In the months since the 2024 presidential election, advisors have sat down with investors who may be feeling ecstatic, uncertain, or somewhere in between those two extremes. Wherever their clients may stand on that emotional spectrum, I believe there are a few things advisors should be discussing as we move through 2025.
Investments: Stay Focused on Long-term Goals
President Trump’s April 2 “Liberation Day” announcement has led to significant volatility, and markets are still trying to sort through the rubble.
In the short term this announcement has obviously caused damage. These tariffs have changed trade relationships between countries, companies and the United States and, more important for advisors, they have led to losses in client portfolios and stifled financial confidence.
The hope is these tariffs will lead to negotiations and more cool-headed trade policy instead of the game of financial “chicken” (threats of reciprocal tariffs) that they seem to have ignited. At this point, the eventual outcome remains uncertain, and that uncertainty could cause volatility to persist.
Because of this, it’s important for advisors to talk with clients in the near term about how this volatility may affect them individually. Being able to talk with clients about how they are feeling, and being able to recognize their emotional responses, helps us provide them with tools to navigate uncertainty in the future.
Although the potential market and economic impacts of the Trump’s tariffs remain to be seen, it is important for advisors to remind investors that the volatility we’re experiencing now may not contine at these levels in the future.
Yes, the stock market is currently experiencing a market correction, defined as a decline of at least 10% from the recent market high. And while every U.S. president going back to Herbert Hoover has seen a bear market during their administration, markets tend to go up during most presidencies (both Democrat and Republican).
Important Steps
So, how can advisors help? It’s important to help investors stay focused on the long term. A good place to start is by reviewing their clients’ short-, medium- and long-term financial goals. For example, do they want to buy a new house? Do they want to fund a grandchild’s college education? Do they want to continue saving for their retirement? Once those goals have been confirmed and clarified, it’s important to review your clients’ asset allocation and ensure that it is in line with those goals.
These simple but incredibly important steps may help ensure clients’ portfolios continue to grow over the long term. Along with that, I believe these steps help get clients out of a short-term, emotional mindset and into a calmer, future-oriented mindset.
Taxes: Consider Potential Changes on the Horizon
Another policy issue for advisors to discuss with investors is what might happen with the Tax Cuts and Jobs Act. If it is allowed to sunset at the end of 2025, taxes could increase for 62% of Americans, according to this article from the Tax Foundation.
Because of this, it’s important for advisors to understand how things may change, what proposals may be included in a new tax bill, and how these may affect individual client’s tax situations. For example, changes could be seen to the State and Local Tax (SALT) deduction, tax credits for electric vehicles, and/or the alternative minimum tax.
Overall, I think it’s important for advisors to first clarify their clients’ tax goals, and then remind them of what they control from a tax perspective. That includes taxable income and deductions, so it may be more important to consider strategies such as when clients take distributions from traditional IRAs, Roth conversions and qualified charitable distributions, among others.
Remember: This Too Shall Pass
“The emotions we are feeling now, whether positive or negative, can seem outsized, and that can lead to investing mistakes.”
Returning to the emotions investors may be experiencing, it’s important for all of us to remember that the present is a magnifying glass. The emotions we are feeling now, whether positive or negative, can seem outsized, and that can lead to investing mistakes.
That’s why it’s important to have a future-oriented perspective and remind ourselves of tomorrow’s goals. Reminding clients to remember that they have a written financial plan — and referring back to their plan — is one way to do this.
Along with that, simply giving clients the time to meet with you as their financial advisor and allowing them to space to vent or talk about how they are feeling can help get them to a point where they can more thoughtfully reflect on their goals.
Finally, the phrase “this too shall pass” is an important reminder for all of us, not just our clients. If we are feeling negative, reminding ourselves that this too shall pass gives us hope. And if at some point in the future we are feeling ecstatic again, reminding ourselves that this too shall pass keeps us humble. In either case we, are able to gain perspective, which allows us to stay calm, manage emotions, and focus on our longer-term financial goals.
Ben Rizzuto, CFP®, CRPS® is a wealth strategist with the Specialist Consulting Group at Janus Henderson Investors. In this role, he works with financial advisors and their high-net-worth clients to find solutions to today’s increasingly difficult retirement, wealth transfer and financial planning issues. This article is for educational purposes only.
