Are advisors worried about the effects of the US election?

Managing portfolios through change

Advisors have mastered the art of recalibration over the past five years as markets delivered swift downturns and record highs, inflation spiked to a 40-year high, and interest rates shot from near zero to 5% or more. Although change may not always be as dramatic, advisors continually need to manage portfolios through exuberance and turbulence.

The long and short of politics and policy

Given the speed and frequency at which macro and market factors have changed in recent years, it could be easy to look at the US presidential election as yet another reason for concern about investments. But the November election is just one more in a long line of national elections carried out in 2024, and advisors see greater risks in the policies that come out of the election than the election itself.

Surveyed between June 2024 and August 2024, advisors were in the thick of political disruption. In the UK, a landslide victory for the Labour Party ushered in a new center-left government. In France, a surge for the left resulted in a deadlocked parliament. And in the US, one candidate survived an assassination attempt, the other dropped out, and a new candidate took over the party mantle. All this in the span of just 33 days.

Fundamentals matter more than elections

Despite the dramatic shifts, advisors express two clear views on how much politics matter to markets: 72% of those surveyed globally believe that the underlying fundamentals are more important than election results. Looking specifically at the US election, 54% say that the results have already been priced into the market – though given events in the US during July, it’s not surprising that only 39% of US advisors agree.

A more detailed look at the implications of the US election reveals a greater level of underlying concern. In the outfall of the 2020 election, one of the key questions is if the upcoming election will be settled on election day. Nearly six in ten advisors worldwide (58%) worry that election skepticism could have a negative effect on the markets.

The results of races down the ballot could matter more as 59% believe split control of Congress between Democrats and Republicans will be good for the markets – a sentiment shared with 72% of advisors in the US. Ultimately, 59% of advisors believe the election results are less important than Fed policy.

Policy presents greater risks

The election may be seen as a moderate risk, but advisors have greater concerns about the policies that come out of the White House and the next Congress. More than six in ten believe the future of antitrust regulation is under appreciated in this election. The issue is especially relevant, as the US Justice Department is pursuing an antitrust case against Google’s ad business. On the trade front, 69% say the US election has the potential to speed up bifurcation of the global economy.

Another 55% believe independence of the Federal Reserve is at stake in this election as well. Most telling of their risk concerns, however, is the 73% of advisors who believe the US national debt will increase regardless of the election outcome.

Read our full Financial Advisors survey on the Great Wealth Transfer and what strategies advisors are using to futureproof their business