Treading the political tightrope

Nobody knows for sure who first coined the maxim that politics, religion and money should never be discussed in polite company. We live in a society where the right to free speech is taken for granted, but as far as advisers are concerned, one thing is certain – the first two topics should definitely be handled with care.

29 November 2018

Politics in particular has become a “hot potato” that is increasingly tricky for advisors to juggle in today’s media-driven world - and it’s one that comes with risks attached.

The one topic that everyone wants to talk about

With polarising topics like Brexit and Trump continuing to rule the agenda, politics is the one topic that every client inevitably wants to talk about when they meet with their adviser. So does the adviser-client relationship meet the criteria for “polite company”?  Where do we draw the line between free speech and political pontificating? And should political discussion ever pass the lips of an adviser who is, by default, meant to be both professional and impartial?

Given that political differences of opinion can quickly descend into a heated exchange – or even, in extreme cases, in the loss of a client - it’s probably safe to treat this subject with the caution it deserves. Indeed, some advisers are most comfortable with avoiding politics altogether, sticking instead to the safer ground of less contentious areas. But, if sensitively handled, this touchy subject doesn’t need to be off the agenda altogether for advisers.

Doubling up as a diplomat

Many advisers take a softer line, driven by the belief that frank discussions on everything – including politics – can open the door to a deeper understanding of their client’s concerns, motivations and, ultimately, their investment goals. What’s more, getting to know a client better – including their political persuasion – can boost the chances of sidestepping potentially sensitive or inflammatory subjects in the first place.

Of course, advisers will always have clients who take a differing political stance from their own – that’s just the way it is. In some cases, that stance may even be poles apart from the advisor’s own world view and morals. However, advisers have a real advantage here: by exercising the listening skills that come with the territory and adopting a “diplomatic” role, advisers can not only better understand what drives their clients, but can also help them stay firmly focused on the bigger picture. And there’s no need for advisers to share their own opinion along the way.

Politics and portfolios

For many clients, politics has a tangible impact on the way they view their investment portfolio. For example, a client who is strongly anti-Brexit might be understandably concerned about the impact that the withdrawal of some Europe-wide funding agreements on scientific research could have on their pharmaceutical stocks. Conversely, a right-leaning client might be worried about the potential impact on their European equities if hard-line populist governments come to power in Europe. And a client who invests in US financials might be curious about the effect of potentially looser regulation of the industry under Trump. It is here that advisers have a genuine opportunity to put their relationship-building skills to good use in helping clients to think through their political views and how these impact their investment decisions. They can also help clients to look beyond their short-term political disappointments – or the reverse – to the higher-level issues that will shape their portfolio in the years to come.

When it comes to the thorny issue of politics, there’s no right or wrong way to approach conversations with clients. But by steering political conversations towards more tangible topics and gently redirecting them in a less inflammatory direction, advisers can not only double as diplomats, but help their clients to make rational investment decisions based on fact rather than political conviction alone. It’s free speech – but free speech with strings attached.