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Trump And Your Client Portfolios

By Thomas Coyle March 30, 2017

This is the second of a two-part series. Read part one here.

Donald Trump came into office as president three months ago promising to change everything for U.S. businesses by cutting taxes, eliminating red tape and renegotiating trade deals.

It remains to be seen how effective the Trump administration will be in bringing about its ambitious agenda — though last week’s retreat from Obamacare repeal seems to have cast doubt on its ability work with Congress to bring about such changes. Still, fail or succeed, advisors tell FA-IQ the scope and ambition of Trump’s campaign promises put him front and center in their conversations with clients.

For Todd Youngdahl the overriding advice to clients in these early days of the Trump era is to take stock.

“I am telling clients this is a great time to review their asset allocation and their risk tolerance given the increase in the market,” says Youngdahl of Washington Wealth Advisors in Falls Church, Va., a firm with $116 million under management. “I am advising them to expect potentially increased volatility as Trump’s policy implementation may not completely match up with the market’s expectations, which is the main reason for the current post-election increase.”

In addition, says Youngdahl, the potential for market gyrations in the face of lower expectations for what Trump can deliver means “clients must remain focused on their long-term objectives no matter what is going on in the political landscape.”

Ashley O’Kurley agrees. “Updating thoughts and plans” is essential right now, says the Coconut Grove, Fla.-based advisor. “The new president has stoked animal spirits but I am advising clients that there will be a price to pay, especially this late in the business cycle, for having leadership that is unpredictability personified.”

Meanwhile Jonathan Swanburg, of Tristar Advisors in Houston, reminds clients to keep emotions — including their feelings about politicians — out of their financial decisions.

“The plans we build are long-term and there is no value in trading around – or reacting to – the president’s actions,” he tells clients. “If a 30% correction in the stock market would cause a client to fall short of a goal, the client has the wrong allocation.”

President Donald Trump (Getty)

Adds Swanburg, who manages $135 million: a client who “needs to guess right about the markets in order to retire” needs “to reset the plan.”

When it comes to taking action, Swanburg concludes, the advent of the Trump administration “is a great time to rebalance.”

Allan Katz’s message to clients about Trump is to get ready for good things.

“I have been telling clients that the Trump effect will be felt long-term and the short-term volatility is not important,” Katz of Comprehensive Wealth Management Group in New York tells FA-IQ. “I believe that if policies such as tax reform, better trade and lower taxes come to fruition, all will be good for most investment markets, especially the stock market.”

That said, Katz, who charges clients on an hourly or project basis, likes to remind clients “it will be difficult day-to-day” in the market as Trump’s agenda unfolds.

For Jon Ten Haagen of Ten Haagen Financial Group in Huntington, N.Y., his biggest Trump-related message to clients is “turn off CNN and the talking heads because there is no interpreting what they are blabbing about.”

“The man has not been in office for 100 days yet,” says Ten Haagen, referring to Trump. “He has a total of 1,459 days to accomplish what he wants to — or not.”

Given the Trump administration’s newness and the fact he’s a catalyst for controversy and pushback, Ten Haagen says clients should “look at the economy and interest rates” and consider what companies “are doing and saying.”

Above all, Ten Haagen, who manages more than $30 million and is “mostly paid with a trail,” tells clients to “look at the big picture and be diversified” — advice he says holds true no matter who’s in the White House.