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Columbus, OH As the political noise leading up to national elections in 2024 begins its long crescendo, many American investors are nervously considering implications for their investment portfolios. Regardless of political affiliation, nearly half (45%) of investors believe the results of the 2024 U.S. federal (presidential and congressional) elections will have a bigger impact on their retirement plans and portfolios than market performance, according to Nationwides ninth annual Advisor Authority survey, powered by the Nationwide Retirement Institute.

In addition to general pessimism regarding the elections impact on retirement prospects, investors fear the impact of new policy and opposing party rule on the U.S. economy. Nearly one in three (32%) investors believe the economy will plunge into a recession within 12 months if the political party with which they least align gains more power in the 2024 federal elections. Roughly the same percentage (31%) believe the party they least align with gaining more power in office will negatively impact their future finances, and 31% believe their taxes will increase within 12 months.

As we get closer to the 2024 election, were going to see more messaging and campaign ads that portray worst case scenarios, creating anxiety in investors that can lead to short-sighted, emotional decisions, said Eric Henderson, President of Nationwide Annuity. Its important for investors to not get caught up in the what ifs, and instead focus on what they can control. A proactive step would be having a conversation with their advisor or financial professional and establishing a long-term plan or revisiting the plan they already have in place to ensure it remains aligned with their goals regardless of which party takes control in Washington.

Recession fears are strong across party lines Some issues are viewed differently across party lines. More than half (57%) of investors who identify as Democrats say market performance will have a bigger impact on their retirement plans and portfolios than the results of the 2024 election, compared to 47% of investors who identify as Republicans.

However, Republicans tend to brace for election results more than their Democrat counterparts. More than two thirds (68%) of Republican investors believe the outcome of a presidential election will have a direct, immediate and lasting impact on the performance of the stock market, compared to 57% of Democratic investors. Independent investors are the least concerned with election results; fewer than half (40%) feel the results of next years election will have a bigger impact on their retirement plans and portfolios than market volatility the lowest of the three primary political demographic groups.

While its natural to feel the party you support will deliver the best economic outcome, history tells us that these instincts can be blown out of proportion, said Mark Hackett, Chief of Investment Research for Nationwide. Remember that election results in either partys favor have historically had little impact on future investment returns. Thats why its important to apply a strong filter to election news coverage to maintain an objective understanding of the events shaping our world. Its best to stay focused on the fundamental drivers of investment performance (e.g., company earnings, revenue growth, profit margins, etc.) and leadinindicators of economic conditions.

Older investors are more fearful The general fear of a recession is magnified for those closest to retirement ahead of next years election, as any wrong decision could have a lasting impact on how they live through retirement. Pre-retiree investors (defined as non-retired investors aged 55-65) are more concerned about an impending economic recession (50%) than investors overall (41%). Pre-retirees and those already in retirement are more concerned about inflation than investors overall (66%, 66% vs. 61%, respectively).

As a result, pre-retirees are planning to be more conservative with their assets than other investors perhaps because they dont have the time to recoup losses. One third (33%) of pre-retiree investors are managing their investments more conservatively in anticipation of next years election, compared to just 31% of all non-retired investors. In addition, just 12% of pre-retirees and 4% of retired investors plan to invest more aggressively in anticipation of next years election.

Economic fears spur changes to spending As campaigning and political punditry ramp up, economic factors are still top of mind for those saving for retirement.

Overall, investors who are not retired see inflation (47%), an increased cost of living (42%), and a potential recession (31%) as the greatest long-term challenges to their retirement portfolios. To compensate, they are changing their spending and investing habits, including making adjustments to cut spending and ensure a timely retirement.

To save more for retirement in the current environment, one third (33%) of investors are avoiding unnecessary expenses, such as vacations, jewelry, and shopping sprees over the next 12 months. A quarter (25%) of non-retired investors also say they will need to work longer to save money for retirement in case Social Security runs out of money, a hard reality that is projected in 10 years, according to the most recent Social Security Trustees Report.

Despite pulling back spending and adjusting investments as political pressures and economic turbulence collide, investors are entering election season on a cautiously optimistic note. Recession fears remain elevated but are down slightly from last year four in five (80%) investors are now concerned about a U.S. recession in the next 12 months, compared to 85% in 2022. Four in ten (40%) of all investors and 32% of pre-retirees describe their financial outlook for the next 12 months as optimistic.

Advisors empathize with investor concerns Financial advisors understand the fears that can stem from changes in Washington and can help investors navigate through it. Like investors, financial advisors view inflation (46%) as the most immediate challenge to their clients retirement portfolios. However, they are not immune to a partisan bias; 38% believe the stock market will be volatile for the 12 months following the election if the party they least align with gains more power after next years federal elections.

In the face of volatility spurred on by partisan noise and a potential exchange of power in Washington, advisors still maintain a more balanced, nuanced view of the election than their clients, in part because many have designed long-term strategies to protect them against volatility. Despite election jitters, most advisors (56%) believe staying the course i.e., not changing their clients investment strategies is the best course of action in an election year.

With this approach in mind, advisors are recommending and implementing their strategies accordingly. Almost all (96%) currently have a strategy in place to help their clients protect their assets against market risk, an increase from 92% in the last 12 months.

Annuities (80% vs. 78%), diversification and noncorrelated assets (72% vs. 57%), and liquid alternatives such as mutual funds or ETFs (54% vs. 31%) all saw at least a slight increase as solutions used by advisors to help their clients protect their assets against market risk in the last year.

While elections are important, and its good to be engaged in our democratic process, making emotional decisions based on what you think will happen runs the risk of derailing your retirement goals, said Henderson. Advisors and financial professionals should seize the opportunity to engage with their clients to reinforce the importance of sticking to their long-term plan. Another way to address client anxiety is to help them understand the value of protection solutions, like annuities, that guarantee income in retirement and guard against market volatility regardless of who ends up winning the election.

For additional insights on this survey data, see our infographic.

Nationwides ninth annual Advisor Authority study powered by the Nationwide Retirement Institute explores critical issues confronting advisors, financial professionals and individual investorsand the innovative techniques that they need to succeed in todays complex market.

About Advisor Authority: Methodology The research was conducted online within the U.S. by The Harris Poll on behalf of Nationwide from August 14-30, 2023, among 507 advisors and financial professionals and 2,404 investors ages 18+ with investable assets (IA) of $10K+. Advisors and financial professionals included 274 RIAs, 196 broker-dealers, 143 wirehouse and 52 other financial professionals. Among the investors, there were 636 Mass Affluent (IA of $100K-$499K), 529 Emerging High Net Worth (IA of $500K-$999K), 402 High Net Worth (IA of $1M-$4.99M) and 219 Ultra High Net Worth (IA of $5M+), as well as 618 investors with $10K to less than $100K investable assets (Less affluent). Investors included a subset of 464 pre-retirees age 55-65 who are not retired.

Raw data from advisors were not weighted and are therefore only representative of the individuals who completed the survey. Investor data are weighted where necessary by education, age by gender, race/ethnicity, region, marital status, household size, employment, household income, investable assets, and propensity to be online to bring them in line with their actual proportions in the population. To ensure the investor sample was representative, the data were initially weighted separately for those with investable assets of $10K to less than $100K and those with $100K+ and then post-weighted/combined into a total investor group. Data for the subset of pre-retirees age 55-65 who are not retired were weighted separately as needed by education, age by gender, race/ethnicity, region, marital status, household size, employment, household income, investable assets and propensity to be online.

Respondents for this survey were selected from among those who have agreed to participate in our surveys. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within + 2.7 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. The sample data for the subset of pre-retirees age 55-65 who are not retired is accurate to within + 5.6 percentage points using a 95% confidence level.

All sample surveys and polls, whether or not they use probability sampling, are subject to other multiple sources of error which are most often not possible to quantify or estimate, including, but not limited to coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments.

About The Harris Poll The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas: building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visitwww.theharrispoll.com.

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