Postelection, financial advisers, retirees feeling both fretful and optimistic

APTOPIX Trump Budget Chief
Budget Director-designate Rep. Mick Mulvaney (R., S.C.) testifies on Capitol Hill in Washington on Tuesday at his confirmation hearing before the Senate Budget Committee.

Financial advisers, have you and your retired clients been fretful since President Trump's election, or are you encouraged and optimistic about the future?

If the answer is both, you've got plenty of company.

A new American College of Financial Services survey asked whether advisers were concerned about their clients’ retirement security postelection. More than half, 53 percent, reported that the election results have increased their concerns. Meanwhile, 23 percent said the election has had no impact, and 24 percent believe the election improved the outlook for their clients’ retirement security.

Among clients, the leading concerns are potential changes to health care (27 percent) and Social Security (22 percent), according to the survey by the American College in Bryn Mawr, which polled 419 advisers this month.

Rep. Mick Mulvaney (R., S.C.), Trump’s pick to run the Office of Management and Budget, said last week that he would advocate for reducing spending on Social Security and Medicare.

Clients are "scared that Trump will make changes to those, because it wasn't part of his campaign," said David Littell, a professor at the American College.

On the other hand, many retirees are more optimistic because they expect lower tax rates might stimulate the economy.

"No matter who's the president and the administration, be focused on the positive messages about lower taxes, especially for the next generation. Tax rates are going to go down and the tax code made simpler. The aggregate effect is people will have more control of their financial resources," said Gary Miller, founder and managing partner of Miller Financial Group in Spring House.

What about the stock market? More than half the advisers polled, 53 percent, told their clients to stay the course.

  • Half of advisers (50 percent) said they were rebalancing their retirement clients' investment mix to lock in gains or reduce equities.
  • Forty percent of advisers were taking profits in equities off the table for their retired clients and buying income annuities.
  • A very low percentage of advisers, 5 percent, encouraged their retired clients to invest more heavily in the stock market.
  • About 60 percent of advisers expect more volatility. 

“Regardless of what is ahead during this new administration, the bottom line is clear,” Littell said. “Advisers need to take this opportunity to sit down, talk with their clients about their current retirement plan." The full survey is available at: http://retirement.theamericancollege.edu/sites/amcol-nylcri/files/Impact_of_Election_Report.pdf

Krawcheck in the house

Wall Street powerhouse-turned-leather-jacket-wearing entrepreneur Sallie Krawcheck spoke at the Arts + Business Council of Greater Philadelphia last week and asked the audience of women to help close their gender pay gap by checking comparable salaries on websites such as FairyGodBoss.com and TheMuse.com.  

"Have the difficult conversation" with your boss about a raise, she said. By closing the pay gap, women also could close the gender investment gap by one-third, she estimated. She was referring to the fact that women oversee and inherit $5 trillion in assets, yet often don't learn about saving or investing.

"We control that wealth transfer, because men don't live as long and we inherit 70 percent of their assets," she said.

Krawcheck was one of the highest-ranked women ever to have worked on Wall Street, holding posts such as CEO of Smith Barney, CEO of Merrill Lynch Wealth Management, and CFO of Citigroup. Today, she is cofounder and CEO of Ellevest, a digital investment platform designed to help women reach their financial investment goals. (So naturally, she wants more women as clients.) She also chairs the Ellevate Network, a professional networking community for women.

There are a few resources out there already for women (and men) looking to educate themselves on investing. One is the local chapter of BetterInvesting (BetterInvesting.org), which offers classes in a broad range of subjects from basic investing to market software. The Philadelphia Area Model Investment Club meets the second Saturday of each month and welcomes visitors and prospective members. For more information, contact Gloria Mankonen by email or phone: 215-796-1214 or contact@philly.betterinvesting.net.

Another resource is PICPA, the Pennsylvania Institute of Certified Public Accountants, which sends its members out to volunteer at the Women's Opportunity Resource Center to teach personal-finance classes. They are online at www.picpa.org and worc.org.

Ninety percent of the time, said one financial adviser I spoke with at the Krawcheck event, he talks to husbands about investing, but he always wants the wives in the room. Then the men die, and the wives hadn't shown up for any of the appointments.

Come on, ladies, we can do better than that!