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'Heaviest volatility' in markets to take place after presidential election: Financial Advisor

Liz Weikes - J.P. Morgan Securities Managing Director & Financial Advisor joins Yahoo Finance’s On The Move panel to discuss how the presidential election and potential COVID-19 vaccine will affect U.S. markets.

Video Transcript

ADAM SHAPIRO: So we're all living and working from home because of the coronavirus. Actually, a great many people are actually working at their places of employment, but you know what I mean by this. The future, though, is what a lot of us are trying to understand. Will a vaccine have an impact on the economy? What's really going to happen?

So to help us understand and break this down, we invite into the stream right now Liz Weikes, JP Morgan Securities Managing Director and a financial advisor. She's joining us from Westchester County, New York. And there's so many things we could talk about, but I wanted to jump into something that you've pointed out, that right now, you're focused on liquidity and protecting principle for your clients. And you're not talking 12 months out. You're talking three to six months out. Why?

LIZ WEIKES: Absolutely. Thanks for having me today, Adam. These conversations have been ongoing since, really, March. In March, the conversation was really thoughtful around health care, what could possibly happen through the pandemic, would you contract the virus, and what that looked like.

Now the conversation is coming up into the election. While we're still in the middle of the pandemic, We still-- you know, it's on everybody's mind. What is going to happen come November? And I think it's very important to point out, there will be an election. There will be a president elected. And it doesn't matter who that candidate is, but it's preparing clients and their portfolios for whatever the outcome of the election is.

And for me, it's being the voice of reason as the advisor and also pulling in clients' advisors, whether it's their trust and estate attorneys and accountants, and really, you know, encouraging them to have this conversation now before November while we're still in the middle of the pandemic but also as we come up to the election. Whatever that outcome will be, it's me educating the client to put their biases aside and really prepare their portfolios for whatever that outcome is, no matter who the president is come November and beyond.

LIZ WEIKES: Liz, it's Julie here. Thanks for joining us. Folks we've been talking to, including Ian Bremmer of Eurasia Group yesterday, have talked about that whatever the outcome is, it is likely to be readily accepted by the other side and might be seen as illegitimate. We also know it might take a while to get the results of the election because of the large proportion of mail-in ballots expected. So that would seem to indicate some market volatility, potentially, in the wake of that.

So what are you telling clients? How do they ride that out? Do they just kind of sit back and not do a lot? Do they buy insurance of some kind in the market? What do they do?

LIZ WEIKES: Sure. I think more than ever-- I mean, as we're having these conversations, as you said, Adam, we're preparing for the next two to three months, you know, not looking at 12 months ahead right now. We have to be, you know, very thoughtful about what's happening here. More than ever, we're really putting a lot of fixed income into clients' portfolios.

And based on where rates are and the Fed's comments that rates are going to remain low till '23, we're really looking from a liquidity standpoint of both sides of the balance sheet, quite frankly. Even more so, we're having conversations about finding liquidity on clients' real estate. You know, wealth is wealth, and I have clients all over the country geographically and in all various age groups.

But at the end of the day, clients are now seeing a resurgence, say, in the suburbs of the tri-state area where they're maybe selling their homes that they thought they may not be able to sell and now are coming into liquidity there or they're taking advantage of extremely low rates in the mortgage market or buying second homes because they've been, you know, displaced from their Manhattan apartment.

It's not about, you know, finding-- you know, taking every cherry on top, and, you know, you can leave that out there for the investor that wants to do that. But I think in the average portfolio, where somebody is looking to really step back from cash, have that insurance policy, where overall, they can sleep at night while still meeting their goals, wants, and needs for themselves and their families, it's important to really, you know, step out a little bit outside of the equity markets, where we typically may have been a little more aggressive, and really add fixed income into those portfolios.

DAN HOWLEY: Hey Liz, I just want to ask about overall market volatility, given the fact that it's an election coming up and a global pandemic at the same time. I mean, what are we really expecting? I know, you know, volatility kind of leads into the election, but this is unprecedented where we may have a president who contests it. Plus, we still can't fully get back to normal life. I guess, what does that look like going forward then for the investor class?

LIZ WEIKES: Sure. I mean, it is going to be extremely, extremely volatile, you know, starting now all the way through. I mean, all indications are it could be another year like this, for the most part. But I think you're going to see the heaviest volatility come November, December, January until a lot of this shakes out, you know whether the current president is in place or there's another president in place.

From the standpoint of how much volatility is going to be there, it's going to depend on certainly the American public. You have, you know, parents that were once empty-nesters that are now welcoming their college-aged children back into their homes, and they may have a very different political mindset than their parents, let's say. These are really shaping up to be very different-- difficult conversations amongst the dinner table. And no matter what's going to happen with Thanksgiving in this country come November, whether, you know, we can sit down for a family meal or not, those families that can sit down I think are going to be in for a very, very difficult discussion politically amongst families, for sure.

I mean, it's going to be very difficult. I mean, the American public right now is not ready to accept either way, right? Everybody is extremely on edge, and I think a lot of that has been built up because of the quarantine, of the pandemic. For sure, in the New York area, we've been hit probably the hardest and in terms of returning to work, certainly the hardest. But I think that's really playing with a lot of people's mental psyche. And at the end of the day, that's going to certainly play into the volatility as well.

So you know, I don't know when we return to what normal will actually be. Will you continue to go to the grocery store and wipe down your carts a year from now? Probably, but these are all part of the new norm. It's no different than parents not-- very unsure about what's happening to their children, whether they will go back to school if they're not already back in school. These are all things that are coming to play.

Even on the health care side, you know, setting aside anything with the pandemic, people are not even going for their normal checkups because they're, you know, maybe hesitant to go into a doctor's office. So all of these are playing into the volatility of the market, you know, overall sector focus and really what we can think about, really what the next year lies ahead for us on all aspects of life.

JULIA LA ROCHE: Liz, I guess one final question before we let you go, in terms of your clients, you're referencing a pretty wide base, in terms of age range, also just geographics, if you will. What has been kind of one of the fundamental changes you've seen maybe from the psychology or the behavior of your clients as it relates to kind of setting a financial plan in place, especially given everything we've gone through?

LIZ WEIKES: Sure. I mean, geographically and age-based certainly, you know, weighs in heavily. But I think at the end of the day, most clients right now have really accelerated the conversations, in terms of putting an estate plan into place coming up to the election. When we were having those conversations in March and April, it was because of the uncertainty in their health, for example, that they wanted to put a plan in place.

But now, with the run-up to the election and uncertain of what that outcome will look like, a lot of clients have accelerated the conversations based on that, in terms of how do they prepare for inheritance for their beneficiaries if there is a change in the tax plan. But overall, I mean, you have to look at it-- clients that we have in the Midwest, for example, that may be more agriculture focused, in terms of how their wealth has been derived, is going to be very different than a corporate executive sitting in Manhattan.

And I think that geographic certainly plays heavily into, you know, one's mindset of, you know-- whether they're walking down the streets of Manhattan or they're sitting in the suburban farmland of Missouri, it sets that tone and mindset. And certainly, the questions that are being asked are very different. But at the end of the day, it's still going to come down to wealth is wealth, and putting a plan in place is going to be the most-- is most important to navigate this volatile time.

ADAM SHAPIRO: Liz Weikes is JPMorgan Securities managing director and financial advisor. Thank you for being here.