The re-election of Donald Trump and the whirlwind of executive orders he has issued since his first day back in the White House has created anxiety among many investors — and their advisors.
But for different reasons.
Many clients — including some Trump supporters — are concerned about the potential economic and market impact of tariffs, mass deportations, and tens of thousands of fired federal government employees entering an already softening job market.
Others read about Congressional pledges to slash entitlement programs and wonder if their Social Security and Medicare benefits will be reduced. Or whether there will be money left in Medicaid to pay their parents’ nursing home bills.
When clients have these questions, they contact their advisors for answers.
But this puts advisors on a perilous communications tightrope.
If they express support for President Trump’s actions, they risk alienating clients who voted against him.
If they make dire predictions about where the markets or the economy are headed, their Trump-supporting clients might be offended, while others may make irrational trading decisions that could dearly cost them later on.
If they keep their professional heads in the sand and say nothing, clients might feel that they’re not responding to their concerns.
That’s why the safest communications strategy for advisors may be to take a neutral stance. Recommend that they ignore the geopolitical noise and resist giving in to their fears. Remind them that, over the long term, the markets have delivered strong returns and, in every case, fully recovered lost ground even after generational systemic shocks like the Great Recession of 2008-2009.
But beyond this standard “stay-the-course” message, advisors may want to discuss three major financial initiatives — not all of them initiated by the president — that may be very good news for many clients in 2025 and beyond.
1. Tax Cuts Will Be Extended — and Possibly Expanded
It’s almost certain that the provisions of the Tax Cuts and Jobs Act (TCJA) that Congress and President Trump enacted in 2017 will be extended beyond their original 2025 deadline.
This will be reassuring news for all clients who were worried that their taxes might go up next year. And it will reduce the urgency for wealthier clients to adjust their retirement and estate planning strategies.
For example, the preservation of the $13,990,000 lifetime estate and gift tax exemption for individuals may convince many high-net-worth families to delay moving wealth from their estate into a trust or inspire them to make larger lifetime gifts to their children.
And wealthy clients who were considering converting some or all of their traditional IRA and 401(k) assets to a Roth IRA this year to avoid higher taxes on these distributions in 2026 may want to put these plans on hold until they know for certain whether tax rates will be adjusted downward next year.
Other tax breaks may be in the works. Various proposals being bandied about in Congress include reducing the top tax rate; eliminating taxes on tips, overtime and Social Security benefits; and lifting the $10,000 cap on state and local tax deductions.
What is almost certain is that these tax breaks will remain in effect until the next presidential election in 2028 at the very least.
Even if Democrats reclaim both chambers of Congress in the 2026 mid-term elections, they’re unlikely to amass enough of a veto-proof majority to amend or eliminate these tax cuts.
2. The Potential Financial and Tax Implications of the Social Security Fairness Act
One of the most important legislative changes for 2025 occurred before President Trump took office. This was the enactment of the Social Security Fairness Act (SSFA), signed into law by President Biden on January 5.
This law could provide greater financial security for more than three million public sector workers in states that don’t collect Social Security taxes from their pay. Instead, these states deduct a portion of their income to fund future retirement benefits from the state-run pension plan.
Until this year, the monthly Social Security benefits these employees had earned by working for non-government employers would have been reduced by a percentage of their monthly pension checks.
This penalty would have affected retirees who claimed their own Social Security benefits or those who applied for spousal benefits.
The SSFA eliminates this penalty. Starting this year, all affected public sector workers will receive the full value of the government pension and Social Security benefits they’re entitled to. Those who have already retired will receive a retroactive payment for 2024.
While this is good news for retired government workers who are struggling to make ends meet, it could also have tax ramifications for affluent retirees.
If retroactive payments and increased Social Security checks move them into a higher tax bracket, this could increase their tax burden and possibly raise their monthly Medicare premiums by hundreds of dollars.
3. “Super-Catchup” 401(k) Contributions
One key benefit of the SECURE Act 2.0 will benefit clients of a certain age who are trying to boost their retirement nest eggs as much as possible before they retire.
Starting in 2025, participants in 401(k) plans who turn 60, 61, 62 or 63 this year will be able to contribute up to $11,250 in additional catch-up contributions each year on top of the standard $23,500 elective contribution limit, for a total of $34,750. They can continue to make these “super-catchups” every year until the year they turn 64, when their catch-up limit will revert to the standard $7,500 limit.
Other Trump Priorities Are Still in Flux
Like him or loathe him, the president has been very transparent in communicating his economic priorities, some of which may impact clients’ purchasing and investment decisions.
He wants to end tax credits for the purchase of electric vehicles and the funding of charging stations and federal subsidies for renewable energy producers. His hostility toward companies that promote diversity, equality and inclusion and environmental sustainability could spell the end for many ESG funds and limit values-based investing options for clients.
On the flipside, the president’s desire to loosen SEC regulations governing investments may make it easier for clients to purchase cryptocurrencies and give non-high-worth investors greater access to private market alternative investments.
However, predicting which and when these and other initiatives will become realities is risky as well. Which is why when clients ask “What will happen” questions, advisors may want to limit their answers to the three topics discussed above — and try to convince their clients to take a wait-and-see attitude on everything else.
Jeffrey Briskin is director of marketing at a Boston-area financial planning firm and the principal of Briskin Consulting, which provides content and digital marketing services for asset managers, TAMPs, trust companies, and fintech firms.
