As much as presidential candidates, their respective political parties, and the news media want to make the 2020 Presidential election seem to be a matter of vital daily interest to the American people, the urgency of the situation is not evident among affluent investors.
For the calendar year 2020, Spectrem’s monthly research with investors includes questions about the 2020 Presidential election and the economic ramifications of the choices that will be made in November. While investors report distinct opinions about President Donald Trump and the Democratic candidates, they express less than urgent demand to react to the election prior to the actual vote taking place.
Investors seem to prefer to make portfolio changes after the election results are known rather than try to invest predictively. They are also less certain than some economic observers that the election will have a major impact on the American economy, at least immediately.
Advisors need to check in with their client base, especially those who have an active interest in the day-to-day movement of stock prices, to see if they want to react to news regarding the election, and if they want to be contacted on a regular basis about what is going on from a political standpoint.
The investors surveyed were asked what they plan to do with their investable assets prior to the election, and in January, 51.5 percent said they plan to make no changes to their portfolio prior to the election as a direct result of what they believe will happen in the election. That’s more than half of investors who do not plan to react to election news before a final result is announced in 10 months.
Of the others, the largest percentage (16 percent) plan to invest more in fixed income and similar assets to protect the portfolio from whatever impact the political discourse of the next 10 months will produce. Rather than trying to predict the outcome of the election and its impact, investors plan to put funds into investments that will not be severely impacted no matter how the election goes.
Only approximately 8 percent of investors plan to increase investments in equities because they see the election process as an opportunity to profit. That’s a highly predictive response that requires a very detailed understanding of how the election conversation impacts the stock market.
While advisors need to know how their clients feel about the financial impact of election posturing for the next 10 months, investors are not expecting to have frequent election updates with their advisor. Asked how often they want to hear from their advisor to discuss election impact, 36.2 percent of investors said they want to hear from their advisor any time the advisor believes something from the election will impact their personal financial situation.
That puts a great deal of the pressure on advisors to understand the ramifications of political conversations and revelations and then get on the phone or send an email to clients who might be severely impacted by the promises or threats coming out of them mouths of the President or the Democratic candidates.
One-quarter of investors want to discuss the election on a quarterly basis with their advisor, and 16.6 percent hope for a monthly update.
Advisors need to know how often their clients wish to have conversations on this topic, and which ones are in the 6 percent who don’t want to ever have a conversation about the election and its impact on portfolios.
©2020 Spectrem Group
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