Presidential Election Results Will Impact Portfolio Decisions

This is according to a recent survey of investors.

By Ayo Mseka

Hartford Funds has released data revealing that investors plan to make investment changes based on the outcome of the 2020 presidential election.

The findings also suggest a generational disparity on presidential investment decisions and the financial professional/client relationship, as younger investors (ages 18-44) and older investors (ages 45 and up) hold mixed views on which outcome will be better for their portfolios and the importance of political alignment with their financial professionals.

ELECTION’S INFLUENCE ON MARKET PERFORMANCE

An overwhelming majority of investors believe that the presidential election will impact the stock market (93%) and their investing habits (84%) in one way or another.

Leading to the election, less than half of investors (45%) plan to make changes to their investments. Sixty-two percent of investors, however, plan to make investment changes within 12 months following the election, indicating that the election result is likely to influence their investing decisions.

What’s more, investors who have worked or currently work with a financial professional are more likely to make investment changes following the election outcome, while those who never worked with a financial professional are less likely to make changes (53% and 79%, respectively).

Among investors who believe that presidents influence stock market performance, less than half (48%) believe presidents influence performance a lot, and 46% believe the influence is little. Investors who have worked or currently work with a financial professional are more likely to say that presidents influence performance by a lot than those who have never worked with one (51% and 37%, respectively).

In the context of investment performance, investors generally believe that a Republican president is better for their investments, compared to a Democrat (47% and 37%, respectively). This view, however, differs among generations. Younger generations believe a Democrat win will be better for their investments (46%), while older generations lean towards a Republican victory (49%). Less than one fifth (16%) of investors believe that the election outcome will not affect their investments. investments.

POLITICAL ALIGNMENT AND THE FINANCIAL PROFESSIONAL/CLIENT RELATIONSHIP

The data suggest that political views also play a key role in the financial professional/client relationship. Seventyfive percent of investors say they discuss politics with their financial professional, and more than half believe it is important that they align on political views (57%). In fact, 44% say they would switch financial professionals if they did not align on political views, indicating that political alignment is becoming an important factor when selecting and retaining a financial professional.

Generational Differences

The data also suggest generational differences on the importance of political alignment in the financial professional/client relationship. Younger generations almost unanimously (91%) say that aligning on political views with their financial professional is very or somewhat important, compared to the older generations (48%).

Additionally, the majority of younger investors (83%) say that they discuss politics with their financial professional, and 68% of this same group say they would consider switching financial professionals if their political views do not align with those of their financial professional. However, less than half (38%) of older investors say that they discuss politics with their financial professional, and only 27% would consider switching if they did not align on political views.

“Now more than ever, investors—especially those of the younger generations—are looking to connect with their financial professionals for insights and expertise above and beyond financial guidance,” said John Diehl, Senior Vice President of Applied Insights at Hartford Funds. “As financial professionals begin to bring in the next generation of clients, they should be prepared to engage in conversations about topics that might not have historically fallen within their purview. These outside-of-the-box discussions, if done correctly, can uncover further details on what clients value, their investing habits and ultimately help foster a strong, effective relationship.”

The survey of 872 investors with at least $100,000 in investible assets was conducted online by Engine’s CARAVAN ® between Aug. 5 and Aug. 9, 2020.