Why Financial Advisors have no Confidence in Washington

Written by Dave Young, President of Paragon Wealth Management

 photo by Seansie

Smoke and Mirrors...

Politics and religion are two subjects we try not to discuss on this blog because we realize they are often more emotional than fact based and can be offensive to some of our readers.

Avoiding politics has been difficult this year because it seems that the center of the financial universe has recently moved from Wall Street to Washington. The continuous daily news updates from Washington have had much more impact on our financial markets than ever before.

I find it interesting that while 60% of Americans approve of how Obama is doing, a recently released poll of financial advisors showed that only 36% of them approve of his performance so far. Even worse, 68% said they have no confidence in his ability to "fix" the ailing economy.

Why is there such a difference between the ways that most citizens see the new president versus most financial advisors? In part, I believe, because financial advisors base their perception more on "the numbers" than "the personality".

For example, last week President Obama held a press conference on the U.S. budget that was recently passed by Congress.

The budget was 3.6 trillion dollars.

Since one trillion (1,000,000,000,000) equals one million times one million -- 3.6 trillion is beyond the grasp of most people's understanding. So they ignore it.

As last week's budget press conference, President Obama's entire focus was that he is taking us into a NEW ERA OF RESPONSIBILITY. That is what they have named this massive spending bill. To make his point, he spent the entire press conference focused on the 17 billion dollars he was going to save through his new polices. No mention was made of the 3.6 trillion dollar budget or the 1.2 trillion dollar deficit that it would create.

The 17 billion dollars in savings that was the focus of the press conference is equal to one half of one percent of the entire budget. That would be like buying a car for $100,000 and then getting excited about saving $500. Never mind that the car cost $33,000 more than you had available to pay for it.

This is why financial advisors, (people that work with numbers) don't have a lot of confidence in what the President is doing. What he does compared to what he says just doesn't add up.

Sources:  May 8, 2009 Investment News, and www.whitehouse.gov.