How advisors, RIA execs and finance experts are reacting to 2024’s election results
With former President Trump now projected to return to the White House, advisors across the industry are weighing in on what it means for advisor-client relationships, regulations and more.
By Alec Rich, Lilly Riddle Nov 06, 2024
As the dust settles in Washington, D.C., the RIA industry is bracing for how Election Day results will touch on everything from market volatility to tax laws to regulation.
Former president Donald Trump is projected to win back the White House and Republicans are expected to control the Senate, while control of the House of Representatives remains uncalled, according to the Associated Press. But ahead of the full slate of results, Citywire spoke to a range of advisors, firm partners and experts from across the industry — and country — to see how they’ve discussed potential outcomes with their clients over the last few weeks and what might lie ahead for RIAs.
One consensus among those Citywire spoke with is that the broader market tends to perform well over the long term irrespective of the party in power. Eric Gerster, chief investment strategist with AlphaCore Wealth Advisory, said he emphasized that message to clients in a pre-election webinar in August, with the caveat that certain sectors tend to benefit depending on the party in control.
President Trump was very much favorable to fossil fuels and yet energy stocks performed quite poorly during his four years,’ Gerster said. ‘And President Biden was much more favorable to renewable energy and yet fossil fuel stocks performed quite well during the last four years. So we try to tell clients that it’s best to take a long term view and be really focused on the underlying dynamic of the US economy.’
Others said they’ve employed different strategies to prepare for scenarios such as market volatility or a change in the wider geopolitical landscape.For example, Dan Perrino, a wealth manager at Savvy Advisors based in Washington state, said he’s been preparing for market changes by keeping more cash on hand in client portfolios so he can remain ready to buy if opportunities arise. He added that a sweep of Congressional control tends to lead to more market volatility than divided government, which remains a possibility as of early Wednesday morning.
Mike McGrath, senior vice president and a partner with EP Wealth Advisors, said his team has worked to remain flexible in its investing as the results shake out so that it can similarly remain ready to pivot quickly. He also noted the impact that global factors, such as wars, can have, which extend beyond the direct election results..
‘We’re seeing what we would think is a rotation out of tech if you watch the volatility of the Nasdaq into sectors like defense and industrials and so on,’ McGrath said. ‘So we’ve already positioned for that ahead of time, and I think depending on geopolitical risk for example, they’re ready to quickly rotate into particularly energy and defense if we have a flare-up.’ Stocks were rallying on Wednesday morning following the news of Trump’s win, as the S&P 500 opened up 2% while the Russell 2000 index jumped nearly 4% at the opening bell.
Tax cuts on the horizon
With a Trump presidency, much of the focus from the RIA world now shifts to specific policy areas such as tax law and regulation. The expectation is Trump will usher in a new round of tax cuts, likely extending many of the provisions of the 2017 Tax Cuts and Jobs Act (TCJA), which are scheduled to sunset next year. That could have implications for all aspects of financial planning, but estate planning in particular,as several estate planning tech companies rolled out programs this year in preparation for the expected end of the law’s provisions.
John Krambeer, CEO of Validus Capital, said that although it’s unknown what will happen to those regulations set to expire next year, his firm is preparing clients for a scenario in which those policies are no longer in effect. ‘Obviously we’ve got a sunset of the TCJA here at the end of ‘25. This has been a big conversation amongst families here, certainly over this year... So it’s a little early to know where that’s going to go,’ Krambeer said. ‘We’ll probably, at this moment, go with the belief that it will sunset.’
Krambeer added that in the short term, at least, clients will see a bump in certain Trump-friendly stocks — such as Tesla — as well as a boost in small caps, which are ‘up probably four or five percent this morning,’ he said.
Still, Scott Little — a vice president of Berkshire Money Management — said advisors should not get complacent given that the short-term lift will fade, and policies will become increasingly important to the economic environment.
‘It’s going to take time for the market to really figure this out, because it’s not only the policies. Hey, everybody wants their taxes cut... But the other side of that equation is our ballooning national debt and our annual deficits,’ Little said. ‘If all of these things were done based on a
Republican wave, how are we going to pay for them? It’s not all just this free lunch, this really wonderful outcome.’
Deregulation ahead
Republican control of Washington is also expected to usher in a deregulatory environment, which could impact everything from Securities and Exchange Commission (SEC) enforcement to banking compliance.Gerster said the regulatory landscape becomes particularly important to analyze in the wake of the Supreme Court’s landmark ruling earlier this year in Loper Bright Enterprises v. Raimondo.That decision overruled the long-standing ‘Chevron deference’ precedent, which had historically given federal agencies power over the courts to interpret ambiguous language in laws.
He said this could lead to regulations being thrown out in subsequent court challenges as Trump works to undo the stricter regulatory environment in place under President Joe Biden.
Gerster said leadership of the Federal Trade Commission and the Department of Justice will have a major impact on M&A activity, which has been relatively stunted by the current regulatory environment. Though, he said the regulatory approach of FTC Commissioner Lina Khan may still endure under a Trump administration, as presumed vice president-elect JD Vance has praised Khan’s regulatory approach in the past.’‘I think it’s going to be important for a number of areas, particularly investments in private equity and venture capital, where you have higher rates, and with a tougher regulatory environment,you’ve seen less deal activity,’ Gerster said. ‘Both parties have indicated that they might be particularly difficult on M&A.’
How clients may react
The election could directly impact advisor-client relationships, too. Brendan Frazier, chief behavioral officer at RFG advisory — who described his role as helping advisors and clients understand the psychological aspects of money — said what might look like market concern for a lot of advisors is really a fear of uncertainty.
‘Just pulling [clients] out of the moment, which is like, “Oh my gosh, the elections gonna blow this whole thing up,” and zooming out and going, “Hey, it’s not just about today. It’s about the bigger picture,”’ Frazier said. ‘If you can help them zoom out of this one day and remember that it’s a lot bigger picture, that helps take people out of their emotional state.’
Frazier said this election largely feels like the last one. He added that he thinks an advisor’s role in determining a client’s political involvement should be minimal, if not nonexistent.
‘The reality is that at the end of the day, clients are gonna bring up the election. They’re gonna have thoughts, they’re gonna have an opinion,’ Frazier said. ‘But our job isn’t to offer political conjectures, not to have a political debate. Our job is to help guide people through these times to get to where they want to go to accomplish their goals.’
Meet
Dan Perrino
Hello there! 👋🏼 I'm Dan, originally from Chicago and now residing in Bellingham, Washington. My lifelong passion for finance and the stock market has driven my career path.
How advisors, RIA execs and finance experts are reacting to 2024’s election results
With former President Trump now projected to return to the White House, advisors across the industry are weighing in on what it means for advisor-client relationships, regulations and more.
By Alec Rich, Lilly Riddle Nov 06, 2024
As the dust settles in Washington, D.C., the RIA industry is bracing for how Election Day results will touch on everything from market volatility to tax laws to regulation.
Former president Donald Trump is projected to win back the White House and Republicans are expected to control the Senate, while control of the House of Representatives remains uncalled, according to the Associated Press. But ahead of the full slate of results, Citywire spoke to a range of advisors, firm partners and experts from across the industry — and country — to see how they’ve discussed potential outcomes with their clients over the last few weeks and what might lie ahead for RIAs.
One consensus among those Citywire spoke with is that the broader market tends to perform well over the long term irrespective of the party in power. Eric Gerster, chief investment strategist with AlphaCore Wealth Advisory, said he emphasized that message to clients in a pre-election webinar in August, with the caveat that certain sectors tend to benefit depending on the party in control.
President Trump was very much favorable to fossil fuels and yet energy stocks performed quite poorly during his four years,’ Gerster said. ‘And President Biden was much more favorable to renewable energy and yet fossil fuel stocks performed quite well during the last four years. So we try to tell clients that it’s best to take a long term view and be really focused on the underlying dynamic of the US economy.’
Others said they’ve employed different strategies to prepare for scenarios such as market volatility or a change in the wider geopolitical landscape.For example, Dan Perrino, a wealth manager at Savvy Advisors based in Washington state, said he’s been preparing for market changes by keeping more cash on hand in client portfolios so he can remain ready to buy if opportunities arise. He added that a sweep of Congressional control tends to lead to more market volatility than divided government, which remains a possibility as of early Wednesday morning.
Mike McGrath, senior vice president and a partner with EP Wealth Advisors, said his team has worked to remain flexible in its investing as the results shake out so that it can similarly remain ready to pivot quickly. He also noted the impact that global factors, such as wars, can have, which extend beyond the direct election results..
‘We’re seeing what we would think is a rotation out of tech if you watch the volatility of the Nasdaq into sectors like defense and industrials and so on,’ McGrath said. ‘So we’ve already positioned for that ahead of time, and I think depending on geopolitical risk for example, they’re ready to quickly rotate into particularly energy and defense if we have a flare-up.’ Stocks were rallying on Wednesday morning following the news of Trump’s win, as the S&P 500 opened up 2% while the Russell 2000 index jumped nearly 4% at the opening bell.
Tax cuts on the horizon
With a Trump presidency, much of the focus from the RIA world now shifts to specific policy areas such as tax law and regulation. The expectation is Trump will usher in a new round of tax cuts, likely extending many of the provisions of the 2017 Tax Cuts and Jobs Act (TCJA), which are scheduled to sunset next year. That could have implications for all aspects of financial planning, but estate planning in particular,as several estate planning tech companies rolled out programs this year in preparation for the expected end of the law’s provisions.
John Krambeer, CEO of Validus Capital, said that although it’s unknown what will happen to those regulations set to expire next year, his firm is preparing clients for a scenario in which those policies are no longer in effect. ‘Obviously we’ve got a sunset of the TCJA here at the end of ‘25. This has been a big conversation amongst families here, certainly over this year... So it’s a little early to know where that’s going to go,’ Krambeer said. ‘We’ll probably, at this moment, go with the belief that it will sunset.’
Krambeer added that in the short term, at least, clients will see a bump in certain Trump-friendly stocks — such as Tesla — as well as a boost in small caps, which are ‘up probably four or five percent this morning,’ he said.
Still, Scott Little — a vice president of Berkshire Money Management — said advisors should not get complacent given that the short-term lift will fade, and policies will become increasingly important to the economic environment.
‘It’s going to take time for the market to really figure this out, because it’s not only the policies. Hey, everybody wants their taxes cut... But the other side of that equation is our ballooning national debt and our annual deficits,’ Little said. ‘If all of these things were done based on a
Republican wave, how are we going to pay for them? It’s not all just this free lunch, this really wonderful outcome.’
Deregulation ahead
Republican control of Washington is also expected to usher in a deregulatory environment, which could impact everything from Securities and Exchange Commission (SEC) enforcement to banking compliance.Gerster said the regulatory landscape becomes particularly important to analyze in the wake of the Supreme Court’s landmark ruling earlier this year in Loper Bright Enterprises v. Raimondo.That decision overruled the long-standing ‘Chevron deference’ precedent, which had historically given federal agencies power over the courts to interpret ambiguous language in laws.
He said this could lead to regulations being thrown out in subsequent court challenges as Trump works to undo the stricter regulatory environment in place under President Joe Biden.
Gerster said leadership of the Federal Trade Commission and the Department of Justice will have a major impact on M&A activity, which has been relatively stunted by the current regulatory environment. Though, he said the regulatory approach of FTC Commissioner Lina Khan may still endure under a Trump administration, as presumed vice president-elect JD Vance has praised Khan’s regulatory approach in the past.’‘I think it’s going to be important for a number of areas, particularly investments in private equity and venture capital, where you have higher rates, and with a tougher regulatory environment,you’ve seen less deal activity,’ Gerster said. ‘Both parties have indicated that they might be particularly difficult on M&A.’
How clients may react
The election could directly impact advisor-client relationships, too. Brendan Frazier, chief behavioral officer at RFG advisory — who described his role as helping advisors and clients understand the psychological aspects of money — said what might look like market concern for a lot of advisors is really a fear of uncertainty.
‘Just pulling [clients] out of the moment, which is like, “Oh my gosh, the elections gonna blow this whole thing up,” and zooming out and going, “Hey, it’s not just about today. It’s about the bigger picture,”’ Frazier said. ‘If you can help them zoom out of this one day and remember that it’s a lot bigger picture, that helps take people out of their emotional state.’
Frazier said this election largely feels like the last one. He added that he thinks an advisor’s role in determining a client’s political involvement should be minimal, if not nonexistent.
‘The reality is that at the end of the day, clients are gonna bring up the election. They’re gonna have thoughts, they’re gonna have an opinion,’ Frazier said. ‘But our job isn’t to offer political conjectures, not to have a political debate. Our job is to help guide people through these times to get to where they want to go to accomplish their goals.’
Meet
Dan Perrino
Hello there! 👋🏼 I'm Dan, originally from Chicago and now residing in Bellingham, Washington. My lifelong passion for finance and the stock market has driven my career path.
