Managing money for the wealthy has always been a very profitable business. Under the Trump administration, the business of managing money for the wealthy is going to become considerably more profitable for a substantial percentage of investment professionals.
There are four principal factors that are going to boost the investment management industry. First, there is Trump himself, his “advisors,” and the people in the cabinet. By definition, the United States is a plutocracy. While it may not be the case currently, plutocracies historically have tended to favor the wealthy in numerous ways.
The pulling back of regulations is another factor that will contribute to the creation of large cohorts of wealthy investors. Many affluent business owners, for example, will find the costs of running their companies lowered. Some will take the monies they would have otherwise paid and grow their companies, while many other affluent business owners will end up with larger investment portfolios.
Probably the biggest factor contributing to people becoming wealthier with more monies to invest is the proposed tax cuts. The elimination of the estate tax, for instance, will be an incredible boon for investment professionals who understand the implications and are prepared to capture a tremendous pool of investable assets. Furthermore, it is very clear that for a relatively small but extraordinarily well-heeled number of ultra-wealthy families the elimination of the estate tax is going to help facilitate new financial dynasties where talented, motivated investment professionals who recognize the interplay of needs and wants will play crucial roles.
Besides these, there is a fourth factor. The Trump administration is powerfully promoting a pro-wealth ethos. Getting rich is “good.” Getting very rich is “very good.”
There is a countervailing factor that can, over time, possibly badly damage the investment management business. Simply put, if the policies of the Trump administration lead to a significant and prolonged drop in the markets, amid a terrible trade war, for instance, wealthy investors will retreat. However, such a scenario would have to be quite dramatic before it would seriously harm the investment management business.
Whether these factors are good for the country, in the short term or long term, is debatable. Whether these factors are good for the wealthy is not. They are also very advantageous for people who are fast-tracking to serious wealth. Therefore, now is an exceptional time to be in the investment management business focusing on serving the wealthy.
