I’m a Financial Planner: 4 Moves My Upper-Class Clients Are Making Under Trump
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President Donald Trump’s second term is just getting started, but he’s already made some sweeping changes that have affected the economy and individuals’ wallets. To prepare for the next four years, many wealthy Americans are making money moves to ensure they’re in a good spot for the rest of Trump’s term.
To find out the money moves upper-class Americans are making, GOBankingRates spoke with Matt Parenti, CFP and partner at Private Vista, who works with these clients firsthand. Here are the top moves he has been seeing.
Bracing for Volatility and Adding Cash
Parenti’s upper-class clients have been moving more money from investments into cash in response to market volatility.
“As with any change in administration, uncertainty can create volatility, and in Trump 2.0, we’re seeing a bit more uncertainty on where policy will land — particularly around trade,” he said. “With markets hitting all-time highs within the last few months and ongoing volatility, we’re seeing more high-net-worth clients looking to harvest gains and move a few percentage points of their portfolio to cash or money market.
“This is not a wholesale move to cash; rather, it is a way to take some gains near the top, keep enough cash for short-term needs from the portfolio — so they don’t have to sell during volatile markets — and have some potential dry powder for opportunities,” he continued. “They have the added benefit of earning a bit more on cash these days than we have seen the prior decade, particularly by parking it in high-yield savings, CDs or money markets.”
Adding Alternative Investments
Parenti’s high-net-worth clients have been repositioning more of their portfolios toward alternative investments since Trump took office.
“Privately traded investments, or non-market correlated investments, have the benefit of diversified returns and can act as a ballast in volatile markets as we’ve seen,” he said. “Additionally, with public markets having had strong returns the last two years, rebalancing toward alternative investments has been a way investors are evening out their asset allocation.”
Reviewing Their Estate Plans
Many upper-class Americans have been revisiting their estate plans to ensure they are optimized for the current environment.
“While so far it appears the historically higher lifetime exemption — the amount of an individual’s estate that is not subject to estate tax — will remain higher under extended tax cuts, estate planning has been an area high-net-worth investors have been watching very closely over the last few years as the current tax law gets close to sunsetting,” Parenti said. “With more long-term certainty, or at least a longer time horizon on the current laws, investors are readying to refresh their plans to the new laws.”
Sticking To the Plan
While upper-class Americans are making some changes to their financial plans, overall, they are sticking to their long-term strategy, Parenti said.
“Our high net-worth clients make some marginal changes to their portfolios year-to-year, and are always looking to stay current and take advantage of tax law; however, when it comes to their long-term financial and investment plan, they know that over the long term, these four year periods come and go very quickly and that drastic or emotional decisions — high or low — can cause pain,” he said.
“Looking back historically, no one political party has a significantly better investment record when it comes to returns during their time in office,” Parenti continued. “Making a few percentage point changes to your portfolio can help on the margins, and taking advantage of estate tax and income tax law can save money, but drastically altering a portfolio based on who is in office, our clients know, can potentially do more harm than good. They are making some minor adjustments but keeping their eye on the long term and staying invested.”
