Client confidence high on heels of ‘Trump bump’

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Clients’ risk tolerance rose, boosted by the election of Donald Trump, advisers said in this month's Retirement Adviser Confidence Index — Financial Planning's monthly barometer of business conditions for wealth managers.

"We're calling it the Trump bump!" one adviser wrote.

The index overall gained a modest 1.1 points to 56.6, helped by growing optimism. The client risk tolerance measure rose 10.2 points to 66.2, putting the metric comfortably into positive territory. It rose almost 20 points the previous month. Advisers still credit the U.S. election with the rise in confidence and risk appetites.

Still, some advisers said they are trying to keep client exuberance at bay. "We didn't make a whole lot of changes other than scaling back international positions, specifically emerging markets," said one adviser. "Clients' risk tolerance appears to have increased, as is typical when unwarranted euphoria captivates the market without any fundamental changes in the underlying securities."

As clients became more eager to invest, advisers noted a boost in retirement saving. Dollar contributions to retirement plans rose 4.4 points. Advisers also raised their fees, reporting a 2.4-point bump in what they charged.

"We acquired more assets under management. That, coupled with moving money from cash to equities, caused the fees to be higher," one adviser said.

Despite the optimism, some advisers reported their clients were nervous about the Trump win. Others noted it was affecting clients’ investment decisions. Many advisers reported moving away from global assets. As one adviser wrote: "Since Trump's victory, more and more clients are pro-U.S. [They have] uncertainty about international [assets] and how those markets continue to look unfavorable."