On the day following the surprising 2016 election, financial advisors feel there are lessons to be learned and opportunities to be had in the coming days and weeks.
Robert Laura, president of Synergos Financial Group in Brighton, Mich., says there is a comparison between the Brexit vote and Tuesday’s election.
“These two events provide a powerful signal that we as an industry can learn from. A growing group of people don’t want the status quo anymore,” he says.
The situation “is an opportunity to educate your clients on your style and approach. Let clients know that you are working, but they need to let the dust settle. Give them two or three key points you are watching and what steps you may be taking,” he says.
“Right now, interest rates are one of the most important aspects as the 10-year Treasury has jumped significantly. That punishes bondholders and interest rate sensitive sectors like utilities and REITS—so some asset allocation adjustments may be in order.
“I like to tell clients that I prefer to be a fast follower rather than a frontrunner who might miss a signal or key fact and end up taking this in the wrong direction,” he says.
For clients who are panicking, Laura advises, “Turn their fear into an opportunity. As we can see from markets today, there are certain sectors of the economy that are doing better than others now that Trump has won. You don’t have to reallocate their entire portfolio. Simply suggest you will be researching areas that are responding well and once the dust settles consider creating a small position in biotech, healthcare, banking or materials which a Trump presidency is expected to favor.”
Christopher B. Moore, managing partner and chief investment advisor at Massey Quick, a wealth management and investment consulting firm in Morristown, N.J., draws a Brexit-election day parallel also. “What we clearly learned in Brexit and now here is that the polls and media can trick us, and counting on one particular outcome is not wise.
“Clearly, investors over-reacted to Brexit and markets declined over two to three days but then they rallied. In the case of this election, futures were down initially but are already coming back,” he adds.
“There are a lot of unknowns out there: What policies will President-elect Trump focus on? He will need to appoint high-ranking officials and we will need to see how those people will influence policy.”
Moore says he talked with some clients early Wednesday morning and they are asking how Trump’s win will affect particular industries. “One client is in health care and he wanted to know what Trump would bring to the health-care industry.