Sorry, we’re closing up shop early tonight.

The federal government officially shut down yesterday after lawmakers failed to agree on a spending bill. While history shows shutdowns usually create short-term volatility, rather than lasting damage, advisors will need to make sure they’re holding clients’ hands through the turmoil. And, for many clients already shaken by tariffs, geopolitical conflicts and AI disruptions in the broader labor market, the news only added to a year of remarkable uncertainty.

“The most important thing is for clients not to lose their heads and overreact to what will likely be a short-term shutdown,” said Michael Arone, chief investment strategist at State Street.

Keep Your Head Up

The good news is that shutdowns aren’t usually a major blow to markets and the overall economy. Over the previous 21 shutdowns, 11 saw positive market changes, nine experienced market declines, and in one case, the shutdown was resolved before markets even opened, according to Vanguard data:

• From December 2018 to January 2019, the government shut down for 35 days, the longest period on record, and the S&P 500 actually rose 9.3% in that time.
• The biggest decline occurred in 1979, when an 11-day shutdown caused the index to drop 4.4%, according to the data.

So far, market reactions have mirrored past shutdowns, Arone said. However, if furloughed government employees are fully laid off, then that would be a real departure from the norm, he added.

Big Data. One immediate effect is data delays. Friday’s September jobs report, a key indicator for Fed policy, has been postponed. But Arone noted the Fed can rely on alternative sources like the ADP and JOLTS reports, which both came out this week. “The Fed is always very careful to suggest that a single data point isn’t how they respond,” he said.

And, despite April’s sharp market dip following President Trump’s Liberation Day tariff announcements, major indexes are up this year, with the Nasdaq gaining nearly 20%. Arone said the shutdown isn’t likely to derail that. “The foundation for the bull market remains solid,” he told Advisor Upside, citing fiscal stimulus from the One Big Beautiful Bill Act, Fed rate cuts and healthy earnings. “It’s rare for the US economy to enter a recession if corporate profits are growing, especially by double digits.”

Try Not to Panic. Advisors make financial plans to withstand market downturns, but headlines about a government shutdown can absolutely rattle clients’ confidence, said Omen Quelvog, founder of Formynder Wealth Manager.

“I find it reassuring to preemptively send a note or short video to my clients letting them know that we’ve built their portfolios with the appropriate amount of risk to tolerate these kinds of events,” he told Advisor Upside.

There are 196 days until taxes are due, but clients want help now.

Americans paid more than $206 billion in capital gains taxes last year, according to the Tax Foundation, a Washington think tank. By our calculations, that is … a lot of money. For good reason, along with portfolio management and estate planning, tax planning is quickly becoming one of the most in-demand advisory services. Nearly 70% of high-net-worth clients say reducing taxes is important, yet fewer than half of advisors provide this service, according to a new report from Cerulli and Parametric. As clients shift focus from investment returns to services, tax planning is giving advisors a leg up.

“Ten years from now, this will need to be the standard, and if you’re not doing it, you can be at a distinct disadvantage,” said Scott Smith, senior director of advice relationships at Cerulli.

1 for You, 19 for Me

Traditionally, many firms limited tax planning to end-of-year tax-loss harvesting. Now, more offices are adopting systems that handle it monthly, weekly or even daily. Despite recognizing their shortcomings, many firms hesitate to invest in the expertise needed, viewing it as costly. Smith warned that without strong tax planning, performance gains can be quickly eroded by taxes.

Transition management is another area of growing emphasis. For example, when clients bring 401(k)s in-house, advisors often restructure portfolios. “They end up trading a bunch of things to get the recipe they want,” Scott said. “But it’s created a lot of capital gains tax along the way.” He recommended treating this process as a multi-year transition, rather than an immediate overhaul to minimize tax impact.

The Cerulli report found:

• Some 53% of advisors working with clients holding $5 million or more in assets offer tax planning.
• Only 38% of advisors working with clients under $100,000 provide the service.

“Tax planning used to be a value-add; now it’s table stakes,” said Adam Wojtkowski, founder of Copper Beech Wealth Management. “They want integrated wealth management where tax strategy is central to every decision.

Declare the Pennies on Your Eyes. Client questions are also evolving. While many still ask, “How do I lower my taxes?” others are becoming more sophisticated, said Patrick Huey, principal advisor at Victory Independent Planning. Since the passage of the One Big Beautiful Bill Act, clients are asking how new rules affect income, Social Security, Roth conversions and legacy planning.

“Clients now recognize that taxes aren’t a once-a-year headache,” Huey told Advisor Upside. “They’re a crucial piece of every wealth and retirement strategy, especially in the face of sweeping tax law changes that create moving targets and new phase-outs.”

Quarterly earnings season is a fixture on Wall Street, but if Paul Atkins has his way, that could become a thing of the past.

The SEC Chairman called for an end to quarterly earnings reports in an op-ed published this week in the Financial Times. The proposal is the latest example of the agency taking a more deregulatory approach under the current administration, and it followed a social media post earlier this month from President Trump stating that US companies should only have to report earnings twice a year. Experts said the change may also create unexpected outcomes, including hesitancy among investors to participate in public markets.

“It could send a negative message to the market, even if the switch was intended as a cost-saving measure,” said Nathan Hoyt, chief investment officer at Regent Peak Wealth Advisors. “Wary or skeptical investors do not take shifts away from transparency very well.”

Quarter Master

Atkins argued that quarterly reporting has outlived its usefulness, and getting rid of it would allow companies to cut costs and focus on operations. Quarterly reporting has been standard practice since 1970, when the SEC shifted away from semi-annual disclosures. Countries like the UK and some parts of Europe, as well as some foreign firms listed in the US, already allow twice-a-year disclosures. Some companies still choose to report more often.

Notable names, however, have supported the quarterly reports. Berkshire Hathaway CEO Warren Buffett and JPMorgan Chase CEO Jamie Dimon wrote in 2018 that such reports are “an essential aspect” of public markets. There are also research-backed reasons to believe in their benefits, according to a recent report from NC State’s Poole College of Management:

• Firms’ stock prices are correlated with their accounting numbers, indicating that earnings reports inform investors and drive valuations.
• The US reporting framework makes American capital markets deep enough that startups can raise capital more easily than in other countries.

Report Card. Less frequent reporting could create volatility as investors remain unaware of positive or negative company developments that occurred on a quarterly basis, Hoyt said. The rule change would also impact corporate executives, most of whom are only allowed to trade their company shares once reporting is public.

“Semi-annual reporting would either limit [executives’] trading windows to twice a year or expose them to longer periods of holding material non-public information, and thus room for more bad actors taking advantage of that information,” Hoyt said. Ultimately, however, the market will continue to rely on all available earnings reports, not just the latest ones, which Hoyt said won’t change with the SEC’s new stance.