When Politics Threaten Relationships and Retirement

As the midterm elections approach, advisors discuss how they communicate with politically obsessed clients.

By Jerilyn Klein

Older Americans are expected to account for the largest share of voters who come out for the 2022 midterm elections and they mean business.

In a Pew Research survey conducted in early August, 50% of registered voters age 65 and older and 41% of the 50-to-64 cohort said they’d already given a lot of thought to the November 4 congressional elections — far outpacing respondents age 30 to 49 (25%) and 18 to 29 (20%).

“It really matters” which party wins control of Congress, said the vast majority of respondents age 65-plus (82%) and 50 to 64 (71%), compared with 50% to 60% of the younger groups surveyed. More voters 50 and up said they’d vote for or lean toward a Republican candidate for the House (47%) than a Democrat (42%) — which Pew describes as a modest tilt to the GOP.

“It’s going to be a crazy political season. We already have TV commercials and they are awful,” says Larry Pon, CPA, CFP of Pon & Associates in Redwood City, Calif.

Financial advisors are also seeing their share of politically crazed clients.

“I’ve worked with clients all over the political spectrum,” says Pon, who says he learns about their political beliefs especially during estate planning.

“For example, one client has his entire estate going to the National Rifle Association when he dies. My question: ‘What about your wonderful wife, Nancy?’” says Pon.

This particular client has also protested California’s Fire Prevention Fee and disagrees about his property bill. “I just let him rant and send long letters to the government,” says Pon.

Tax savings didn’t impress them

Another client “believed every Democratic party talking point. I don’t know why they kept making political comments in our meetings,” says Pon. Yet when he pointed out the client’s substantive tax reduction when the Tax Cuts and Job Act of 2017 (TCJA) passed, despite lack of Democratic support in the House or Senate, “they were not impressed,” says Pon.

Neither were some other clients who received five-figure tax deductions. “The most common comment was, ‘Not my president,’” says Pon.

Yet one client was able to cut his tax bill by about $150,000 after the TCJA reduced the top income-tax bracket to 37%, he says, and many clients no longer have to pay the alternative minimum tax.

Meanwhile, talk last year of the Build Back Better Act (which Congress resurrected and recently passed as the scaled-down Inflation Reduction Act) “caused a lot of heartburn for many clients,” he says.

The most political clients

Working with politically charged clients is not a new phenomenon.

“Another client refused to pay his tax bill until George W. Bush was out of office,” says Pon. “The extra penalties and interest cost him about $15,000 but he was adamant about not supporting GWB. It’s hard to understand why people make irrational financial decisions.”

Pon also gets a good sense of clients’ politics when they make campaign contributions. And he reminds them that political contributions are not tax-deductible.

“This disappointed many clients who made substantial donations to Hillary for President,” he says. “During the campaign she had a luncheon at the hotel across the street from my office. I knew many clients were there.”

Pon refers to “he” in most of his client examples, but clarifies that he used this pronoun generically. “My most virulent left- and right-leaning clients were women,” he says.

He’s also found that clients don’t always display their true political colors.

Pon, based in Silicon Valley, says most of the tech companies have founders who are very left leaning. “It is great if you agree with them, but I know many clients are uncomfortable with this,” he says. “I notice many people ‘faking it’ just to get along in the office and hopefully get promotions.” For example, some made sure they marched in the Gay Pride Parade, he says.

Pon is reserved about sharing his own political views. “Clients know that I am financially conservative and will never give aggressive advice, [but] I never reveal to them my party affiliation,” he says.

He did help a client when the client was running for city council. “I learned a lot about politics,” he says, “and will never agree to be Treasurer for free for any political campaign.”

Focus on the facts

Although some clients are more vocal than others, “most people have political beliefs whether they choose to share them or not,” says Monica Dwyer, CFP, CDFA of Harvest Financial Advisors in West Chester, Ohio. So, she tries to remain quiet about her personal politics.

“I have found that unless the client is aligned with your beliefs, it can harm the relationship,” she says. “It isn’t my job to share my political beliefs with my clients.”

“However, it is my job to support my clients if they have a belief that could impact their investing life,” she says. And if that belief “is going to harm them in some way, it is my job to tell them the facts.”

For example, she has had both conservative and liberal clients “who said they didn’t believe in a particular president,” she says. “If they told me that they were going to sell out of the market because of those beliefs, I would tell them that this is a bad idea.”

She notes that research from various sources shows the stock market tends to thrive when there is a split between which party controls the White House and Congress, or the two chambers of Congress.

All ears, all the time

“My clients are welcome to bring any subject — political or not — to me and I will listen. If that particular belief can be supported by making changes to their portfolio, we are open to customizing that for our clients, and that is a conversation that would be appropriate,” says Dwyer. And if their belief “has nothing to do with their financial life, I just listen and try to understand where they are coming from.”

She doesn’t know if political beliefs have altered the financial planning goals of any clients, but they have had a negative impact on some of their family relationships, she says.

For example, one client has three children, two of whom are active in the political party that he opposes. “He feels angst towards those children and has written them out of his beneficiary designations,” says Dwyer.

“That is something that would never happen in my own family,” she adds. “We believe that people are entitled to their opinions, even if those opinions aren’t in alignment with ours. Some families don’t feel that way.”

Another client of hers is “actively indoctrinating his grandchildren into his belief system, against the parent’s wishes,” says Dwyer. “I think that this could alienate his children and possibly even the grandchildren long term.”

What heirs need to hear

“If there is one thing I could stress, it is that if you are not going to make your wills/beneficiaries equal amongst your own children, it would be nice if you would have a conversation with them about your logic and reasoning before you leave this earth so that they don’t spend the rest of their lives questioning why,” she says.

This is not just about political differences. “Some clients reason that the child who is successful doesn’t need the money and it should go to their children who do not have the same opportunities. Fine, but at least tell the children who have lost their inheritance what you are doing and why so that they don’t assume that you care more for the other children,” says Dwyer. “Who doesn’t still want the unconditional love of their parents? I know I do! I think we all do!”

‘Hate the idea, not the person’

As upbeat as Dwyer tries to be, she is disappointed by the extent of red-blue strife.

“I personally think we have entered a new age. It doesn’t feel like it is socially acceptable to have conversations with people unless they share the same political beliefs we do. We get so tied up in our emotions on politics and we can no longer separate the idea from the person,” she says. Instead, “Hate the idea, not the person.”

“It is a sad commentary on the culture and I think much of the blame is from biased media reporting and the spread of one-sided ideas and even outright lies spread by social media,” Dwyer continues. “Sometimes I hear or read arguments that are completely illogical. Rarely do I hear the news bring both sides of a debate … but that was common several years ago. It is sad that we can no longer debate issues and share our thoughts — even with our closest friends and family — due to this polarization.”

What really matters

“It seems like everything has become a political issue,” says Sheryl Garrett, CFP, founder of Garrett Planning Network, “I’ve never heard anybody from a client viewpoint have any angst over midterms. This year could be different simply, in my opinion, because of the abortion issue. And in my book, that’s something financial planners and their advisors don’t discuss; it’s a private thing and people have strong beliefs.”

The way she’d respond to a client who says they’re really concerned about the elections is to ask, “What exactly are you concerned about?” she says. And if the client replies, “‘Well, you know, if the Republicans don’t win, this is gonna happen, or if the Democrats win, this is gonna happen,’ I just want to bring it back to, ‘Does that have an immediately effect on you, financially?’ And if the answer is, ‘No,’ they usually let it lay.”

She might also respond by asking if they plan to spend a lot of money on candidates. “Not that I know anyone who does,” she says, “but at least I can have a legitimate question to respond.”

However, “If we can only worry about it, then I choose not to, because it gets us nowhere,” says Garrett. “And then I would pull out one of [CFP and cartoonist] Carl Richard’s cartoons about ‘things that matter” and ‘things you can control.’” The small intersection, “that’s the stuff you can worry about,” says Garrett.

Politically speaking, “I don’t want to call anybody right or wrong. I don’t know what’s right or wrong,” she says. “But I do know that the politics of our country do not have that much influence on our economy, and what we do have more control of is our personal economy Let’s focus on that. That’s a statement I would make to a prospective client.”

Factor in fees

Garrett also points out that when advisors charge by the hour, like she and members of the Garrett Planning Network, “People don’t want to sit there and pay for your time when you’re telling them, ‘I can’t do anything about that. How can I help you do something about your life?’” That gentle reminder can be enough to steer some clients away from political venting.

However, some clients do want to spend this money to talk. Garrett worked for a few years with a gentleman in his 70s who liked to come in and talk for three hours during their quarterly meanings. They focused on his finances early in each meeting and then he moved on to discuss world events he cared about. The topics ranged from nuclear energy (including the aftershocks of Chernobyl) and civil wars to droughts and migrants fleeing war-torn countries, she says.

“He said he knew I was not an economist,” says Garrett, “but he found the conversations to be stimulating, he enjoyed the subjects, and he felt he had more clarity and understanding” after the discussions. “It was kind of like a therapy session, although I didn’t give him therapy other than having him talk aloud. He didn’t change his portfolio based on these conversations.”

“We advisors can’t drag a conversation all over kingdom come because that would be the opposite of fiduciary,” she says. “But if the client knowing that I’m charging him wants to take me anywhere in his conversation” he can. This might not work out as well for an advisor whose fee structures are based on commission or assets under management, Garrett notes.

Be prepared

In an article Hartford Funds published recently, clinical psychologist Barbara Nusbaum explains how financial advisors can prepare for political conversations with clients.

“Talking politics with clients can feel like the third rail. It can be tough and nerve-racking. Yet political conversations are close to inevitable these days,” she wrote. According to Nusbaum, advisors should figure out in advance which political issues they’re not comfortable talking about to clients and which issues they personally find most emotional. Advisors should also learn to recognize and control their physiological responses to these topics, she noted, such as tightening in the chest or throat.

“If the conversation gets heated, empathy and knowing your political triggers go a long way to de-escalating and reconnecting with your client,” she wrote. Her suggestions include deep breathing and redirecting conversations, for which she provided some prompts.

Try telling clients, “These issues are important to both of us, and I value that, but I value our relationship most. My thought is to go back to the areas we feel in sync and work on the issues where I can be most helpful. We could get back to this another time, if we want to,” Nusbaum wrote. She also emphasized the importance of following up and asking clients, “How does this sound to you?” — and actively listening to their responses.

When clients don’t listen

The reality, though, is that what you say won’t sound good to some people no matter how you say it. They may not even listen.

“We always try to steer clear of politics. There seems to be no good outcome if we tip our hand,” says Jennifer Weber, CFP, vice president of financial planning at Weber Asset Management in Lake Success, N.Y. “We’ve lost a couple prospects over the years if they feel our views are opposite of theirs.”

Instead, “We listen and avoid agreeing or disagreeing. Mostly, we let them vent,” she says, and, “We note we have people on both sides of the aisle within the office.”

“But, yes, we have had a handful of clients — all on the far Right — who let the things they hear and believe (‘Well, the way this country is going’) shape their nest eggs,” says Weber. “They either want to become super-conservative — lower case C — and/or they want to put gold in their portfolios.”

“We do our best to dissuade them, but sometimes they are immovable,” she says. “After the last election, we had two clients who sold to all cash because they were not happy where the market was headed. This was against our advice!”

In November 2020, Weber Asset Management sent an email to clients that included a chart of historic S&P 500 performance that indicated which party controlled the White House, Senate and House during those years. “We try to have respectful conversations, lead with facts, and explain there’s more at play than who controls the federal government,” says Weber.

She doesn’t know if those two clients who sold to cash regret their decision or if they tried to get back in the market because they’re no longer clients, she says.

As for advisory clients continuing to air their political beliefs? “Most likely, post-elections we’ll hear more,” says Weber, “depending on if one party has an unexpected win or loss.”

Jerilyn Klein is editorial director of Rethinking65. How are you working with clients who express strong political views? Email us.


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