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 Last week, Robert Wander, a financial adviser with his own firm in
New York, got his first email from a client for this election cycle
worrying about the impact on the stock market. The client wants to
move all his assets into cash before votes are cast in November.
"I don't know his political leanings. For most clients, it's not
something I get into, unless they are also friends of mine. There's
no advantage in that," Wander said.
Wander's advice was equally agnostic to party affiliation: Stay the
course.
Yes, it's boring and basic, but this is the guidance most advisers
give, trying to talk their clients down from making changes to their
portfolios based on emotions.
We "want our clients to stay with what can be predicted, and that is
that the economy should improve by the end of the year," said Paul
Christopher, head global market strategist for Wells Fargo
Investment Institute.
Christopher's research predicts that the benchmark S&P 500 stock
index will be up 9.6 percent over last year by the close of 2016.
Still, he said that number could swing by 7 or 8 percentage points
in either direction due to many factors, only one of which would be
the election.
When clients ask Christopher what stocks they should buy if person X
wins or Y wins, he declines to answer.
"It sounds like a dodge," he says, "but there are too many
uncertainties for something that is not predictable yet."
ELECTION PROMISES
Looking to history is not much of a balm here, because this election
cycle is so different. Christopher points to his research on
promises made on the campaign trail versus those kept in office.
President Obama, for instance, only kept 32 percent of 506 promises
made, such as the Affordable Care Act and ending the use of torture.
At Fidelity, one of the largest holders of retirement accounts,
advisers caution clients to take a view at least five years out,
even if they are planning to retire in a few months, which
purposefully looks past any individual election cycle.
When Merrill Lynch is assessing the market, it focuses on company
fundamentals rather than politics.
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"The markets eventually price everything, and at the end of the day,
it’s about earnings and how much investors are willing to pay for
those earnings," said Mary Ann Bartels, head of portfolio strategy
for Merrill Lynch.
For those inclined to worry no matter what, Betsy Billard, a private
wealth advisor for Ameriprise Financial, said there are other more
pertinent topics than the Presidential race to mull over.
"Typically speaking, presidents don’t move the market," Billard
said. "The Fed controls monetary policy. A president doesn’t move
interest rates. The Fed moves them."
Yet, one adviser has found a way to harness his client's anxiety
into a more diversified portfolio.
Last week, Wes Shannon, a certified financial planner at SJK
Financial Planning in Hurst, Texas, met with a client who wanted to
make her portfolio more conservative because she was concerned about
the election.
Because the woman and her husband were in their late 50s and had one
of the most aggressive portfolios in his practice, he jumped at the
opportunity to get them more aligned with where he thought they
should be.
"I didn't go into her rationale. I don't even know if she's Democrat
or Republican. I don't ask. I was like, all right great, let's dial
it back," Shannon said.
(Editing by Lauren Young and Bernadette Baum)
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