Talking Politics With Clients

with No Comments

I have seen two articles in InvestmentNews about how advisors shouldn’t talk politics with clients.

In 2010, Lisa Shidler wrote an article entitled “No profit in talking politics with clients. ” I spoke with her for the article, and it seemed to me that she had her narrative already in place before talking with me: sane advisors should avoid talking politics with their clients at all costs. The article suggested that “experts” say you shouldn’t espouse one’s personal views. It even advocated stalking your client’s political views:

It’s always a good idea to learn as much as possible about a client’s political leanings before meeting with him or her. Doing so will help the adviser to come up with a list of neutral — or at least inoffensive — talking points around a specific planning issue. …

One way of doing that is to utilize websites with searchable databases that can identify whether a client, or a potential client, has made a recent campaign contribution, and to whom.

I obviously disagree with the prevailing wisdom of these so-called experts. It is no secret that I lean libertarian and often disagree with both sides.

I say, if you want to know about your client’s political views, just ask them. The dialog is healthy, and there are important things to be said about politics.

Charlottesville (despite recent invaders) is one of the rare parts of the country that is fairly equally balanced between liberal and conservative. Being a university town, we are also more intellectual than the average town. If talking politics is what clients want to do, I welcome it. Although other advisors are afraid of offending a potential revenue base, I don’t view my clients as a revenue base. I view them more like extended family.

Here are seven political issues that I think are most important to communicate to clients:

1. The return of the stock market has very little to do with what happens in Washington D.C.

It doesn’t matter whether you like the current president. Millions of Americans whose very livelihood depends on the profitability of their company will continue to produce goods and services that others value and purchase. Yes, some policies do have a large long-term effects on economic growth, but those policies are often tax rate levels and obscure regulation.

Read “Are Democrats Or Republicans Better For The Stock Market?” for more information on this.

2. Economic Freedom should influence in which countries you invest.

The stock markets of developed countries high in economic freedom tend to have a better return than the MSCI EAFE foreign index as a whole. The 10 measures of economic freedom used to calculate the Economic Freedom Index score are a good representation of the politics that matter to economics.

Read “The Success of Freedom Investing” or browse our “Freedom Investing” category for more information on this.

3. Personal success is not dependent on government policy.

Most government regulation is both ineffective and costs more than it cures. Clients should take responsibility for their own safety by saving enough for retirement without reliance on Social Security, freezing their credit, providing for their own healthcare, and saving for potential large healthcare expenses. In short, they should have an internal locus of control.

Read “Government Regulations Don’t Make You Safer” and “Wealth Management Is In Your Control” for more information on this.

4. Life is spiritual.

Financial planning begins with our values. Cultivating the very best values in ourselves is worth our focused attention, and it will change our politics. It will change our relationship to wealth. Habits ultimately become our character. Habits such as appreciation and gratitude can help shape our character into something worthy. There are many values that are more important than politics.

Read “Financial Planning Begins with Spiritual Values” for more information on this.

5. Be generous.

Generosity is good for your soul. Generosity is a voluntary method of producing a better world. It transcends the coercive methods of government force and pretensions of entitlement. While few practice charity, even fewer would have political complaints if you practice it. Strive for improvement instead of striving for equality. Avoid non-profits that primarily rent-seek government funds and support private charities that change lives.

Read “A Christmas Sermon” or “Three Reasons To Engage In Gift Giving” for more information on this.

6. Turn off the political news.

News is bad for your health. It leads to fear and aggression and hinders your creativity and ability to think deeply. Studies show you will be happier if you make it a habit not to listen. My son’s definition of news is a good reminder, “News is information you can actually use; everything else is entertainment.” If you do listen to news make sure you listen to information you can actually use rather than five talking heads all yelling politics at the same time.

Read “Ignore Daily Financial Noise” for more information.

7. Try to understand the other side.

Our country is growing more violent and more polarized mostly because few Americans listen to or dialog with reasonable people who disagree with them. In contrast, I gravitate toward trying to understand perspectives that I don’t agree with in order to find the underlying assumptions that are different. Perhaps that is why I disagree so strongly with the perspective of the InvestmentNews articles. They seem to be advocating a position which will only add to the isolation of all perspectives.

Recently, Jeff Benjamin of InvestmentNews wrote another article which sparked my dismay. In print, it was entitled “Avoiding politics at all costs” and subtitled “Advisers focus on not rocking the boat in client relationships.” Online it was entitled “Financial advisers do whatever it takes to avoid talking politics with clients ” and included this terrible advice:

“Sure, I’ll talk politics with clients,” said Tracey Ann Gordineer, a financial planner Wealth 360.
“If they voted for Hillary, that’s how I voted, and if they voted for Trump, that’s who I voted for,” she said. “You can have a reasonable conversation if you stay calm and objective and weigh the pros and cons.”

Personally, I don’t have that kind of guile. I’d rather offend clients with my honesty than lie to them. If my financial planner wouldn’t be honest about her politics, I don’t think I would trust her to engage and challenge me on other topics that matter even more. As Albert Einstein said, “Whoever is careless with the truth in small matters cannot be trusted with important matters.”

I am dismayed both by advisers who aren’t genuine and authentic as well as with InvestmentNews for reporting the dishonesty as though it is a value to be emulated.

Whenever advisers try to isolate investments from life planning, they fail both to get to know their clients and to help them meet their goals. When clients want to talk about politics or other important issues, I think a good advisor would engage them.

A good advisor should be part life counselor, and that can only be accomplished if you honestly discuss life together.

The first of the seven principles adopted by the CFP Board and reviewed in every required 2-hour CFP Ethics continuing education is integrity. As defined in the CFP Board’s Code of Ethics:

Integrity demands honesty and candor which must not be subordinated to personal gain and advantage. Certificants are placed in positions of trust by clients, and the ultimate source of that trust is the certificant’s personal integrity. Allowance can be made for innocent error and legitimate differences of opinion, but integrity cannot co-exist with deceit or subordination of one’s principles.

I would think that lack of honesty and candor and subordinating your principles for the sake of the personal gain from a client would violate both the spirit and the letter of the Code of Ethics. I think if your advisor doesn’t have integrity, you can stop there and find a new advisor.

Photo by Jose Moreno on Unsplash
Follow David John Marotta:

President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.