As the US enters a particularly heated presidential election, CPA financial planners have just one heartfelt piece of advice for their clients: ignore it.
At least, that's the case when it comes to their financial planning.
Most of the members Today's AccountingWhile the top firms by assets under management don't expect the 2024 presidential election to have a medium- or long-term impact on asset markets, they do acknowledge that the heat of the election and the short-term market volatility that accompanies it could tempt some of their clients to deviate from their carefully constructed financial plans.
“Historically, presidential elections increase investor anxiety,” explained Charlene Wehling, managing member at DBHW Wealth Management. “This is due to (potential) changes in leadership and excessive coverage by news and social media outlets. Unfortunately, bad news sells better than good news. Even the most well-prepared investors may need help easing their anxieties to avoid poor decision-making. We are a voice of reason in uncertain times.”
Keeping clients calm is also a priority for Shaw Pritchett, president and CEO of Jackson Thornton Asset Management. “We feel it could be a question of how clients perceive the impact of the election. They may want to abandon their plans and maintain the status quo, seeking safety from the possibility that a party they don't prefer may win,” he says. “That said, history has shown that the stock market will continue to grow over the long term, regardless of which party is in power. Our job is to protect our clients and their plans during this election period, and to provide them with reassurance that the long-term outcome will be favorable, regardless of who wins.”
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Many companies said they were preparing in advance for just such customer fears. ““In the short term, we expect there will be some impulsive calls and wishful thinking decisions by clients,” said Maddie Keegan, director of operations and financial advisor at Fraser Financial Advisors. “We have a lot of different resources and materials that talk about the long-term impact of the presidential candidates, but we know that there really isn't any long-term impact, so we're preparing to take calls and try to dissuade clients from making rash decisions.”
Likewise, SignatureFD strives to mitigate any undue impact the race may have by continually providing facts and information. “We communicate regularly with our clients through weekly newsletters and host weekly phone briefings to keep clients informed of market fluctuations, economic indicators and relevant news,” explains Marketing and Communications Manager Samantha Geier. “By keeping our clients up to date on the latest developments and offering guidance tailored to their individual circumstances, we aim to give them confidence and keep them aligned with their long-term financial goals.”
Short-term fluctuations and long-term changes
Our Wealth Magnet planners were quick to acknowledge that the race and the final election itself could cause short-term market volatility, but they don't think that should cause clients to deviate from their plans.
“While uncertainty surrounding the election outcome could lead to increased volatility, it will likely be relatively short-lived and not have a lasting impact on market returns,” said John Lesser, group managing partner at Plante Moran Financial Advisors.
For the few clients who could be immediately affected by these volatility, Manor Wealth has taken proactive steps to protect them. “For clients who are actively generating income from their portfolios, we've shifted distributions for the next one to five years into cash equivalents and removed the election volatility from their income plans,” said Michael Nordman, chief wealth officer. “For clients who are still in the wealth accumulation stage, we've told them to prepare for increased volatility.”
CPA financial planners don’t want their clients to make short-term election mistakes, but that doesn’t mean they aren’t being careful themselves.
“While the election itself should have little impact on our clients' financial planning, it is expected to be polarizing and could change the outcome depending on proposed income tax rates, wealth and transfer tax changes, and other changes to the Internal Revenue Code,” said Christy McCullough, managing director of wealth management at Mowery & Schoenfeld Wealth Management. “We will be closely monitoring the incoming administration's regulatory agenda to ensure we are building necessary benefits and avoiding drawbacks into our clients' long-term financial planning.”
Chris Danlaji, managing principal of investments at CliftonLarsonAllen Wealth Advisors, highlighted some of the things to look out for: “Election years typically bring renewed emphasis on potential regulatory and policy changes, and this year is no exception, with a focus on potential changes to tax and inheritance policies that are at risk of expiring at the end of 2025,” he said. “We are actively working with clients to help them navigate potential increases in personal tax rates and reductions in the inheritance tax exemption from a current and future financial planning perspective.”
Alex Weiss, president of Napier Financial, said the election could create opportunities for financial planners, though it's a tough balance to strike between keeping clients calm and on track and preparing for potentially significant regulatory changes.
“The election will be disruptive,” he said. “But in the midst of all this chaos, people will be looking for comprehensive advice, which should help grow our business.”
