7. The sample group consisted of investors 18 years or older with household incomes of $50,000 or more and investable assets of $100,000 or more, not including a home. Approximately 1,500 surveys were completed; the sampling error is plus or minus 2 percent.

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