Corporate Scandals, Fear of War Top List of Market Woes, According to Schwab Survey of Independent Investment Advisors.

Business Editors

WASHINGTON--(BUSINESS WIRE)--Oct. 28, 2002

Recent Poll Reveals Short-Term Concerns,

Recommended Solutions, and Long-Term Optimism

The nation's independent investment advisors, who are key influencers of financial decisions made by affluent Americans, overwhelmingly cite corporate scandals, followed by fear of war, as principal causes of the current bear market, according to survey findings released today.

The survey conducted by Schwab Institutional, a division of Charles Schwab & Co., Inc. that provides custodial, operational and trading support for nearly 6,000 independent fee-based investment advisors and financial planners, queried 1,476 advisors for their opinions on current events and investor confidence. The result: the majority of financial counselors from large and small firms agree that corporate wrongdoing has had a significant impact on both stock market performance and participation in 2002.

Likewise, advisors believe that additional steps to prosecute criminal activity and implement corporate reforms are necessary ingredients to restoring investor confidence.

Key findings based on the 1,476 respondents who completed the survey are as follows:

-- Market Performance:

-- 82% of advisors rated "corporate scandals" as having the most impact on the stock market in 2002, followed by "disappointing corporate earnings" 70% and "fear of war" 55%.

-- 90% of advisors believe that terrorism and fear of war with Iraq have some (negative) impact on the stock market, with 55% reporting that these factors have a significant impact.

-- Investor Confidence:

-- 43% said market forces aren't strong enough to improve corporate management practices and investor confidence.

-- 82% of advisors agree that continued emphasis on criminal prosecution of corporate wrongdoers will improve investor confidence.

-- Government Intervention:

-- 71% of advisors reported that new government policies to date have had some impact on the market, although only 15% believe these policies have had significant impact thus far.

-- 55% of advisors agree that Congress' recently passed 'Corporate reform' legislation is helping to improve investor confidence.

-- 68% of advisors feel that the government must take additional steps to effectively separate research analysis and stock recommendations provided to individual investors.

-- Future Expectations:

-- 33% of advisors said their clients' expectations of the market's performance during the next six months are "uncertain" and 22% said they are "negative." However, 67% of advisors also reported that their clients expect the market will rebound in the next one to five years.

-- Advisors themselves also appear to be showing signs of optimism. 40% believe that US economic conditions are improving, and more than half, 57%, are advising their clients to buy cautiously.

"Independent advisors' outlook on the economy is extremely important because more and more investors are looking to them for help in achieving their goals," said Deborah D. McWhinney, President, Services for Investment Managers, Schwab Institutional. "Unlike industry analysts or even corporate CEOs, advisors are in a unique position to listen to and influence investor attitudes toward the market. As a result, they tend to be very accurate arbiters of investor confidence."

Collectively, independent advisors in the U.S. manage more than $1.5 trillion in assets.(a)

The survey was conducted online by Schwab Institutional, between October 14 and October 18, 2002. The number of advisors who completed the survey totaled 1,476.

The results were announced on the eve of the 12th Annual IMPACT Conference, an industry-leading symposium for registered investment advisors in Washington DC, October 27-30, 2002 at the Washington Convention Center (visit: www.impact.schwab.com).

About Schwab Institutional

Schwab Institutional is a leading provider of custodial, operational and trading support for independent fee-based investment advisors. The investment professionals it serves represent about 28% of Schwab's total customer assets and about 10% of Schwab's total customer accounts. Schwab Institutional is a division of Charles Schwab & Co., Inc. ("Schwab"), Member SIPC/NYSE. Schwab is a subsidiary of The Charles Schwab Corporation.

About Charles Schwab & Co., Inc.

The Charles Schwab Corporation (NYSE:SCH), through Charles Schwab & Co., Inc. (Member SIPC/NYSE), U.S. Trust Corporation, CyberTrader, Inc. (Member SIPC/NASD) and its other operating subsidiaries, is one of the nation's largest financial services firms serving 8.0 million active accounts with $761.4 billion in client assets through 428 domestic offices, 5 regional client telephone service centers and automated telephonic and online channels as of June 30, 2002. Charles Schwab & Co., Inc., U.S. Trust and CyberTrader Web sites can be reached at www.schwab.com, www.ustrust.com and www.cybertrader.com, respectively. Led by its customers, Schwab is creating a new model of full-service investing in which information flows freely, and investors make their own decisions with objective help and advice when they ask for it. (0002-03987)

(a) source: Cerulli Associates