Nervous About the Election? Here’s What Financial Pros Have to Say About That.

It’s probably safe to say that emotions are running high when it comes to politics right now. The 2024 presidential election is less than 12 weeks away and the candidates offer vastly different visions for the country. One of them was nearly assassinated in recent days, and the other is facing pressure to drop out of the race. 

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Against this backdrop, financial advisors are encouraging clients not to make emotional investing decisions. For this week’s Big Q, we asked several advisors: What are you telling clients who are worried about the election?

Ross Bramwell, principal, Homrich Berg Wealth Management: For investors, keeping politics and their wealth separate is not always an easy task. When emotions are involved, investors have the tendency to let political views dictate investment decisions. To stay on track, we would encourage investors to vote through the ballot box and not through their portfolio.

We should expect volatility leading up to an election, as a lot of promises are thrown around. Maybe view it as an opportunity rather than a risk. Stick to your plan instead of trying to time markets. We believe economic data and trends are ultimately more important than the election winner and that corporate earnings and the economy will remain the market’s most important drivers. Determining if there’s a recession around the corner will likely be more important than projecting the next election’s result.

Financial advisors often say don’t rely on historical results, but history shows that election years, especially with an incumbent president running, typically lead to decent returns. There’s some common sense in this as sitting presidents tend to focus on popular, pro-growth policies to stimulate the economy, as we’ve seen in 2024. So, history would say stay invested this year, and then wait to see what legislation can be passed in 2025 and beyond to determine any impact on earnings, consumers, and the economy.

Jim Lebenthal, chief equity strategist, Cerity Partners: History has shown it is better to stay the course than change investment stance with every passing piece of news—even news on something as momentous as the upcoming election. Through many centuries, staying the course in high-quality stocks and bonds has been a winning strategy in turbulent times. Private market investments may further dampen portfolio volatility. Any such recommendations must balance growth with resiliency to consistently traverse turbulent markets.

Justin Samples, private wealth advisor, Ameriprise Financial: Amid the noise and volatility that elections often bring, it’s essential to keep your long-term financial goals in sight. Remember, a sound financial plan is designed to endure various market conditions, including economic downturns, stagflation, and speculative bubbles. During periods of uncertainty, review your plan to ensure it remains on track. Your long-term objectives, not short-term market fluctuations, should guide your investment decisions.

It’s a common mistake to let political preferences dictate investment choices. Historically, aligning investments solely with your preferred party has not been a successful strategy. Instead, pay attention to policy changes and their potential impacts on different market sectors. Policies from any administration can create both risks and opportunities.  

Your financial plan likely includes a set of actionable steps tailored to achieve your goals. These might involve systematic savings, ensuring your portfolio aligns with your risk tolerance, and rebalancing opportunistically in response to market fluctuations. By concentrating on things you can control, you can maintain a sense of stability and direction, regardless of external uncertainties.

Russell Hackmann, president, Hackmann Wealth Partners: Over the long haul, it doesn’t matter too much who is president. However, stock market volatility does tend to increase in an election year in the few months prior to November. So you can expect volatility from here through November.

But more specifically, in this cycle it is interesting to talk about whether the market would benefit from a Trump win. The answer is probably yes given his deregulatory bent and interest in renewing tax cuts from the beginning of his last administration that are due to sunset at the end of 2025. 

Markets like tax cuts, whether they are responsible or not, and investors remember that the markets did well under Trump. A Biden or replacement Dem win is probably a mild negative to the market.

Kathleen Grace, managing member and CEO, Fiduciary Family Office: Markets like certainty. The silver lining of having a repeat match with Biden and Trump is that we know their respective economic playbooks. Given the history we can have some comfort in knowing that regardless of the day-to-day movements, the periods of both the Trump and Biden presidencies posted returns higher than the 30-year S&P 500 average of 10.4%.

We know from experience that market gyrations create an emotional response that typically leads investors to make poor timing decisions. But impacts to markets and the economy over the periods following elections are not easily predicted. Therefore, it isn’t possible to create an investment strategy in anticipation of the outcome while having a high probability of success. 

Portfolios should not be positioned for certainty of recession nor for certainty of economic growth. We recommend that portfolios be positioned at their strategic asset allocation, using some tactical deviations when it makes sense, where they are better positioned to weather economic storms throughout market cycles.