Expect Americans to continue to be frugal, save their money and pay down their debt, say independent investment advisors surveyed in the latest of Charles Schwab’s biannual studies.

Thirty-two percent of the 1,144 advisors surveyed in January cited “frugal spending habits” as the new consumer behavior that will have the greatest staying power, followed by a “focus on saving money” (26 per cent).

In fact, 59 per cent of the advisors surveyed expect consumer savings to increase during the next six months.  Nearly two-thirds of advisors say that their own clients have been more focused on paying off debt in the current market environment. 

But advisors are also seeing less client anxiety about investing, and they also report getting more new clients.

Advisors reported that while half of their clients needed reassurance in January 2009, only 31 per cent required handholding a year later.

Even more encouraging for advisors, the study also found that consumers are continuing to turn to independent RIAs. More than 90 per cent of advisors report that they won new clients in the last six months and that 46 percent of these new clients were previously served by full-service wirehouse advisors.

“That is a critical trend we continue to see,” Bernie Clark, senior vice president and head of Charles Schwab Advisor Services, said at a press conference in New York.

Two-thirds of the advisors surveyed said they felt they won new business because clients had lost trust in their previous firm.  Almost 60 percent said new clients wanted more personal advice.

Eight out of ten advisors also felt their independent status and their role as a fiduciary helped them win business from wirehouses.

But advisors shouldn’t take their new business and renewed investor confidence for granted, Mr Clarke warned. “Clients want more education,” he said.

Indeed, advisors reported that nearly 40 per cent of clients recently expressed interest in education on investments and finances. Fifty-six per cent expressed interest in financial planning, and 38 per cent expressed interest in tax planning and accounting.

Following a trend first seen in the July 2009 survey, advisors are continuing to gravitate toward large-cap equities – particularly international large-cap – and moving away from fixed income and cash.

One-third say they plan to invest more in emerging market large-cap stocks, while another 28 per cent say they intend to invest more in large-cap stocks from developed markets.  Just over one-quarter of advisors surveyed expect to increase their investments in US large-cap stocks. 

More than one-third of advisors expect to invest less in cash, and only 10 per cent plan to invest more, compared to a high of 28 per cent in January 2008. Only 16 per cent plan to invest more in fixed income, compared to a high of 42 per cent in January 2009.

ETFs remain the preferred investment vehicles for the advisors surveyed, with 36 per cent planning to invest more in ETFs during the next six months.

To achieve additional ETF allocations, advisors say they will pull mostly from cash and mutual funds. 

After ETFs, commodities ranked second in popularity (18 per cent), followed by mutual funds with hedging strategies (17 per cent), precious metals (14 per cent), REITs (13 per cent), real estate (11 per cent) and separately managed accounts (11 per cent).

According to internal Schwab data, more than 70 per cent of advisors who custody assets with Schwab are using ETFs.