Whether they are Republican, Democrat or independent, many U.S. investors are concerned about how to prepare their portfolios for the upcoming federal election in November.
The 24-hour news cycle and social media have led to increased polarization and a heightened sense of urgency around elections at all levels, according to Ben Rizzuto, a wealth strategist with the specialist consulting group at Janus Henderson Investors. As a result, many financial advisors are feeling some pressure to "talk politics."
Advisors are often wary of doing so, Rizzuto told ThinkAdvisor in a recent interview, whether out of fear of sparking disagreements or simply a desire to stick to more concrete financial planning topics during the limited fact-to-face time advisors and clients typically have together.
But these legitimate motivations don't give advisors a free pass to simply ignore their clients' concerns about the November election — especially those that go beyond the flashy topics of the moment and speak to more fundamental questions about the economy, public policy and the potential effect big changes could have on their nest eggs.
This is one reason why Rizzuto has been focusing many of his recent articles on questions about politics and eye-catching news headlines. The main takeaway of the articles is that elections may unfold over two- or four-year cycles and news events come and go by the day, but the effort to plan for and then navigate retirement unfolds over a lifetime.
Retirement itself can last 30 or 40 years today for those who are lucky to have their health intact as they enter their golden years, Rizzuto said.
"It's inevitable that, over this period of time, every client is going to have to navigate periods where they agree and disagree with the current administration in power or the current majority in Congress," Rizzuto said. "What this means is that they can be as political as they want outside the advisor meeting, but when it comes to building the financial plan, they need to be agnostic."
Election Anxiety Runs High
Rizzuto pointed to a recent investor sentiment survey run by Janus Henderson Investors. In short, the results show that anxiety around the 2024 U.S. presidential election is affecting more than three in four (78%) investors.
More specifically, of the roughly 1,000 mass affluent and high-net-worth investors who took part in the survey, nearly half (49%) said they are very concerned, while 29% are somewhat concerned about how the election will play out and affect their portfolio.
"In this year's survey results, the election eclipsed investors' concerns about inflation, risk of recession and rising interest rates," Rizzuto noted. "These worries can push us to focus on the short term and get sucked into the emotional eye of the political storm."
So, how can advisors calm their clients and refocus on their long-term objectives?
