How to talk to clients about politics in 5 easy steps

Whoever said, “Avoid talking about religion and politics,” would find it difficult to make conversation in today’s world. Politics, in particular, is a subject that is becoming impossible to avoid — even for financial professionals. Clients are more likely to be open about their political views, to ask politically motivated questions, and to pay close attention to the answers.

In some respects, this makes perfect sense because politics and policy can impact your personal finances. Whatever their political leanings, clients may expect you to help them understand whether adjustments are needed to their financial plans, tax and estate plans, or investment portfolios. Or they may need to be talked out of short-term decisions made in reaction to the latest political drama.

The risk, of course, is alienating anyone with your own political views, which have no relevance in the advisor-client relationship. Even if you have strong political opinions and believe your clients generally agree with you, there may be minefields of sensitivity that you are unprepared to encounter.

Have the conversation, but approach it thoughtfully, says Paul Cieslik, an Advisor Practice Management consultant at Capital Group. “It helps to have a systematic and repeatable approach you can use when these conversations arise,” he says.

Here are five easy steps to help you keep the conversation on neutral but productive ground.

1. Find your sources of unbiased perspective

Part of your role is to stay informed and be aware of policy plans and proposals that may affect your clients. Knowledge is power. The ability to analyze what potential changes in legislation may mean for individuals or businesses can be of great value.

As you develop this perspective, pay attention to where the information is coming from. We all have favorite news channels, websites, podcasts and other outlets. But as a trusted advisor, you want to make sure you are aware of news outside your own bubble. It can help to favor unbiased information sources — or, perhaps more importantly, sources that can uncover what political issues in the news might mean for your clients’ wealth.

One example is Capital Ideas, where we offer nonpartisan perspectives on political issues and what they mean for investors. Trade magazines, industry websites and third-party partners can also be good sources of information on what matters to investors, high net worth individuals, small businesses and retirement plans.

2. Start with a framework for the conversation

While you don’t necessarily want to be the first to bring up politics, you should be prepared to respond to clients’ questions in a thoughtful way. Your perspective can help calm fears, refocus on long-term goals or encourage action if necessary.

On PracticeLab, we developed a four-step framework for all crucial conversations. When using this approach to discuss politics, acknowledgement and empathy are important first steps. And they don’t need to be specific. For example: “I hear what you are saying and understand your fears,” or “I can empathize. The news can be hard to take in.” Even this level of reassurance can begin to calm anxieties, and allows you to move onto the next steps of offering perspective, confidence and opportunity.

3. Know and show history

It’s hard to provide perspective when there are so many unknowns. At Capital Group, we believe it helps to try and find historical examples or patterns in the data that can serve as hypothetical “what-if” illustrations. Even in seemingly unprecedented times, there is a certain comfort in knowing we have been through worse before.

For example, many investors may have concerns about what a contentious presidential election may mean for the stock market. By using data, you can shift the conversation slightly to share some compelling charts showing that, regardless of which party occupies the White House, stocks have trended higher.

This type of information does not predict the future, but it can help to remind clients that the market does not always react to political wins or disappointments in the same way we as individuals do. It also helps to remind clients, if applicable, that the firm works with professional money managers with experience evaluating political and economic events to keep portfolios properly positioned. This allows you to focus on your clients’ goals, rather than have to react to daily events outside your control.

4. Express confidence to calm their fears

These reassurances may not work on everyone. That’s because data can be helpful, but it’s not enough to address clients’ sometimes strong emotions. Clients often fear that the consequences of a political move will have catastrophic consequences for their personal finances. This is when it helps to know your client. As an advisor, you may have some insight to try and get to the root of these fears. Is there something else driving their concerns? Once you understand what is at the core of client worries, you can help them determine if action is needed.

This important step can help you remind clients that you know what matters to them. Let them know, "I remain confident about your plan. You've shared with me the things that matter to you. I'd like to walk through each one and reconfirm your goals.”

5. Pivot to opportunity

Regardless of the political climate, there are always smart financial moves that your client may want to consider. For clients worried about volatility, maybe this is an opportunity for a portfolio review with an eye towards investment quality and risk. Clients worried about the state of the economy might find some comfort in reducing or refinancing debt, maximizing 401(k) contributions or buying undervalued assets. This is a great opportunity to shift the conversation toward the future and focus on steps you can take to potentially improve their portfolios.

“With almost three decades in this industry and countless election cycles, I’ve had hundreds of these conversations with advisors and clients,” Cieslik says. “I can tell you from firsthand experience, having this type of systematic and repeatable approach can help you turn potentially awkward conversations into more rewarding ones.“