By Mark Palmerino
Married couples tend to have political views that are relatively in sync, but not always. And in those cases, the most recent presidential election and the resultant political environment has inflamed many of those already existing intermarriage political fault lines.
For better or worse, politics shape so much of how we look at the world, from the actors and entertainers we enjoy, to the sports teams and athletes we support, to the attitudes we have about certain cities. And, of course, political views can also weigh heavily on investor behavior.
In our own client discussions, it's become clear that most Donald Trump supporters are generally bullish on the markets and broader economic trends. Meanwhile, ardent Hillary Clinton voters have a more pessimistic view of the markets and our economy.
In fact, in my nearly 20 years working in the industry, no outside event has elicited quite the level of emotionally charged discussion among clients as last November’s election — not Y2K, not 9/11, not even the financial crisis. Indeed, nearly four months after the inauguration, the hyperpartisan political landscape is still one of the first things that many clients want to talk about during financial planning meetings.
Naturally, most advisors are not eager to delve too deeply into politics with their clients. Aside from being a sensitive topic, many (quite rightly) believe it is, at best, loosely connected to long-term financial planning. But by avoiding the subject altogether, with their politically divided married clients, advisors run the risk of having existing tensions getting redirected onto them.
The following are ways in which advisors can have more productive conversations with such clients:
- Focus on a goals-based financial plan. When politics creates stress within a relationship, advisors should first acknowledge it. Again, ignoring the obvious has very little upside. But from there, it’s important to re-iterate their previously established goals, which will help the couple re-discover what unites them from a planning perspective and hopefully make them realize that political events, however transformational, don’t change what they both truly want. Indeed, by focusing purely on their goals versus what is generating headlines that week, clients will appreciate that their desire to comfortably retire, to eliminate debt, to pay for a child’s college education, to buy a vacation home — or whatever it is they eventually want to do — is not dependent on who’s president at any given time.
- Pivot from the financial plan to intergenerational planning. One thing that unites every married couple is the welfare of their children — and even future generations beyond that — after they pass away. This is an ideal time to revisit their intergeneration plan (or create one), making sure that it reduces conflicts, protects assets and carries out their specific legacy wishes, including leaving a portion of their wealth to causes or organizations that are important to them. Also, as margins get tighter and competitive hurdles get steeper, a strong emphasis on intergenerational planning could have the corollary benefit of helping firms keep more of the family’s future business.
- Encourage clients to make financial planning decisions as if they were managing a small business. Among the main concerns for grocers, for example, are wild fluctuations in the cost of staples items, like ground beef, eggs or milk. And while it would be a stretch to say that national political outcomes don’t have any bearing on the decisions they make (Obamacare comes to mind), small business owners, by and large, have to make important decisions based on reality, not on what may happen. Encourage your clients to take a similar mindset. Whether they hate the president and think we’re on the brink of Armageddon or believe his election was welcome disruption, until the raw data — job numbers, GDP, interest rates, P/E ratios, etc. — starts to suggest that drastic moves should be made, clients are better off staying true to their financial plan.
Increasingly, firms have had to expand not just the scope of the services they offer clients, but the quality of them. As part of this trend, advisors will have to take on the role of a financial "life coach" — walking their clients through a host of potentially prickly situations — including the fallout from the most recent election. This approach to client-service may be a big change for many to embrace, but, more and more, this is the type of support that will add value.
Mark Palmerino is a partner at CCR Wealth Management, a Boston-area based firm with approximately $1.2 billion in assets under advisement.
