The 2016 presidential election changed the United States forever. A candidate with no previous government or military experience was elected to run the country, and expectations, positive and negative, were strong and rampant and widespread.
What was generally accepted to be true was that a Donald Trump presidency would be beneficial for the nation’s business culture. Investors are not certain how the new presidency will affect their portfolio.
Spectrem’s quarterly wealth segmentation series study Financial Behaviors and the Investor’s Mindset asked investors to react to the results of the November election.
“We are all waiting to see how this presidential administration will affect the business and investment worlds, but investors certainly have opinions about what they expect,’’ Spectrem president George H. Walper Jr. said.
In a way, that is what the investors in the Spectrem study said.
Looking at the Millionaire segment, investors with a net worth between $1 million and $5 million (not including primary residence), 43 percent expect better investment returns directly as a result of the presidential election. Investors with more wealth are slightly more likely to believe the presidential election will provide better returns.
With more than 40 percent of Millionaires expecting better returns, does that mean more assets will be going into investments? Not necessarily, according to the Spectrem report. Only 29 percent of Millionaires will greatly alter their investment plans as a direct result of the presidential outcome. That answer was much the same across all wealth segments.
For advisors, this has got to be interesting times. Not only do they need to keep an eye on the Department of Labor fiduciary standard regulation change (which may or may not actually take place), they have to be aware of how decisions by the Trump administration, as well as the Republican-led House and Senate, affect the culture of investments.
Advisors must be cognizant of any changes in their clients’ investment plans and priorities as it relates to the changes in Washington, D.C. In some cases, clients may be upfront and tell their advisors how the current investment climate impacts their decision-making. In other cases, some investors may not be aware that they have investments that may well be directly impacted by decisions made by President Trump.
Keep in mind as well that President Trump enjoys tweeting about American companies, both for complimentary and derogatory reasons, and when he does, the stock market reacts.
The truth of the matter is that the effect the new administration has on investments and the financial markets industry will not be known for a long time. But the administration’s unique manner of affecting change requires attention, and has some investors uneasy.
The Spectrem study asked investors if the new administration caused them any concern, and 56 percent of Millionaires said “yes’’. That was higher than the percentage concerned about U.S. relations with Russia (55 percent) and the percentage concerned about climate change or global warming (50 percent). And the wealthier the investor, the more likely he or she is to have concern over the new presidential administration.
Top Takeaways for Advisors
There has probably never been a new presidential administration so certain to affect investment possibilities as the Trump administration. Advisors may need to increase their communication with investors to take advantage of the fluctuations that are happening in the market, and the updated investment possibilities that stem from presidential decisions.
©2017 Spectrem Group