FA 100

Financial advisors predict a Biden win and more market volatility ahead: CNBC FA 100 survey

Key Points
  • Nearly 40% of top-rated financial advisory firms are predicting a Biden win and an ensuing slide in the Dow. 
  • But despite potential volatility on the horizon, advisors say upcoming market swings can be buying opportunities. 
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Advisors are bullish on Joe Biden, but bracing for a rocky election cycle, according to a CNBC FA 100 survey.

More than a third, or 37%, of top-rated financial advisory firms said they believe the Democratic nominee will be elected as the next U.S. president, compared to 20% predicting President Donald Trump will come out ahead, according to a new poll of firms on the 2020 CNBC FA list. (Editor's note: The advisors were polled before reports that President Trump tested positive for coronavirus.)

However, the majority, or 43%, of the firms said they are unsure who will win the election in November.

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Most also said that there will likely be no change in the congressional breakdown, predicting that the Republicans will retain control of the Senate and Democrats will retain control of the House.

Just 15% said they expect Democrats will win back control of the Senate and retain control of the House. A mere 1% said they think Republicans will retain control of the Senate and win back control of the House.

And again, 26% said they are unsure about the most likely outcome of the congressional races, the survey found.

With so much unknown and the election just weeks away, many advisors in the CNBC survey expressed concern that the electoral process could weigh heavily on the market. 

"There's a lot of uncertainty — not just because of the election," said Alison Gamble, president of Gamble Jones Investment Counsel, which ranked 15th on the CNBC FA 100 list of top financial advisors for 2020.

The coronavirus crisis and the economic shock that followed have taken a toll on businesses almost across the board. "These are market cycles we will need to weather through," said Gamble, whose firm is based in Pasadena, California.

"That's not to say we haven't positioned ourselves to have a little dry powder," she added.

Before hitting a key 30,000-threshold, the Dow Jones Industrial Average will fall back below 25,000, 37% of the top firms predicted.

If we do see a pullback, there are some opportunities out there.
Michelle Perry Higgins
principal of California Financial Advisors

Slightly fewer — roughly 29% of those polled — said the 30-stock benchmark could hit 30,000 before receding, and 34% were unsure which would happen first.

"If we get a drop because of the election results, or a delay in the results, we would look for an opportunity to buy some things cheaper," said David Rea, president of Winston-Salem, North Carolina-based Salem Investment Counselors, which ranked first on the 2020 CNBC FA 100 list. 

"If we do see a pullback, there are some opportunities out there," said Michelle Perry Higgins, a financial planner and principal of California Financial Advisors in San Ramon, California.

"A lot of money will get put to work," she said. California Financial Advisors ranked 9th on the CNBC FA 100 list.

In September, the Dow notched its first negative month since March but began October on an upswing.

Wall Street generally sees Trump as more pro-business. Some investors have raised concerns about a potential Biden win as they fear it could lead to higher corporate taxes and tighter regulations.

But at the same time, it could ease concerns about the trade war with China and lack of stimulus to bolster the economy in the wake of the coronavirus.

Even if the election does lead to market swings, it's not a reason to change your overall investment strategy, advisors say.

"We all know we are going into some sort of storm," Higgins said. Have some money sitting on the sidelines for buying opportunities and be ready to hunker down, she advised.