Relax.
While not suggesting that you take a public position on the presidential election, I am urging you to be proactive/pre-emptive in addressing client questions and concerns about its probable market impacts. As you already know, the most important thing you need to say to clients is that unless goals, time horizons, or risk tolerance have changed, stick with your current investment strategy. That said, it is both fair and appropriate to also speak to clients about the risk and uncertainty that will likely buffet the market over the next three to four months.
The markets dislike uncertainty. Duh. All considered, Hillary Clinton is a less-risky candidate than Donald Trump and, therefore, represents lower uncertainty for the markets and investors. By the time Election Day happens, however, a rolling avalanche of opinion polls with contradictory or ambiguous findings will drive the whipsaw market impacts of mercurial speculation. Such volatility in isolation will cause great unease among even your most mature clients. Against a context of global and national unrest like that which has dominated the recent news landscape, the market effects are likely to be amplified. Add to that the dynamics of the predictable fear-greed psychology that accompanies historically high-level market indexes and you have a potentially perfect storm for severe market turbulence.
You cannot change the circumstances but neither can you ignore them. It is critical that you now inoculate your clients against the likely turmoil. Speak directly to the issues mentioned above. Speak about expected volatility, even the possibility of an unsettling correction. Some portfolios will probably need to be modified to accommodate diminished risk tolerance, whether reality- or fear-based. Some portfolios will need to be rebalanced, taking some heretofore unrealized gains. Some, perhaps most, asset allocations will not have to be changed at all. But speak and soon, especially to those clients you care about most. Compliance will understand and probably even help in the process.
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