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From health care to fiduciary: Advisors prep for Trump changes

Advisors were left with a number of questions about the future as President Trump was sworn into office.

Chief concerns among nearly a dozen advisors quizzed by Financial Planning regard a possible repeal of Obamacare and the elimination of the fiduciary rule.

Many advisors also wondered whether the Republican’s pro-business, anti-regulatory policies can deliver his promised economic benefits.

U.S. First Lady Melania Trump, from left, U.S. President Donald Trump, Vice President Mike Pence, and Second Lady Karen Pence wave on the West Front of the U.S. Capitol after the 58th presidential inauguration in Washington, D.C., U.S., on Friday, Jan. 20, 2017. Trump will become the 45th president of the United States today, in a celebration of American unity for a country that is anything but unified. Photographer: David Paul Morris/Bloomberg

Zaneilia Harris Harris & Harris

With client opinion split — either bracing for the worst or expecting big investment gains under Trump — advisors said they hope to keep their clients focused on the long term rather than on daily developments.

“My clients, who are mostly people of color, are very fearful of the current political environment that we now live in," said Harris & Harris Wealth Management President Zaneilia Harris from her firm’s Upper Marlboro, Maryland, office. "They are wondering how this new administration will affect their money and impact their lives.”

Advisors expressed optimism about markets under the new president, but with reservations.

“Many of my clients have money on the sidelines and are reluctant to put it into the market all at once," said Stephanie Genkin, an advisor and founder of My Financial Planner in Brooklyn, New York. "Not all of the concern is related to the Trump presidency; they are also concerned that the market is over-valued.”

Liz Miller, president of Summit Place Financial Advisors in Summit, New Jersey, stressed patience.


“From an investment standpoint, we have taken some profits so we can wait and watch a bit," Miller says. "I believe the underlying economy is strong and the market can move higher on improving corporate earnings, so we wait to see how our new president supports or impedes that trend.”

Shane Morrow, a private wealth advisor with IronBridge Wealth Counsel in Austin, Texas, said he would be watching how the new president handles trade and taxes on businesses, a major element of his campaign.

“His messaging around lower corporate taxes and a potential tax holiday on repatriation of overseas corporate tax could help to boost corporate earnings," Morrow said. "However, materialization of protectionist trade policies might present some challenges.”

Plans by the Trump administration and Congressional Republicans to repeal and replace Obamacare had advisors wondering which provisions could disappear under a new health care law.

“If I were to advise Congress and the Trump Administration, I’d say, ‘Don’t do anything stupid.’ Don’t repeal it without having something to replace it with,” said Dave Campbell, a partner in San Francisco-based Bingham, Osborn & Scarborough.

Clients near retirement in the next year should be warned that a repeal of Obamacare is a real possibility, said Eric Furey, an advisor with RegentAtlantic in Morristown, New Jersey.

"[They] need to be aware that any pre-existing conditions could make obtaining health insurance more expensive, or even worse, preclude them from buying health insurance,” Furey said.

But advisors should measure how they speak about the new administration, said Greg Sommersberger, a senior investment consultant with Baird in Mequon, Wisconsin, given the usual pace of change in government.

"Whether it's tax cuts, infrastructure spending, renegotiating trade agreements, reforming health care or building a wall on the border of Mexico, that's five monumental tasks that can take years to do," he said. "I fear we're going to be three months into it and he's just going to disappoint some people, because you can't do it all."

The president has not said whether he plans to eliminate the Department of Labor’s regulation for retirement advisors. Yet the advisory community believes it knows what’s in store for the rule, which is slated to go into effect in April.

“Under Trump, I expect the DoL fiduciary rule will be watered down to the point that it will be of little or no value, therefore making it even more critical that clients educate themselves about the questions they need to ask an advisor before they engage their services," Genkin said. "For those of us who maintain a fiduciary standard, I am optimistic that business will be even more robust.”

Miller expected an easing of regulation by the new administration, which he said would make advice actually more easily accessible. "Everyone deserves to work with a fiduciary advisor who keeps their best interests first,” she said.

The fiduciary standard was on the minds of clients due to comedian John Oliver rather than the DoL, Harris quipped. "It’s unclear as to how this issue is propelled forward by this administration, however, I feel Pandora’s box has been opened and the investor will be the motivating factor of the future of this issue.”

Advisors said they are telling clients not to adopt in their investment outlook the divided opinion that marked much of the presidential campaign.

“We want to remind those who are bullish that you don’t want to be too extreme on the bullish side," said Matthew Cooper, president of Beacon Pointe Wealth Advisors in Newport Beach, California. "[And] if you’re sensitive to a Trump administration, you can still invest in a manner that’s thoughtful to what’s important to you.”

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