Midterm election won't change portfolio fundamentals, advisors say

With the Nov. 3, 2026, midterm election approaching, financial advisors are fielding the same question from anxious clients: should the portfolio change before the vote? Three wealth managers interviewed by InvestmentNews say the answer is almost always no, because what drives long-term results – a client's goals, time horizon and discipline, along with earnings and Federal Reserve policy – is not on the ballot.

The pressure to act is real. In a Harris Poll survey conducted for Nationwide from Aug. 24 to Sept. 11, 2026, 40% of investors said they had already changed their retirement savings or portfolio ahead of the midterms, and 75% said the outcome could meaningfully affect their long-term plan. Advisors are leaning the other way: 63% said leaving investment strategies unchanged is the best course in an election year, up from 52% in 2024.

Clients also want help. A UBS Investor Watch survey of millionaire investors found 59% are more likely to consider working with an advisor in an election year, up from 29% in 2024, as InvestmentNews reported when it covered how wealthy investors are turning to advisors for guidance. The same survey found 84% want more guidance than usual from their advisor during an election year.

Why the midterm election rarely moves long-term returns

Angelo V. Esposito Jr., founder and private wealth advisor at Atlanta-based Harbor View Private Wealth, said midterm campaigns produce plenty of noise but seldom alter what determines a client's outcome: the financial plan, risk tolerance, asset allocation and near-term cash needs. Markets may react to a result, he said, but those moves tend to fade as investors return to corporate earnings, economic data and Fed policy.

"History supports staying the course: since 1874, the S&P 500 has been higher 12 months after a midterm election about 84% of the time, with an average gain of roughly 14%. Vanguard's research estimates that advisors can add about 3% a year in net returns, and about half of that comes from behavioral coaching, which means helping clients stick to their plan when emotions run high. An election is exactly that kind of moment," Esposito said.

Juan Xavier Sánchez, head of wealth strategy at Activest Wealth Management in Aventura, Florida, said this cycle is unusual in one respect: the forces that have moved markets in 2026 are not up for a vote.

"Oil has pushed inflation higher, the Fed responded by raising rates in September, and trade and deregulation are driven by the White House, which is not up for election either. In our view, the vote will change how Washington gets things done more than where markets are going," Sánchez said.

The Federal Open Market Committee voted 12-0 on Sept. 16, 2026, to raise the federal funds target range by a quarter point to 3.75%–4%, saying inflation remains elevated.

What could stir volatility after Election Day

Sánchez expects the bigger test to come after the votes are counted. A stopgap spending bill signed Sept. 2 keeps the federal government funded only through Dec. 11, 2026.

"That does not mean the result is irrelevant. Its real test comes right after the election, with government funding running out on December 11 and the debt limit returning in 2027, and those negotiations could bring some volatility to bond yields. But that kind of volatility is exactly what a good plan is built to handle," Sánchez said.

How advisors talk clients out of election trades

Tracy Byrnes, vice president of women & investing at Lebenthal Global Advisors, said the costliest mistake ahead of the midterms is letting political opinions steer investment decisions.

When clients ask about moving to cash, Byrnes tells them they would be timing the market twice – once when they sell and again when they decide it is safe to get back in, which is usually the harder call. Her test is simple: has anything changed about the client's goals, time horizon or need for the money? If not, she needs a compelling investment reason, not election anxiety, to alter the portfolio.

"Election results may influence certain sectors or tax policies, but they shouldn't determine someone's entire investment strategy," Byrnes said.

Esposito said clients who want to reposition before a vote often don't realize they are making an emotional decision rather than an investment one.

"Our job is to slow that down. We remind clients that markets tend to refocus on fundamentals once the initial reaction to a result fades, and that both strong and weak fundamentals have shown up under every combination of party control in Washington," he said.

Sánchez opens those conversations with one question: did something change in your plan, or only in the news? He said it is almost always the news.

"Trading around an election means being right twice, on the result and on how markets react to it, and this year markets have had bigger things to react to than Congress. We believe there are better tools for a nervous client than a big move: rebalancing back to target, setting aside the next year or two of spending so they are not forced to sell, or putting new money to work gradually," Sánchez said.

Younger clients may need that conversation most. The UBS survey found political views heavily influence investment decisions for 42% of millennial respondents, compared with 10% of baby boomers – a gap that complicates the work of advisors managing multigenerational households and their competing priorities.

Year-end tax planning moves no election can change

Sánchez said the planning calendar should be anchored to the one date no election can move: Dec. 31.

"Year-end tax work should happen now, whatever the results: harvesting losses where it makes sense, being deliberate about which gains get realized this year, and looking at Roth conversions or charitable gifts in lower-income years," he said.

Tax-loss harvesting means selling investments at a loss to offset realized capital gains. Byrnes adds required minimum distributions and charitable giving strategies to the year-end list, along with retirement income plans for clients who need liquidity over the next few years.

On retirement income, Esposito sees the recent rise in interest rates as a reason to revisit cash holdings and bond positioning. He expects tougher year-over-year inflation comparisons in 2027 could lead the Fed to hold rates steady or eventually cut.

"For clients who depend on their portfolio for income, this may be a good time to put excess cash to work and consider locking in today's higher yields for longer. Rates could still move higher from here, so any change should fit the client's overall plan and time horizon," Esposito said.

Estate planning also deserves a look. The One Big Beautiful Bill Act, signed July 4, 2025, set the federal estate and gift tax basic exclusion at $15 million per person for 2026, according to the IRS, indexed for inflation. Sánchez noted that while the law calls the exemption permanent, that only means it has no expiration date, not that Congress can't change it.

"In our view, that is a reason for families with larger estates to review their plans now, while the rules are known. One simple step before year-end is the annual gift exclusion: $19,000 per recipient for 2026, and whatever isn't used by December 31 is lost. None of these steps depends on who wins in November," Sánchez said.

Byrnes put it more bluntly.

"Estate plans and beneficiary designations should be reviewed regularly, not just when Washington changes hands. So vote based on your political convictions, but your portfolio should be built around your financial goals – not politics," she said.