Hillary versus Donald (or Ted) . . . the outcome could impact the economy, financial markets and financial advisors in different ways.

During an entertaining and informative presentation on Friday during the Transamerica Coaching Forum for registered investment advisors in Philadelphia, noted political observer Andy Friedman said Democratic candidate Hillary Clinton could have a more salubrious effect on the markets than her Republican rivals. And happy markets tend to make for happy advisor clients.

“I don’t see her administration making things more difficult for us,” said Friedman, principal at The Washington Update, which offers insights on the intersection of politics and investment and retirement planning. Under Clinton, he noted, we could expect a continuation of the status quo characterized by gridlocked lawmaking marked by 11th-hour/kick-the-can-down-the-road types of deals.

“Maybe that’s good for the markets because they like that kind of deadlock because they don’t have to worry about something crazy happening,” Friedman said. “The unpredictability of a Trump presidency will probably create market volatility. The markets like predictability, and Trump is anything but predictable.”

He offered that Trump’s desire for trade protectionism is a serious threat to the economy.

Friedman noted that a Donald Trump or a Ted Cruz presidency could follow the arc of a George W. Bush presidency. Namely, an initial positive jolt to the economy resulting from lower taxes and more government spending, followed by a ballooning deficit and worries about the economy faltering and heading into recession.

Friedman said one of the big issues of the current presidential campaign has been income inequality. The Democrat solution, he noted, is higher taxes on the affluent and additional domestic programs to help lower-income people.

Republicans take the opposite approach, he explained, by claiming we need to focus on growth, jobs creation and getting the government off the backs of businesses by undoing burdensome regulations. And, of course, they want lower taxes.

Either way, the federal budget deficit will probably rise. And failing a major tax overhaul (unlikely) and entitlement cuts (also unlikely), Friedman said one of the ways politicians will try to trim the deficit is by closing tax loop holes, some of which could impact the bottom line for investors.

“There will be a withering away of the opportunities for affluent clients to save taxes,” Friedman said. “So advisors will want to pay more attention to tax drag on investments––things like harvesting losses, buy-and-hold strategies . . . and muni bonds, MLPs and REITs, which all flow through income with little or no tax. Try to hold tax-inefficient investments, like mutual funds that throw off big dividends, in tax-deferral accounts such as IRAs, variable life and variable annuities.”