The Independent Market Observer

What Your Clients Are Worried About

Posted by Brad McMillan, CFA, CAIA, MAI

Find me on:

This entry was posted on Sep 26, 2019 2:56:30 PM

and tagged Commentary

Leave a comment

what your clients are worried aboutThis will be a short post, as I am still traveling. It turns out planes, trains, and automobiles are not very conducive to thinking things through.

But being on the road is great for getting the chance to get out of my bubble and to find out what real clients are thinking about. I have had the opportunity to speak with a number of clients this past week, and it has been very interesting. When you talk to people who don’t spend their days on the economy and the markets, you actually learn a lot about what is affecting those things. Consumer spending, after all, is one of the primary drivers of the economy (more than two-thirds). So, to really understand what is going on, it is helpful to talk with the actual consumers.

People are starting to worry

The main takeaway from my week talking to and with clients has been that people still feel pretty good but are getting increasingly worried. Almost all of the individuals I speak to are older and reasonably affluent, so they have no reason to be worried—but they are. Not worried enough, in many cases, to act on it. Yet I get the sense many of them are trending that way.

2020 election. Politics seems to be a major driver of this concern, especially with the election coming into focus. Based on what I am hearing, once the election really gets underway, we might see more economic disruption than expected. If you remember, the 2016 election coincided with very weak economic performance, to the point where a recession looked quite possible at year-end. The 2020 election, which is likely to be even nastier, could well be a major headwind for growth. In the face of the other signals that growth is slowing, a contentious election could end up being the final straw for the expansion.

The deficit. Beyond the election, I am also getting an increasing number of questions about the deficit. It has been a nonissue since the sequester spending cuts essentially solved the problem. But the recent tax cuts and spending bumps have driven the deficit back up, and that issue is starting to resonate with the public again. The deficit is not (yet) something that candidates have to respond to, but I think I see a surge building. The problem is that there is no longer a party that focuses on fiscal responsibility, which should make the political impact much harder to predict.

Risks on the rise

The sense of growing caution, and that headwinds are building, is of course very consistent with the consumer confidence report we discussed yesterday. It is also consistent with what I have been telling clients, which is this: everything remains fine for the moment, but the risks are rising.

They seem to feel the same way.

Subscribe via Email

Crash-Test Investing

Hot Topics

New Call-to-action



see all



The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.


Please review our Terms of Use

Commonwealth Financial Network®