For those investors who still feel like they've been punished by the market in recent years, one advisor has found the carrot to lure them back.

Daniel Moskowitz, president of Chatham Wealth Management in Chatham, N.J., has seen plenty of clients who are still scared of the stock market. But he and his colleagues have used a reassuring message: A balanced portfolio combining short-duration bonds and blue chip stocks with high dividends is "the safest way for them to meet their income needs."

If all advisors were as persuasive as Moskowitz, they might be swimming in new assets. Chatham has added $15 million of new assets since August 2010.

Even if clients' demand for more risk isn't there yet, the potential supply of cash certainly is. Americans are holding a record $5.9 trillion in domestic liquid deposits, says Dan Geller, executive vice president of Market Rates Insight in San Anselmo, Calif. The reason: They just don't trust the recovery, Geller says.

This is despite the improvements in consumer confidence indexes since the end of the recession. For example, the Consumer Confidence Index by the Conference Board climbed to a three-year high in February, although it fell again in March, the most recent report. And the consumer sentiment survey by the University of Michigan and Thomson/Reuters showed an uptick in its preliminary April findings, after it also declined in March.

But the problem remains that surveys such as these are subjective measures, Geller says. They use questionnaires to measure how consumers feel about the economy.

A more objective measurement is what consumers actually do with their money, he says. And what they're doing is letting their money sit and accrue paltry interest gains while being outpaced by inflation.

Indeed, money sitting in liquid accounts, such as checking, savings and money market accounts, is earning an average of 44 basis points of interest. By comparison, the annual inflation rate in March was 2.7%.

But some advisors fear that market-phobic investors have waited too long to jump back in. "The fact that so much money is sitting on the sidelines doesn't concern me as much as what happens to it next," says Jonathan Bergman, a financial planner with Palisades Hudson Asset Management in Scarsdale, N.Y. "My concern is that investors on the sidelines will redeploy now and the market won't meet their expectations."

Bergman isn't calling a top to the market, but says he does not expect returns in the next couple of years to match those of 2009 and 2010.

Still, Bergman says the best way to grow long-term capital and beat inflation is to invest in a diversified securities portfolio. "As long as investors have a long-term view and won't bail on stocks during a volatile time, then they should invest in stocks," he says.

Much of the money parked in liquid accounts has shifted there from CDs and other term accounts, Geller says. From March 2009 (the bottom of the equity markets) to March 2011, nearly 13% of total deposits shifted from term accounts to checking, savings and money market accounts.

Moreover, in March 2009, liquid balances made up 62% of total deposits. By March 2011, they reached a record 75%, Geller says.