People not sure what to do with their money

“When people are scared and they have money that they’ve earned, they are going to protect it in any way they see fit.”

Joseph Leonard

Chief executive of Coastal Investment Advisors

DES MOINES, Iowa (AP) — Investment advisers are seeing something new — people coming through the door in droves with cash they’re afraid to invest. Some of these new clients have inherited money, others have sold businesses and a few are people who’ve liquidated their 401(k) or some other account that has suffered losses. Regardless of where they acquired the lump sum, they all have one thing in common — a pile of cash they don’t want to lose.

“When people are scared and they have money that they’ve earned, they are going to protect it in any way they see fit,” said Joseph Leonard, chief executive of Coastal Investment Advisors in Southport, N.C. “Put it in their mattress ... simply have it in checking,” he said. “They’re going to put it someplace where they know they won’t lose their physical dollar.”

Leonard said that the volume of money placed with his company has multiplied eight-fold in the current quarter over the same period a year ago. His firm manages $100 million in assets. What’s more, he’s seen attendance at the financial planning meetings he organizes balloon from about 50 to 150 people in recent months. He’s had to go so far as to set up a waiting list.

Symbolic of what’s likely playing out across the country, Leonard recently spoke with a 74-year-old woman who has $1 million invested in certificates of deposit. After loosing about 30 percent in a brokerage account, she pulled the money out and it’s been stashed in CDs for months.

“She’s not making anything, but it’s safe,” Leonard said. “She said to me, now I need to know what to do with it.”

What’s more, Leonard is also working with a 54-year-old man who sold his manufacturing business for $1.6 million. Along with other savings, his client has just over $2 million to live on for the rest of his life. “He came to me and said what do I do not to ever lose it,” Leonard said.

Such experiences are shared by Joe Spada, a financial planner and principal at New Jersey-based Summit Financial Resources, which works with high net worth clients. Spada said the focus for many has turned away from getting a return “on” their money to getting a return “of” their money.

He’s seen many clients turn to certificates of deposit at federally insured banks, annuities that guarantee a return and Treasury bills.

“Everybody’s concerned. It’s all bad news right now,” he said. “More and more people thought they could stomach the risk, now more and more are finding they can’t.”