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Are You Politically Aligned With Your Clients? It Matters More Than You Think

By Ming Li September 17, 2020

As the November U.S. presidential election nears, the recently published findings of a survey bring to light that most investors believe political alignment with their financial professional is important — to the point that it could make or break a relationship.

More than half, or 57%, of investors surveyed believe it is important that their financial professional’s political views are aligned with their own. In fact, 44% of the investors surveyed would consider switching financial professionals if their political views do not align.

Hartford Funds, which commissioned the survey, says the data suggest that political views play a key role in the client-financial professional relationships. The firm notes that 75% of investors surveyed said they discuss politics with their financial professional.

The survey of 872 investors with at least $100,000 in investable assets was conducted online between August 5 and August 9 by Caravan, a unit of the research firm Engine.

The survey also shows generational differences in the degree of importance of political alignment in the client-financial professional relationship.

Younger investors surveyed (ages 18 to 44) almost unanimously (91%) said that aligning on political views with their financial professional is “very or somewhat important.” In contrast, only 48% of the older generations (ages 45 and up) hold similar views.

“Now more than ever, investors — especially those of the younger generations — are looking to connect with their financial professionals for insights and expertise above and beyond financial guidance,” John Diehl, a senior vice president of Applied Insights at Hartford Funds, says about the findings.

“As financial professionals begin to bring in the next generation of clients, they should be prepared to engage in conversations about topics that might not have historically fallen within their purview. These outside-of-the-box discussions, if done correctly, can uncover further details on what clients value, their investing habits and ultimately help foster a strong, effective relationship," he adds.

The survey also shows that majority of investors, or 93% of those surveyed, believe that the upcoming presidential election will impact the stock market. About 84% of the respondents said their investing habits will be impacted in one way or another.

Leading up to the election, less than half of the respondents, or 45%, plan to make changes to their investments. Sixty-two percent, however, plan to make investment changes within 12 months following the election, indicating that the election result is likely to influence their investing decisions, according to the findings.

Investors who have worked or currently work with a financial professional are more likely to make investment changes following the election outcome (79% of respondents). Those who have never worked with a financial professional are less likely to make changes (53%).

In terms of investment performance, more respondents (47%) believe that a Republican president would be better for their portfolios compared to those who believe that a Democrat president would be better (37%).

Less than one-fifth (16%) of the respondents believe that the election outcome will not affect their investments.

“History suggests that market performance is impartial to who is sitting in the Oval Office,” says Brian Kraus, Hartford Funds’ head of investment consulting,

“As November approaches and investors and their financial professionals are actively evaluating their portfolios, we believe that focusing on clients’ long-term objectives, rather than the dynamics of election outcomes, will yield better results for investors’ portfolios,” he adds.

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