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Clients With Political Discontent Harder to Keep on Track

By Crucial Clips     June 7, 2017
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FA-IQ, May. 9, 2017 

RITA RAAGAS DE RAMOS, SPECIAL PROJECTS MANAGER, FINANCIAL ADVISOR IQ: Hi. I'm Rita Raagas de Ramos from Financial Advisor IQ and here with me today is Eric Aanes, president of Titus Wealth Management. The new administration is being monitored very closely by financial advisors. How has the presidency of Donald Trump affected your business, your clients, and the advisory industry in general?

ERIC AANES, PRESIDENT, TITUS WEALTH MANAGEMENT: I think in general, while the advisory business is not going to say with open arms that they're really in favor wholeheartedly for this administration, I think what they are in favor of is some of the tax cuts and some of the proposals that have been made. And what those do are basically fueling the economy, whether it's a repatriation of cash, tax cuts at the corporate level, the personal level-- child tax credits.

Those are some of the items that people seem to like-- not so favorable on border tax and items along that agenda. And so from that, we have clients that have become somewhat less comfortable with the current environment since the November election. And as I mentioned, building and tailoring that plan for our client and collaborating doesn't mean serving them whatever is on our agenda.

So for us, it's important to work as a team. From our perspective, what had happened is-- because we do have a great number of clients on the other side of the aisle. And when we look at where we are in Marin County, which is quite liberal, and all the exit polls really didn't show Trump as coming out on top, we had a client dinner a couple nights after the election, somewhat of a trail of tears.

So many clients were very upset, really having a hard time conceptualizing the idea that really the country was going in this direction. So there was a lot of uncertainty, a lot of fear, a lot of panic, and no one really knew what was going to happen or if the markets were going to tank and so a lot of concern.

And so by helping these folks in creating that cash cushion, creating a hedge within the portfolio, we found a way to make sure that our clients really stick to the plan because when we're building that plan for someone's lifetime, the last thing we want is for them to feel so uncertain that they can't stomach the ride or stick with where we're heading.

And over my years of experience, whether it was the last election or this election, oftentimes, the most difficult people to keep aboard the plan were the ones that were the most politically discontent because they really would have a hard time seeing any sort of dip as a comeback because they really couldn't see how the economy would come back, given their lack of confidence in the administration.

So by understanding our clients, by partnering with our clients, we really feel like we found a way to be on the same page with them and really help guide them through what for them is a somewhat troubling time.

RITA RAAGAS DE RAMOS: How do you appease those nervous clients? How do you assure them that "We're doing fine with your investments," regardless who's in the White House?

ERIC AANES: So that's a great question. So what we'll do for a lot of individuals in the situation is create a higher cash component. So oftentimes, we might have a lower level of cash. But right now, we'll have an extra cushion built in for those clients. And that seems to, if anything, help them feel comfortable. If there turns out to be a geopolitical issue that happens, we have, as I like to call it, dry powder to throw at the problem.

We also have a small hedge of 5% within the portfolio that's a program that really helps to mitigate some of that volatility, if we do see a spike-up in the volatility of the markets.

RITA RAAGAS DE RAMOS: Well, thank you, Eric.

ERIC AANES: Well, thanks, Rita. I really appreciate being here today.