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Mood swings

Our survey says…if the latest research into consumer confidence in financial services is to be believed, then possibly not even Les Dennis could put a brave face on it.

The results from Zalpha&#39s latest mood survey, carried out monthly on a sample of 1,000 people, prove that stockmarket confidence varies not only by region and gender but even by daily newspaper and that although the majority of people would still seek financial advice from an IFA, they are sticking to buying products from banks and building societies.

The overall picture for August is of a wobbly consumer with diminishing confidence in the future who anticipates increases in inflation and interest rates. But the figures show improvement on July, with slightly more confidence in future income and the stockmarket after a series of sensational corporate crashes in June and July.

According to the Mori-style poll, people in Greater London are the most pessimistic about the markets closely followed by those in the North-west.

People in the South-east are most likely to believe that the market will recover. This “confident” group is not only better informed – reading more newspapers and using the internet for research – but has more investments, so it is wat-ching for dips in the markets.

The survey breaks down the stockmarket-confident group&#39s responses, showing that 36 per cent hold shares and 27 per cent have a Tessa/ Pep. It also shows that there are significantly more of these people reading the middle-market papers on a regular basis.

But it looks like IFAs still have their work cut out bec-ause, although this group believes the market will improve, the majority still have most of their money in cash, with only 18 per cent willing to invest, with around nine out of 10 saying they would prefer to keep their assets in cash, not equities.

Thirty-four per cent will seek financial advice from an IFA but most will buy products from banks and building societies. The market-confident group is only slightly more likely to stick with the IFA who originally advised them.

The other most popular sources of information are still friends, family and newspapers and magazines. A bigger proportion of the confident group were also using the internet as a source of information about financial purchases and for buying online. This group was most likely to respond to personalised mail from companies it knew.

Over six months, the results have shown that women are consistently far less likely to venture an opinion on the economy – or far more likely to admit their ignorance – than men. More than 60 per cent of those who believe the markets will rise are male.

The stockmarket-confident group is more likely to be homeowners than council tenants and those who also think house prices will go higher.

The survey shows there is still a significant North/South divide over house prices. Homeowners in the North think the value of their properties will continue to rise while confidence in house prices is sinking rapidly in the Midlands, Wales and the South, most notably in London.

Over the last six months, those who expressed a strong opinion on the stockmarket have stuck to their guns but the don&#39t knows have proved to be easily swayed in either direction.

During the Enron and Worldcom crises in June and July, confidence in the markets plummeted as scandal after scandal emerged. This can be read as an indication that investors are influenced by the level of news coverage that items are given.

There are two schools of thought over how war with Iraq will affect market confidence – the optimists and the pessimists. The markets did well during the Gulf War as a result of fluctuations in oil prices but if investors are so easily influenced by negative newspaper coverage, confidence could go either way.

Zalpha partner Stephen Abbott believes that the questions gauge the market mood very carefully – consumer feelings about their future income prospects, levels of the stockmarket, interest rates, inflation and house prices.

He also feels that although IFAs meet clients daily, they often miss the bigger picture and the research should be used to build a profile of consumers who already have confidence in the market and those that are more likely to invest.

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