How to serve clients during a Trump presidency

Help your clients see that overrating Mr. Trump's impact — for good or ill — could result in biased financial decisions.
MAY 17, 2017

Since last November's presidential election, politics have dominated so many conversations. Investing, of course, is no exception. Many investors question what a Trump presidency means for markets. Some worry he'll introduce sweeping changes. Others hope he will. Recent data like consumer confidence surveys support this: Respondents increasingly see markets and the economy as an extension of their political views. But your clients' financial needs likely didn't change on Nov. 8, 2016, and neither did the considerations most relevant to meeting those needs. This brings up a challenge: How can you best counsel clients when the subject of their concern is so charged? A measured approach hinging on active listening and continuous education is key. (More: Markets fall in reaction to Trump turmoil) REMEMBER YOUR ROLE First, know what you should and should not weigh in on as a financial adviser. The majority of contentious political topics aren't directly related to investments, financial plans or really anything relevant to a money manager. It is a trap to start forecasting and opining on matters far removed from your specific responsibilities. Also, controversial issues tend to trigger big emotional responses. Make sure to clarify with clients up front that any discussion of politics doesn't mean an endorsement or rebuke of policies or personalities. You are, of course, welcome to have personal opinions. So are your employees and colleagues. But as should be apparent from the highly-charged atmosphere this year, it's potentially poisonous to your business to enter the political fray — and clients who don't agree with your view may tune you out if you're not on their side. Stay above it. Listen to your clients' views on politics, but always remember: Your role is to guide them with regard to their finances — and that's it. (More: Trump's tax plan could fuel rally in MLP investments) ACTIVE LISTENING AND ENGAGEMENT One of the most underrated skills in many industries — not just ours — is actually listening to clients' worries and asking questions to understand their underlying concerns. It is easy to accept the media's broad brushstroke descriptions of how one demographic feels and apply it to everyone. For example, the "people are angry" meme was prevalent throughout last year's election season. But were your clients actually angry? And if they were, what exactly was the source of that anger? One client expressed frustration with Washington, D.C., arguing that politicians didn't understand the struggles of "real people." That's a common (and not unfounded) critique. But after listening to her specific concerns and asking relevant questions, I learned her real worry — as it pertained to her portfolio and investment goals — specifically centered on the national debt. This allowed us to have a productive conversation that cleared up several common misperceptions about U.S. debt. Actively listening — not only hearing your client's words, but thinking and asking further questions — is a huge value add for clients. (More: Trump agenda spawns new ETFs that align with his policies) LEARNING NEVER STOPS Once you've listened to your clients' concerns and identified relevant topics, you have an opportunity to educate — particularly vital when "fake news" makes almost as many headlines as "real news." While it may seem simplistic, a refresher on some basic civics concepts could be helpful to give clients perspective on the likelihood Mr. Trump can act on his rhetoric (for good or ill). For one, the president simply isn't as powerful as is commonly portrayed. America is a capitalist economy, and investors too often overrate the government's effect. It is a basic point, but one often lost in this day and age, as folks frequently fixate on central banks and governments for clues on the economy. Also, remember, big talk on the campaign trail is one thing, but once in office, politicians moderate significantly. Not only must a president deal with checks on his power via the legislative and judicial branches, he or she must also deal with political realities (like planning for the next election). This limits political capital. Like his predecessors, Mr. Trump doesn't have nearly enough to fulfill all his promises. Many Republican investors shunned stocks in 2009 on the notion Democratic President Barack Obama would nationalize banks or take other radical actions harming the economy. With hindsight, it is easy to see this concern was exaggerated. Help your clients today see that overrating Mr. Trump's impact — again, for good or ill — is likely identical. (More: Trump's first 100 days a disappointment to financial advisers) Politics is a dangerous subject for investors, as it is so closely tied to many (very passionate) emotions and biases. To serve your clients well is to help them avoid making financial decisions based on those feelings. Damian Ornani is CEO of Fisher Investments.

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