Election Season May Feel Overwhelming, but It’s Often Business as Usual

Election season is an emotional and confusing time, best summed up by a famous James Dean line from “Rebel Without a Cause”: “You say one thing, he says another, and everybody changes back again!”

Amid all the political noise, financial advisors are preaching patience. Election outcomes may influence the economy and markets in the short term, but they rarely justify significant changes to long-term investment strategies. Instead, advisors say their job is often to keep clients calm and focused on the bigger picture.

That’s not always easy when Americans are bombarded with political ads, headlines and get-out-the-vote text messages from Ice-T (anybody else getting those?).

Clients sometimes worry that a victory for their political opponents could hurt their finances, but that’s rarely how things play out, said John Power, principal advisor at Power Plans. “Most of my clients have been with me since before the Great Recession and know that time in the market is far more important than trying to guess what the market will do and respond,” he told Advisor Upside.

America Speaks

Though he hates how true it remains, political strategist James Carville’s famous words, “It’s the economy, stupid,” continue to resonate with voters:

• Healthcare costs, the war in Iran, wealth distribution and gas prices are among voters’ top concerns heading into the midterm elections, according to a Gallup poll.
• The share of Democratic voters who consider the economy an extremely important issue has risen to 59%, up from 33% during the 2022 midterms.
• Meanwhile, economic concerns have fallen among Republicans, down from 64% to 39% since 2022.

But while these are legitimate concerns, it’s difficult to predict how changes in the House and Senate will affect the economy, said Juan Hernandez-Ariano, founder of WealthCreate. “I don’t think anyone can tell you what a shift in Congress does to the overall economy,” he told Advisor Upside. “I’d be skeptical of an advisor sending clients a confident call on it this week.”

The More Things Change … Election season or not, clients rarely ask about investments and portfolio construction, with conversations tending to focus instead on their broader financial plans, said Bryan Byrer, founder of Millennium Financial Planning.