How to talk to clients about President Trump

November 9, 2016 2:47 PM

Now that a Trump administration is a sure thing, what should advisers plan to change in their practices? How should they guide their clients?

Read on for the most insightful, even surprising takes from industry experts. -- Editorial Staff

Now that a Trump administration is a sure thing, what should advisers plan to change in their practices? How should they guide their clients?

Read on for the most insightful, even surprising takes from industry experts. -- Editorial Staff

Knut Rostad

President
Institute for the Fiduciary Standard

Trump’s statements reinstating Glass-Steagall, criticizing hedge fund managers and certain Wall Street executives may be just politics, of course. But they also may be part of a Trump vison that defies easy labeling — which seems to be true of most Trump views. Where, exactly, the DoL rule fits in the Trump vision is just not clear as of now.

Any authoritative statements about the positions of the president-elect so soon after the election may say far more about the view of the expert source than it does of the president-elect.

JOHNNY SUNDBY

Rick Kahler

Financial Adviser
Kahler Financial Group
Rapid City, South Dakota

The markets had expected a Clinton win, so we expected an immediate market decline if Trump was elected as markets don't like uncertainty. In the long run, any decline will be a short-term blip.

Will this be as short of a blip as Brexit? Time will tell. However, markets often decline in the first 18 months of a presidency, so any extended market decline would not be unusual. The long-term investor is advised to stay the course and rebalance on significant drops of 20% or more of their target allocations.

Ric Edelman

Chairman & CEO
Edelman Financial Services
Fairfax, Virginia

My advice for planners: if you don't know that you are supposed to be in contact with all your clients today, if you don't know what you should be telling them, or if you are giving them advice that is emotionally charged and politically partisan, then you should quit this profession, find another more suited to you, and suggest that your clients hire a financial planning firm that does know what it's doing and which is indeed worthy of the fee it charges.

Andy Kapyrin

Director of Research and Co-Chair of the Investment Committee
RegentAtlantic
Morristown, New Jersey

Trump's election is a surprise result for investors. Given the uncertainty, we're telling clients that making a big change to investment allocations would be premature.

Some clients are worried about the policy implications of this election. We are reminding them that:

Any changes will have to work their way through our political system, which is slow, deliberative and cautious by design. Do not expect large changes that haven’t been vetted and debated.

The vote was very close and the election was very contentious. This does not create a major mandate for change.

There are several potential policy actions that a Republican government makes possible that markets may take well, including corporate tax reform, repatriation of overseas profits at lower tax rates and commitments to infrastructure spending.

Frank Pare

President
PF Wealth Management Group
Oakland, California
Note: Paré is president-elect of the Financial Planning Association.

We are going to focus on our clients’ financial plans and try not allow the political noise to cause them to panic.

There is a lot of uncertainty with respect to the new president, especially as he transitions from rhetoric to governing. We don’t know the challenges, both domestic and foreign, Mr. Trump will be faced with or if he will be reactive or measured in his approach to dealing with those challenges as they present themselves.

Now more than ever we have to focus on helping people make sense of the markets and financial planning in general. I’m not sure if the heightened uncertainty will cause people to seek more help or avoid investing altogether. Either way, our focus has always been on planning versus investing so my hope is people seek out financial planners to help them navigate their futures.

Theodore A. Schwab

Founding Partner and Managing Director
The Schwab Group
Steward Partners
Washington

Whether they are celebrating or mourning yesterday's results, we believe that a review of the history of the markets should remind investors that companies have figured out how to prosper regardless of what has happened in Washington.

As we have noted before, we think Warren Buffett had the right perspective when he reminded investors at the height of the 2008 financial panic that in the twentieth century, the market as measured by the Dow rose from 66 to 11,500. This happened while the country endured two World Wars, numerous smaller conflicts, a Great Depression, a dozen recessions, oil shocks and a flu epidemic and the impeachment of a president.

Thomas R. Boyd

President and Sr. Financial Adviser
The Boyd Financial Group
Selma, Alabama

To our clients that are concerned about where the Trump administration is planning to take the country, we point out that in 35 years as advisers, we have seen many scary events – economically, politically, militarily and socially.

Through all the ups and downs, the S&P 500 with dividends reinvested has averaged more than 11% per year. The U.S. economy is dynamic and will adapt to political changes.

However, we are advising clients that one issue from the campaign that really concerns us is all the talk about rolling back trade agreements. We believe it will turn out to be mostly election-year rhetoric. We expect this administration to be pro-business, but we will watch the trade issue closely for our clients.

David DeBalko

Mark Eskin

Executive Vice President
Stedmark Partners
Janney Montgomery Scott
Philadelphia

We routinely remind clients — in both good times and more challenging ones — that stock market allocations are constructed carefully in advance and within pre-determined limits for time horizons measured in years, like education funding, retirement goals and so forth. We remain confident that the all-weather portfolios we work so diligently to help design represent the only time-tested approach to achieving life’s important financial goals.

Margaret Kineke

Senior Vice President & Financial Adviser
D.A. Davidson
Seattle

We are telling clients to hold tight for now. As we know, the market does not like uncertainty, and so clients have not been as eager to reinvest cash from maturing bonds or sales of stocks. There is also a strong case for the raising of rates by the Fed in December. Bonds could be vulnerable to lower prices, which makes slower reinvestment a logical plan for the next several months.

Jason Maxwell Katz

Managing Director and Senior Portfolio Manager
UBS Private Wealth Management
New York

If you're overweight equities based on your goals and objectives, reducing some risk assets is prudent – especially with what we learned post-Brexit where not lightening up or hedging proved costly over the short-run.

But if you were properly weighted based on your objectives heading into the election, we’ve counseled our clients to do nothing – don’t "act first and think second." Generally taking a deep breath and letting a little time pass to allow the reality of the situation and the facts to emerge will likely prove prudent. The implications of this surprise will take time to unfold. Markets tend to have knee jerk reactions … you shouldn’t. Fundamentals will outweigh political uncertainty.

John Brenkovich

Financial Adviser and Wealth Manager
Brenkovich Financial Management
Mamaroneck, New York

More of the national dialogue will pivot to the critical metrics of our economy: interest rates, the national debt, taxes, corporate earnings, wages and consumer confidence.