Trump triumph – how is your company handling it?
Written by Vanessa Vrdoljak on November 18, 2016.
There was an element of Groundhog Day about the US election result. Just as with Brexit back in June, many people round the world went to bed feeling that the result was going one way, only to wake up and discover it had gone the other. Defying all poll results and predictions, the US electorate voted last week to make Donald Trump, a man who has never held office, its president.
On Tuesday night as the election result was looking more and more likely to put Trump in the White House, markets nosedived. Uncertainty was the trigger for this volatility. If there’s one thing that markets don’t like it is uncertainty and having a political outsider in charge, particularly one who promises to shun globalisation in favour of protectionist policies, most definitely raises a lot of that.
Mexico and Canada could be in for a rocky ride as Trump has promised to tear up the North American Fair Trade Agreement. China could also suffer if threats to set double digit tariffs on imports become reality. In fact, with Trump’s isolationist approach, emerging economies in general could well feel the pain. Plans for tax cuts and increased spending on infrastructure are likely to widen US deficits and drive up interest rates. The doom-mongers are also predicting increased unemployment, inflation and a possible recession.
Yet later in the week we witnessed what has been dubbed the ‘Trump bump’ as equities recovered from their initial falls to post record gains on Thursday and Friday. Today the Dow Jones has again hit a record high. Gains are sector specific – shares in banks, oil companies, constructions and drug firms have risen, in part because Clinton’s proposed regulation of these sectors is no longer a threat. By contrast, stocks in renewable energies suffered with fears that the new president’s denial of climate change will stifle investment. The bond market has also been badly hit with the threat of higher interest rates and inflation.
This market volatility is likely to be with us for a while which can be tricky for financial planners when dealing with jittery clients whose first reaction may be to panic sell. How are you able to reassure your clients in this financial landscape? Are you confident that your clients’ funds are being actively managed to protect them?
Here at Infinity, our planners are safe in the knowledge that our investment management partner, Tilney Bestinvest, takes the guardianship of billions of pounds worth of savings by their clients very seriously indeed. They monitor markets and economic indicators extremely closely to be able to mitigate risk by adapting investment strategy accordingly and actively managing portfolios. Over the last year they have chosen to reduce exposure to equities and bonds in favour of safer alternatives such as gold and absolute return vehicles, with diversification the consistent watchword.
Client communication is also key and Tilney Bestinvest ensure that clients are informed about changes to market conditions and the proposed response every step of the way. If you want an example of how, take a look at this post-election analysis from TBI’s Director of Investment Strategy & Research, Ben Seager-Scott.
Can your company boast such robust policies when it comes to protecting and informing clients? If not and you are feeling frustrated, why not have a chat about furthering your career in a company which offers the support and back-up you need? We are on the look-out for professional, client-focused planners and would love to hear from you.