Markets have reacted to the election of Donald Trump. In such times, there is particular need for wealth managers to give calm direction and advice to clients.

(An earlier version of this article appeared in WealthBriefing, a sister news service to this one, and has been updated with latest developments.)

Gold prices are sharply higher - albeit off their highs of today; debt markets have fallen, the dollar is down and stock futures have taken a hit on the news today that Donald Trump, the brash, at times outrageous figure who has been the Republican nominee in the US election this year, will be the 45th President of the United States.

Taking crucial battleground states such as Ohio and Florida, Trump has – as of the time of writing – secured 278 electoral college votes, passing over the 270 mark he needed to win this extraordinary race.

The price of gold – the classic safe haven asset - at one stage today rose by almost 5 per cent to trade at $1,337.38 per ounce (source: Bloomberg), which is said to be the largest intraday rise since June; the price has since retreated. In the forex market, the dollar at one stage dropped by up to 3.8 per cent against the yen, 2.4 per cent versus the euro and is down about 2.3 per cent against the Swiss franc. The Mexican peso also fell. Futures on the S&P 500 Index fell heavily in Asian/early European trade.

The market reaction, given Trump’s past statements about his (in this publication’s view, harmful) desire to slap tariffs on Chinese exports and his calls for tax cuts while being sketchy about what he would do to bear down on debt, is perhaps understandable. Just as financial markets were not predicting a Brexit vote on June 23 this year – another remarkable blow to received opinion – the same situation appears the case with the US election. There is also the suspicion that, as with Brexit, polls and surveys have underestimated the true support for the insurgent party and underplayed unhappiness with the status quo. The Brexit vote was also, in some ways, something of an early signpost to this election. The received wisdom of finance, politics, academia and big media is under assault. And just as the Remain side of the Brexit referendum arguably caused self-harm by an overly negative and even arrogant campaign, the Democrats may wonder whether choosing a candidate such as Hillary Clinton, for all her experience, was a mistake. Regardless of the fine details, controversy about her emails, and the foundation set up in her name and that of her husband, has taken its toll. 

In his acceptance speech, Trump made statesmanlike comments about working for all Americans and being fair and co-operative to other nations. Perhaps more concerningly, however, his talk about spending on infrastructure and similar projects is not classic limited government conservatism, and will make debt markets concerned about spending. How much of that spending actually gets approved, time will tell. (With politics, management of expectations is all-important, as President Barack Obama found.) With a Republican-controlled Congress, the new president should at face value find it easier to get things done; there are also dangers when all branches are in the hands of one party.

What all this may mean for the wealth management industry in particular is difficult to judge at this point, suffice to say that as with other dramatic episodes in geopolitics and markets – Brexit, the Swiss franc surge of 2015, Indian national elections and sanctions against Russia over Crimea – now is the time for wealth advisors to prove their worth to clients. They must do this by laying out, as calmly and sharply as possible, the likely investment scenarios ahead, the right strategies to protect wealth, and the appropriate time frame over which to judge a course of action.

Trump is, goodness knows, hardly an “establishment” Republican: he does not play familiar tunes about free markets, open trade, traditional values and strong support for NATO. He certainly fits in no neat ideological box. His rise to prominence, it has to be acknowledged, has shown a certain resilience, even a kind of defiant courage and boldness, that directed, could prove a positive force. His comments today about reaching out to those who did not support him are encouraging, even if they are the kind of words victors utter.

It is worth, in keeping a sense of perspective about this result, to bear in mind how much the wealth management industry is influenced by forces beyond politics: trends in technology, demography, culture and values.

This publication will continue to track developments where relevant to its audience in the days and weeks ahead.