In his 23 years as a financial adviser, Greg Munroe has made it a rule not to talk politics with his clients.
Lately, however, that’s the main thing they’ve wanted to discuss.
“They’re saying, ‘Listen, this election has got me concerned. What do you think? How might this affect my investments? Should I make changes based on the election?’ ” said Munroe, president of Munroe Morrow Wealth Management in Boston.
“I’ve had a couple extreme cases where clients say they want to move all their money out of stocks, and I’ve talked them out of doing that,” he said. “And these are very smart, thoughtful people, but they’re very concerned. I’ve never had clients ask about this more.”
Should I liquidate all my equities? Should I move my money into cash or gold? Should I hold off on making any new investments until the fallout from the presidential race is known?
These are the types of nervous questions Munroe and countless other financial advisers have been fielding in recent months, and especially recent weeks, as the tumultuous presidential campaign wreaked psychological havoc on average investors, who worried its outcome could harm their finances.
“There’s a very high level of anxiety out there that certainly is translating to people’s attitudes about investing and their portfolios,” said Brad McMillan, chief investment officer at Commonwealth Financial Network, an independent broker/dealer in Waltham. Like Munroe, “I’ve had clients ask if they should get out of the market entirely,” he added.
For most investors, the perception was that a Donald Trump victory would be much worse for the markets than a win by Hillary Clinton, due to uncertainty over how he would govern and what his administration’s policies would be, according to numerous financial advisers.
But other investors felt a Clinton win would be viewed as “an illegitimate election, so the legitimacy of her presidency would be in question,” potentially having a negative market impact, McMillan said.
That means financial advisers have been doing a lot of hand-holding lately, reminding clients of market fundamentals and urging them not to do anything rash.
To ease client concerns, the Plymouth financial planning firm SHP Financial created a webinar that puts this year’s election in historic context. It found that 14 of the past 16 election years ended positively for the markets; the two that didn’t were 2008 (the recession) and 2000 (the dot-com crash).
“That being said, we’re still getting phone calls,” said SHP founding partner Matthew Peck. “One or two clients have said, ‘Look, I’d like to cash out for the time being,’ but that’s been a very, very small minority. A lot of people just need reassuring. It’s keep calm and carry on.”
Similarly, Robert Rice, a partner at Harvest Wealth Management in Needham, recently sent a group e-mail to his clients warning that some short-term volatility was to be expected, no matter who won. As a result, he cautioned, “the most damaging thing you can do to your portfolio is overreact.”
Rice and other advisers say even throughout this wildly unpredictable election, the usual investing rules have applied: Market timing is impossible, and if you have short-term income needs, those assets should be in safe investments such as cash or cash equivalents.
Clients should also have an investing strategy that doesn’t fluctuate with market uncertainty.
“To change your investment portfolio because of an election is a very foolish thing to do,” Munroe said.
“An election is a one-off event, and in the totality of a global economy to change your portfolio in the short run over a political event is something most advisers would never advise.”
Munroe’s advice to clients who wanted to liquidate their entire portfolios was a compromise: Shift 10 percent from stocks to bonds, because “history is littered with people trying to time the market based on political events or other events,” he said, “when at the end of the day what drives where the stock market goes is fundamentals.”
So far, several advisers say, most clients seem not to be acting on their anxieties.
A recent nationwide poll by Fidelity Investments found that three-quarters of those surveyed believed the stock market could be affected by which political party controls the government. Yet only 15 percent have made or plan to make changes to their portfolios because of the election.
The majority plan to stay the course, which is the standard recommendation of Fidelity and other financial firms. They note that elections historically have little lasting impact on market performance. More powerful drivers are interest rates, corporate earnings, and overall economic growth.
“If you’re worried about any one issue — the presidential election, Brexit, the China market downturn — that’s a great wake-up call for people to rebalance their portfolio,” said John Sweeney, Fidelity’s executive vice president of retirement and investing strategies. “But that has to be due to a better reason than short-term news headlines.”
If jittery investors do bail out of the market, advisers say, they should also have a strategy for when they plan to get back in.
“Getting out of the market is the easy part; getting back in is the tougher part,” McMillan said. “That has to be a two-part decision: How and why am I going to get out, and how and when am I going to get back in? And you shouldn’t make the first decision without having made the second.”