Trump is back. Here's what to tell clients

How to handle clients' post-election despair … or delight

November 12, 2024 4:44 PM

Whether positive or negative, Donald Trump's re-election sparks powerful emotions, which can be problematic for investing.

Well, it happened. Donald Trump has won the 2024 presidential election, and starting in January, he'll be in charge of the world's most powerful military and the world's largest economy.

Depending on one's political leanings, this news could bring despair or delight. For financial advisors, that means this is a highly emotional moment for many clients — and that's the kind of moment when bad financial decisions are made.

The danger is two-fold. If a client is convinced that the economy's future is bleak, they may be tempted to sell off assets or make overly risk-averse choices. On the other hand, if a client is thrilled that Trump won, they may have unrealistically high hopes and become too risk-on.

Jay Zigmont's clients fall more into the despair category. As the CEO of Childfree Wealth, an RIA that advises investors without children, Zigmont says many of his clients felt targeted by the "childless cat ladies" rhetoric from the Republican ticket. Now they fear for their futures.

"I spent most of last week meeting with clients who were in tears, concerned about their safety and the safety of their friends," Zigmont said. "Many of the discussions focused more on moving either to another state, or another country, rather than portfolios and taxes."

How can wealth managers help investors navigate such strong emotions? What can they say to stave off rash decisions? Here's how advisors from around the country are guiding their clients through this moment:

The economy is long-term

The first thing to remind clients of, many planners say, is to think further into the future than four or eight years. With stocks in particular, the economic mismanagement of one president may bring a temporary downturn. But over the very long run, the overall direction is up.

In this election, for example, many voters blamed President Joe Biden for the high inflation and volatility that characterized some of his years in office — in fact, 2022 was the worst year for U.S. stocks since 2008. But by the end of his term, stocks were way up. As of Nov. 1, the S&P 500 had gained an average of 14.1% per year since Biden's inauguration.

"Overall, you're betting on the market and that discipline wins over time, rather than whoever is occupying the Oval Office," said Matthew Gaffey, president of Corbett Road Wealth Management in Potomac Falls, Virginia. "Regardless of … whether you're experiencing exuberance or disappointment, the market has shown time and time again that it is more resilient than any president residing on Pennsylvania Avenue."

Economic and presidential history

Another way to calm an anxious client is to have them look backward. Those who fear that Trump will wreck the economy may remember that they've heard this before.

"History is a tremendous guide," said Kashif Ahmed, president of American Private Wealth in Bedford, Massachusetts. "They said that Obama's going to destroy the economy; that didn't happen. They said Trump would do it, and that didn't happen. And they said Biden would do it, and that didn't happen. How much more evidence do you need?"

In particular, Trump's first term may provide some reassurance. Even in spite of the COVID-19 pandemic, the S&P 500 rose 67% from Trump's inauguration to the day he left office. And inflation, as measured by the consumer price index, was only at 1.4% when he finished.

Whether or not Trump deserves the credit for this performance — and whether he deserves a pass for the short, sharp recession brought by the pandemic — is a political question, not a financial one. If nothing else, the record shows that the American economy is remarkably resilient.

On the other hand, pro-Trump clients who expect an immediate boom may also benefit from a lesson — if not in history, then in civics. The president is not a king; he does not rule by edict. Even Trump's worst or best ideas must get through Congress to become law.

"When you have a $30 trillion economy, think of it as the Titanic or a giant cruise ship," Ahmed said. "Just because the captain wants to make a U-turn doesn't mean that it's going to happen, or that it's going to happen right away."

Limit your focus

For particularly overwhelmed clients, one simple tip could make a world of difference: Turn off your news alerts. If current events are too much to handle, it may be time for some clients to limit their exposure to them.

"Being in a blue state, I tell clients to have a low information diet over the next four years," said Ted White, principal of Arrivity Financial Planning in Seattle. Instead, White encourages investors "to focus on things they can control: strengthening relationships with family and friends, taking care of themselves physically, and so on."

Lisa Kirchenbauer, president of Omega Wealth Management in Arlington, Virginia, takes a similar approach. Her advice to panicked clients is to quiet the "noise" around them and instead focus on their immediate needs and priorities.

"Take the time to build a list of your concerns and questions, and maybe even solutions," Kirchenbauer said. "In other words, begin to build a plan, both personally and financially, to move forward. It doesn't have to happen immediately, but the act of taking time to quietly process what is next for you can go a long way toward a greater sense of control and resiliency."