No matter what side of the fence a person is on, like most of the country,he/she is just grateful that the 2012 Presidential Election is now over. After the incessant blast of political ads, the relentless debates between candidates, and the overwhelming political opinions broadcasted on every social media outlet, the election is finally over; and, Obama is our President for the next four years. Many leaders in financial services agree that the re-election of the Obama Administration will indeed affect the decisions of financial advisors and their clients. Various leaders of the financial advisory industry have already offered the following opinions about Obama’s re-election, as well as what it means for the industry and the clients it serves:
The one sure thing is that clients should meet with their financial advisors to discuss the fiscal opportunities/threats of the re-election and any fiscal actions that the clients should take.
- For those financial advisors who are not registered investment advisors, some leaders believe that the Obama Administration will continue to make brokers subject to the fiduciary rule. The Principal and Chief Investment officer at Fort Pitt Capital Group, Charlie Smith, believes that this rule will impede on the distributive functions of investment banking/brokerage firms. Therefore, he believes that the relationship between the Obama Administration and the brokerage community will continue to be dubious. On a positive note though, Charlie Smith thinks that this will benefit clients because clients will have an easier time identifying the differences as well as the basic business models of advisors vs. brokers.
- Some industry leaders believe that after the re-election, financial advisors should now concentrate on the following two things: 1) What will clients need to do now? 2) How does the outcome make clients feel? Bill Keen, the Managing Director of Investments for Keen Wealth Management of Wells Fargo Advisors, predicts that tax rates will indeed increase. Furthermore, he believes that if the Bush tax cuts are allowed to expire on December 31st, it will affect the pool of assets that clients remove money from. Because of this, Bill Keen encourages financial advisors to be extra aware of “how the tax brackets will weigh on each source and where clients want to spend money from.” He also predicts that interest rates will remain low, and affect clients’ pensions as well as some distributions calculations.
- Despite the fear of an increasing capital gains rate, some financial analysts point out segments in the market that are now favored due to the Obama Administration. The President and Chief Executive Officer of Beverly Hills Wealth Management, Mag Black Scott, expects that the health care industry will be a favored segment because of Obamacare’s reforms. Additionally, he believes that green energy and renewable sources will benefit.
- Various industry leaders also believe that the next 13 months are critical because of the upcoming re-election of Congress members in January 2013. According to Dale Brown, the President and CEO of the Financial Services Institute, “Clients and their independent financial advisors and financial services firms need a healthier, more business friendly regulatory environment. The next 13 months are critical for our members because, come January 2013, Congress will be back in re-election mode and will not tackle anything that could put their own re-elects in jeopardy.” Prior to this re-election, Dale Brown has been an adamant critic of theObama Administration. Now with the outcome of the election, he stresses that because Washington will have tunnel vision regarding the fiscal cliff and tax reform, the Financial Service Institute must remain vigilant in its advocacy efforts and influence.
- Lastly, some industry leaders believe that the effects of the Obama Administration are not all doom and gloom. Managing partner of CIC Wealth Management, Michael Fein, shares that his clients have already voiced their worries about the future. He then reminds his clients that there is a silver lining after all. Michael Fein tells his clients, “Just remember that major corporations right now are sitting on unprecedented levels of cash.”
With all of these predicted outcomes from the re-election of the Obama Administration, what do financial advisors and their clients do with it? Well, it seems that the leaders in the financial industry have differing degrees of positive and negative feelings about the administration, as well as differing opinions about the appropriate actions that clients should take now.The one sure thing is that clients should meet with their financial advisors to discuss the fiscal opportunities/threats of the re-election and any fiscal actions that the clients should take. It’s understandable that clients might be worried about increased taxes and the uncertainty of the economy. Fortunately, the financial advisors can help guide these clients through any concerns about the re-election, and ultimately promote the clients’ confidence.
If you aren’t already working with a financial advisor or if you don’t have a long term financial plan in place, call my office today to make an appointment so we can build an individualized plan to meet your needs for the future.