While some of you clients may be rejoicing over the recent election of Donald Trump and the Repulican Party’s control over both Houses of Congress, a vast swathe of the American population is reeling in horror.
Many of your liberal clients are in full- blown panic mode, and now is the time they need a steady hand on the tiller.
Clients who are paralyzed with fear or panicked are not likely to be making rational decisions. If they’re saving for retirement or other long-term goals, fear can be even more damaging than overconfidence. As we all know, there are no returns without risk. Your grieving clients may be prone to eschew opportunities out of fear, or order a sale at the worst possible time. Following the election, polls showed that Democratic optimism regarding the economy plunged by 15%. This negativity is bound to influence financial decision-making.
As an advisor, you’re going to need to offer some handholding. Your liberal clients need to stick to their investment plans despite the avalanche of emotions they’re experiencing. After all, the S&P 500 is trading at an all time high since the election.
While it’s difficult to say what impact Trump’s election will ultimately have on the market, liberal investors may want to seek returns by putting their money where their mouths are. Investment in socially responsible strategies has tripled since 2007, and there are investment options that focus on everything from environmental impact to social criteria to corporate governance. There is evidence that screening on these criteria can contribute to identifying better-performing equities.
As we’ve seen over time, the stock market has weathered worse than Donald Trump – the crash of 1987, 9/11, and the 2008 financial crisis, just to name a few events. There’s no harm in rebalancing to make portfolios slightly more conservative if that gives clients some comfort. In fact, with the S&P at a high, rebalancing may be timely in any case.
Finally, Trump’s promised changes to the tax code may see charitable deductions become less valuable in the future. Therefore, you can encourage your clients to contribute to their favorite progressive causes now. They’ll feel better, and they’ll be able to take advantage of charitable deductions while it’s still possible.
For more information, please read:
Financial Planners Play Therapist to Paralyzed Liberals | Wealth Management