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November 07, 2018 at 05:17 PM
Political discussions can be difficult — if not impossible — for advisors to avoid.
“It’s fair for clients to wonder how changes in Washington, D.C., or state governments might potentially affect their portfolios, especially amid midterm elections this year,” Capital Group said in recent commentary. “Some may expect you to help them understand if any adjustments are needed, so it’s best to be prepared.” According to Mike Joslin, CEO of Joslin Capital Advisors, clients — including high-net-worth clients — routinely ask him about political matters.
“You have to address it,” Joslin said in the commentary. “To not address something that is so obvious is to ignore the elephant in the room, and I think that makes it even a more awkward moment.”
Capital Group released four tips from Joslin and two other registered investment advisors on the best techniques when talking to clients about politics.
1. Don’t bring up politics — wait and see if the clients do it first.
Capital Group talked to Bob Smith, market leader and partner of the Cleveland office of HPM Partners, whose advice is to not go there unless clients take you there.
Smith is civically active. He has been appointed to several positions by elected officials, including the Ohio Public Employees Retirement System, and serves as the current chair of the Detroit Police and Fire Retirement System Investment Committee. However, while his clients are aware that he is active civically, Smith doesn’t bring up politics before being asked.
“If clients want to ask that question, that’s theirs and we will answer it based on our perspective and how politics, government and public officials affect public markets,” he says.
2. Be prepared with a response.
Because Joslin’s clients tend to ask about politics frequently, he told Capital Group that he likes to stay one step ahead.
When the clients start asking about an election or other event, Joslin writes and emails articles on major political events.
For example, many clients expressed concern with the United Kingdom’s decision to leave the European Union because many of the firm’s clients have significant weightings to international stocks.
