Still reeling from the “lost decade,” retail investors are sitting on the sidelines, keeping their investments in cash and bonds, according to a study by MFS Investment Management. Of course, that’s no surprise to many advisors, who say the “flash crash” in May has added to already frightened investors.

MFS’s survey of found that those with at least $100,000 to invest are still living in fear of the marketplace, with 65 percent expressing concern over another serious drop in the stock market. And yet the market has been on a tear of late, today closing above where it was before the Lehman collapse in 2008.

“When it comes to money, it’s fear and greed,” said Bart Schannep, president of Schannep Investment Advisors, which has been bullish on equities. “People don’t recognize when fear is getting worse.”

Mark Shepherd, principal at Shepherd Financial Partners, said it has been hard to break the inertia among investors after they’ve been hit two times in the last 10 years with 40 to 50 percent declines. While most of Shepherd’s clients are willing to take recommendations, a few are still nervous.

According to Investment Company Institute data, investors have shelled $216 billion into bond funds this year, while pulling $18 billion from equity funds. Last week, equity funds had estimated outflows of $2.34 billion, compared to estimated inflows of $2.07 billion in the previous week, the Investment Company Institute reported. Meanwhile, bond funds saw estimated inflows of $5.31 billion last week.

“Interest rates are at all time lows, potentially creating inherent risks to bond investors’ principal, should rates begin to rise,” said Bill Finnegan, director of global retail marketing for MFS. “Based on this survey, coupled with Investment Company Institute flow data, it appears that investors have understood only half the equation.”

But at the same time, 40 percent feel it’s a great time to invest in the stock market, MFS reported. Another 38 percent said they disagree strongly/somewhat that government bonds are the best place to put their money now.

The stock market was not the only concern expressed in the survey; nearly half said they’ve lowered their expectations about what life will be like in retirement, and 44 percent said they had no idea how much money they will need to retire.

“Most people spend more time planning their vacation than planning their retirement,” said Finnegan.

In response to the survey, MFS is encouraging its clients and advisors not to be afraid of a little equity exposure as a way to meet long-term investment goals. As of September 30, MFS had $204 billion in assets under management in mutual funds and institutional accounts, with roughly and even split between the two. The firm offers 67 mutual funds in the U.S. Firm-wide, net inflows were $9.1 billion year to date, as of September 30.

“We’re not just saying go move the cash,” Finnegan said. While having cash is not a bad thing, having too much cash can be, he added.

When it comes to cash, Finnegan says there’s a disconnect between what the client’s goals need to be and what their expectations are.

“To step completely out of the market, it’s just a scary place to go,” said Shepherd.

Brad Grupp, chief operating officer with Carson Wealth Management Group, said investors are more concerned about loss than the potential gain. They’re saying, “‘I’d rather make nothing than lose something.’”

Grupp said he’s still seeing negative signs out there, and individual investors are seeing the same signs. He believes you need to be in the market, but not blindly in the market in a buy and hold strategy. Getting out of cash really depends on the individual investor and their time horizon. For those with longer time horizons, they’ll have to give some consideration to riskier assets, he said.

“That’s really what’s going to start driving people back into this market.”

In response to the fear expressed in the survey, MFS launched its “Rebuilding Client Confidence” campaign, which provides advisors with materials to help them address clients’ concerns. The new initiative is not about pouring cash into equities, but it is aimed at taking a more balanced approach to bond and equity allocation based on the needs of the client, said Bill Finnegan.

“[Investors] have a lot of questions that are unanswered,” Finnegan said. “Most everyone needs a greater level of advice than they’re getting.”