After taking a devastating blow to their portfolios—not to mention their net worth—affluent small-business owners are feeling slightly more upbeat but are sticking to cautious investments.

“These owners have been through hell,” says Godfrey Phillips, vice president for research for American City Business Journals, which publishes Portfolio.com and 40 weekly business newspapers across the United States. “Their outlook on the economy and their own finances has improved since last year, but they are still opting for safe investments like real estate, retirement funds, and annuities.”

(Click here for an interactive look at the changing financial planning of those with portfolios greater than $250,000.)

Phillips led a study into the financial standing and investment strategies of nearly 1,800 small-business owners. Thirty-three percent of these executives reported having portfolios of more than $250,000 when they were interviewed late this winter.

Among the findings from the study, which was conducted through telephone and online interviews from November 11 to January 27:

• Affluent business owners are predominantly men (at least 76 percent) whose average household income hovers around $230,000. They are well-educated, with around 70 percent having at least a bachelor’s degree. And three quarters of them live in urban or suburban counties.
• They run successful companies with sales of between $6.1 million and $11.4 million. Their businesses are well-established, having been around for between 28 and 31 years.
• These high-value investors—1.17 million of them in the United States—have average investment portfolios of $518,000. Taken together, they represent a $605 billion opportunity.
• A large majority, 84 percent, said that the economic crisis that peaked in 2008 and 2009 impacted them personally as their personal investment portfolios and their overall net worth dropped at least 10 percent.
• As a consequence of the economic hit they took, the amount of money they plan to invest in 2010 is down to around $60,000, from about $75,000 in 2009.
• After touching an all-time low in 2009, optimism about their companies’ prospects has rebounded to 74 percent from 57 percent. Even more tellingly, concerns about having adequate retirement funds have declined (46 percent said they were “very concerned”) compared with last year (54 percent).
• Their top brand among banks was US Bank, followed by BB&T and then Wells Fargo. The top three brand choices in financial services were TD Ameritrade, The Vanguard Group, and E*Trade.

The study, which found that these wealthy small- to midsize-business owners were shifting away from using full-service brokerages for their financial needs, also revealed shifting investment priorities.

(Click here to read more about the shift away from full-service brokerages.)

“The focus now is to reduce overall volatility; investors that had taken a lot of risks are dialing that back,” says Ken Eaton, principal at Kansas City-based adviser Stepp & Rothwell. “They are willing to settle for a lower return in exchange for a better sleep at night.”

Among the investment areas that are making a comeback: real estate, simple IRAs, annuities, SEP IRAs, and, in the case of wealthy investors not using financial planners, commodities, the survey says.

“Investors have more expenses and are more conservative,” said Karl Mills, president of Oakland, California-based Jurika, Mills & Keifer. “But most of our clients are more positive.” Still, “some investors are paying a high price for the feeling of safety."

Financial advisers also see where investors have been seeking ways to diversify their allocations.

“We invest in mutual funds primarily, but even there the breadth has expanded,” says Eaton. “You see a lot more interest in international investments—not just in stocks, but also in bonds—in countries that have stronger balance sheets than the United States.”

Mills describes the "psychology" that goes into financial planning right now. "On the one hand they are scared, on the other they do not want to miss the recovery,” he says. “In any case, they really have a sense that their portfolio doesn’t need to be in a bomb shelter anymore.”