Tariffs not heavily impacting wealth management strategy—yet

Mid-year Economic Forecast

As U.S. President Donald Trump and his counterparts across the world place tit for tat tariffs on each other’s goods, the stock market is yo-yoing in response.

Area wealth management advisors are fielding some calls from concerned clients, but say they haven’t made major strategic changes at this point.


“It’s certainly the prominent headline news item that is impacting markets, but at this point in time, we have not done anything in the portfolios that’s defensive,” said Dave Isaacson, chief investment officer of Schenck Investment Solutions in Milwaukee.

Isaacson emphasized that while large numbers like $200 billion are being thrown around, only $34 billion in tariffs have actually been enacted. And comparing the goods that are being discussed relative to the $20 trillion size of the U.S. economy, there’s less of a concern.

The unpredictable nature of a tariff dispute or trade war makes it difficult to change course anyway, said Bob Lawton, president of Lawton Retirement Plan Consultants LLC in Milwaukee.

“Typically, when there is an unknown like there is with tariffs, it weighs negatively on markets,” Lawton said. “To a certain extent, that’s happened and we’ve been trading sideways in the markets right now because this whole tariff thing is overhanging everything, but no one knows what’s going to happen. It’s kind of risky to adjust a wealth management strategy when you really don’t know what’s going to happen.”

Pam Evason, managing director at Windermere Wealth Advisors in Milwaukee, is less concerned about the immediate impact of tariffs on the stocks of impacted companies, and more focused on the secondary impacts that could result.

“All of those secondary impacts could really impact the length and duration of the expansion and the ongoing bull market,” Evason said. “There’s all this secondary layer that is more concerning to us than the direct dollar.”


Among those potential second-wave effects are rattled consumer confidence and reduced spending, businesses deciding not to invest in capex projects and manufacturers moving production overseas, she said. The strong labor and housing markets, global growth and corporate earnings the economy is experiencing right now could start to weaken.

“It would depend on the magnitude, obviously, of what happens, but I’d say we’d be looking at six to 12 months before these things would be visible,” Evason said.

If the trade dispute continues to escalate, it’s a headwind that shouldn’t be ignored, she said. But the strength of the economy is outweighing most tariff impacts for now.

“We continue to have an incredibly strong job market, not only here in Wisconsin, but also across the United States,” Isaacson said. “There’s a lot of very powerful economic and corporate trends here in the U.S. that have the ability to absorb some of the negative things that come out of trade tariffs.”

Schenck has maintained overweight positions in mid-cap and small-cap strategies in the U.S., which it originally put in place because of federal tax reform and has continued because of the tariffs, Isaacson said.

“The trade tariffs, it’s going to be more industry specific,” he said. “This could potentially have impact on the John Deeres of the world and the Caterpillars of the world, since a lot of their machinery is tied to agriculture.”

Windermere hasn’t reduced its international exposure or made major changes to its investment strategy as a result of the tariffs.


“The good news for our portfolio was we were already overweight to sectors that would fare well in a trade dispute,” Evason said. “We’ve been in financials for a variety of reasons. We’ve been in energy and commodities. We’ve been overweight technology. All the things that we’re in we’ve been in because we like where we are in the economic growth cycle and…all these other factors.”

Lawton deals with retirement plan investments that aren’t impacted by short-term fluctuations in the market, he said. Individuals should remember not to make drastic changes to retirement plan strategies unless there’s an extenuating circumstance, such as a spouse dying or losing a job.

“401(k) plan participants really shouldn’t make adjustments to what they’re doing unless there’s a change in their life,” he said. “They should continue on with what they’ve been doing and stick with their allocation strategies.”

Evason pointed out Warren Buffett’s contention that he has made money in the equity markets under virtually all administrations. There’s no controlling the political environment, so she focuses on finding returns where they’re available.

“We pay far more attention to Twitter than we ever used to,” she said. “But I do also think that some of the rhetoric presents some great opportunities to buy companies at really great prices. We’re trying to treat the volatility as opportunity, not a threat.”

“Long-term, we think trade tariffs are a headwind for economic growth, but in the short-term it could be a bit of a tailwind,” Isaacson said.

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Molly Dill, former BizTimes Milwaukee managing editor.

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