11.04.20

Presidential election results are too close to call

As of this writing, the U.S. presidential election remains too close to call as a number of states and individual precincts continue to count absentee and mail-in ballots, as was predicted by many political analysts.

While the outcome of the race for the White House is unclear, there is a bit more clarity on the battle for the Senate. The results suggest that control of the Senate is unlikely to flip from Republican to Democratic control, and the House will remain in Democratic control, meaning that regardless of who wins the White House it will result in divided government. On balance, this suggests that sweeping legislative changes are unlikely in the next few years regardless of who is in the White House. As we continue to monitor changing circumstances in the days and weeks ahead, we remain committed to helping you stay on course toward your important financial goals, no matter the outcome of the election.

What should retirement savers and investors be thinking about now?

According to John Canally, a CFA charterholder and a TIAA chief portfolio strategist, a key lesson from 2016 is to avoid making high-conviction bets that rely on one particular outcome to perform well. Nonetheless, Canally understands why investors might worry about how the outcome of the election may affect their portfolios.

“The Republican and Democratic parties do differ substantially on a wide range of issues that affect corporations and individuals, but investors often overestimate the impact of a change in the White House and Congress, and conflate campaign promises with enacted legislation,” Canally said.

While the November contests have grabbed investors’ attention, Canally doesn’t expect the results to be the primary driver of financial markets.

“The bottom line is that election outcomes and political alignments are rarely significant or durable drivers of key market bellwethers like the S&P 500,” he said.

Canally notes that regardless of the political backdrop, Americans can expect many trends that have been in force for some time to continue, including the rising importance of environmental, social and regulatory factors in driving investment performance, the growing role of alternatives for investors of all stripes and the need to rethink approaches to income generation in a low-yield environment.

How TIAA can help

Regardless of the election results, politically driven change is often slow to take effect and few, if any, major policy reforms are likely to be enacted until well into 2021. From tax policy to healthcare to energy, the two major political parties may have different ideas. Yet, legislation—especially if the House and Senate continue to be led by different parties—can take a while to get approved.
Canally believes that having a disciplined, repeatable and unemotional process in place to manage risk is far more important than the election outcome for most investors. That process entails strategic asset allocation, the assessment of outside portfolio managers, and making decisions about when to take income and how to rebalance and manage taxes.
 
“The reality is most of us are not emotionally equipped to make the tough calls during times of significant change or volatility,” Canally said. “That's where a process utilizing teams trained to help make difficult decisions under challenging circumstances, who are working on your behalf every day, can really make a difference.”
 
During periods of change and uncertainty, it’s important to work closely with your advisor to discuss ways to help protect and optimize your portfolio. Anchoring yourself in a plan not only helps to avoid emotional or rash decision making, but helps to ensure that the decisions you make are fully aligned with your goals, timeline and risk tolerance in any market or economic climate.
 
To learn more, contact your TIAA advisor to schedule time to talk about your financial planning needs.

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The information provided is for informational purposes only and is not intended to endorse any political party or candidate.

This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.

Please consult your financial or tax professional before taking any action.

Advisory services are provided by Advice & Planning Services, a division of TIAA-CREF Individual & Institutional Services, LLC, a registered investment adviser.
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