Separating politics from decisions can be difficult. It can be even harder if the advisor and client have two different political ideologies. It is up to the advisor to disregard their personal politics and focus on the data, according to Henderson.
“Politics seems to be infused into more and more areas of life, but ultimately the advisor needs to be that professional and say, ‘Regardless of my political persuasion or your political persuasion, we’re looking at what’s the best thing for your retirement security [so] we can make sure that you’re good,’” he said.
While a portion of Americans do believe that the outcome of next year’s election will affect their retirement plans, Republican investors believe it more: 68% said the outcome of the presidential election will have a direct, immediate and lasting impact on the performance of the stock market. Meanwhile, 57% of Democrat investors believe the election will have an impact.
However, investors who are political independents are the least concerned, as only 40% said the results of next year’s election will have a bigger impact on their retirement plans and portfolios than market volatility.
Inflation continues to be a concern for all investors regardless of their political affiliation. Forty-seven percent of non-retirees identified it as the greatest long-term challenge to their retirement portfolios. Meanwhile, 42% said it was the increased cost of living, and 31% said it was a potential recession.
“[Higher inflation] has more of a direct impact on [investors] than equity markets do, and so I think in the back of their mind, they don’t feel in as good of an economic situation as they have in the past,” Henderson said. “I think that spills over to a lot of other parts of the economy.”
Given the insecurity of the markets, those nearing retirement are the most concerned about their potential nest egg getting hurt as a result of inflation and the impact that next year’s election could have on it. To contend with that, 33% of pre-retirees surveyed said they plan to invest more conservatively in preparation for next year’s election compared with 31% of non-retired investors.
In contrast, 12% of pre-retirees and 4% of retired investors will invest more aggressively in anticipation of next year’s election.
“When you think about retirement, that is a long-term situation,” Henderson said. “You have to think about it as a long-term situation and not something that any short-term thing is going to have a significant impact on typically.”