GENEVA – Europe’s affluent middle class has lost so much faith in financial markets after a three-year bear market that it could be years before they start investing again, independent financial advisers said on Monday. «The most serious issue is the real lack of trust and confidence in the system,» Vincent Derudder, secretary-general of the European Federation of Financial Advisors and Financial Intermediaries (FECIF), told Reuters on the sidelines of a conference in Geneva. «My personal opinion is that it will take two good years to get out of this serious mess,» Derudder said. Participants said clients were continuing to feel confused and wary, despite signs that the conflict in Iraq could be reaching an end. «Everyone is a bit worried,» said Angela Knight, chief executive of the London-based Association of Private Client Investment Managers and Stockbrokers (APCIMS). FECIF estimates that there are currently around 30 million individuals in Europe each with potential investable assets of between 50,000 and 200,000 euros. But after losing a sizable 30-60 percent of their savings as markets tumbled in the wake of the spectacular bull run of the late 1990s, they will keep what wealth they have left in low-risk, low-interest rate deposit accounts or buy property. «Clients are becoming very, very nervous,» said one Swiss-based financial adviser. «I have clients who want to sell all their equity and bonds and just keep their money in the bank.» The view among affluent and wealthy individuals is that too much could go wrong with uncertainty surrounding the consequences of the war in Iraq, weak European economies, few concrete signs of an upturn in the US economy and Japan firmly stuck in the doldrums. «Put together, it’s not the easiest climate to say the least. Investors are concerned,» Knight said. Even if economic growth and markets begin to perk up in the second half, it will take a while before the middle class and the seriously wealthy dip their toes into stocks again. «The general feel-good factor will lag behind a pickup in the markets because of the lack of trust and confidence,» said Andrew Peat, an independent financial adviser and FECIF board member. «If markets recover in the third quarter and have some positive direction, it’s going to be another year before the general public starts to feel that optimism,» he said. Get real Financial advisers said they were neither optimistic nor pessimistic about the future. The key was to be realistic; clients would only begin taking their «this is a good time to buy» advice once there was some semblance of stability. «When they start to see stability, when they see global hot spots cooling, when they are no longer seeing redundancies, no longer seeing reductions in profits or corporate disasters, when there’s no longer big fluctuations in the market – at that point, they’ll have the confidence to follow the equity advice of their adviser,» she said. Volatility was still scaring a lot of investors off, and even though stock markets rose last week as Baghdad fell, it was not enough to tempt back investors. One silver lining to the cloud was that some clients, skeptical of the advice from the larger institutions, were beginning to seek out the independent players. «The average client has no real confidence in large institutions,» Derudder said. «Those same institutions that manage their money also promote funds, invest in the clients of their commercial banks and eventually insure the whole thing. There’s a permanent conflict of interest.» «We as intermediaries are indirectly benefiting from this. Clients want better information and more transparency. They feel that with an independent adviser they get this best possible advice,» he added. Another bright spot was the inevitable growth of the pensions market, which Peat described as «enormous» because of aging populations and the fact that most countries’ pension funds will struggle to pay out in the future. «On the upside, people are well aware that the only person who is going to look after them in their retirement years is themselves, and they are only going to be able to do that if they save their money,» agreed Knight.