February Frenzy

Ah, February. The only month where we cram in a fake holiday (…Valentine’s Day), celebrate a groundhog’s weather predictions like it’s gospel, and - every four years - get an extra day to do absolutely nothing productive. But don’t be fooled by the short month; the markets, policy shifts, and real estate trends sure aren’t taking a break. While the world debates whether AI is taking over, Super Bowl ads get more attention than the actual game, and mortgage rates play musical chairs, financial advisors don’t have the luxury of coasting through February. So, let’s cut through the noise and see what actually matters this month.

In today’s email…

• LA real estate after the wildfires – The aftermath and what’s next

• Trump’s first 18 days – Bold reforms or overreach?

• Are advisors really unbiased? The hidden factors driving financial advice

Let’s dive in!

Industry Insight: How the 2025 LA Wildfires Are Reshaping Real Estate

The devastating wildfires that tore through Los Angeles County in January 2025 have left a massive impact on the housing market and the broader economy. From skyrocketing rents to shifting home values, the ripple effects are being felt everywhere. Here’s a breakdown of what’s happening and what it means for advisors and investors alike.

1. The Immediate Aftermath: Housing Market Disruptions

Massive Property Losses: Over 16,240 structures, including nearly 16,000 homes, were destroyed or severely damaged—wiping out $40.3 billion in property value. This has put even more pressure on LA’s already strained housing supply.

Renter Frenzy: With thousands of displaced homeowners looking for temporary housing, rental demand has exploded. LA County saw a 186% surge in “homes for rent” searches, with median rents spiking 20% in certain areas. Some rentals are even seeing bidding wars, like a $16,000/month home that leased for $30,000 post-fire.

Fewer Homes for Sale: Listings in fire-damaged areas plummeted from 94 to 52 in just weeks, while overall LA inventory saw its usual seasonal increase. The imbalance could push up prices in unaffected neighborhoods.

2. Long-Term Market Trends: Where Are Prices Headed?

Rebuilding Costs Pushing Prices Higher: Delays from permitting issues and stricter fire-resistant building codes mean new homes will be larger and pricier. UCLA forecasts a 5% price increase in fire-affected areas by 2026.

Winners and Losers: Some areas hit by the fires will take years to bounce back, while nearby markets like Pasadena and Alhambra could see price surges from displaced buyers. Historically, places like Malibu have recovered within 2–3 years, but affordability remains a challenge.

3. Insurance and Financial Fallout

Premiums Through the Roof: Insurers like State Farm are pushing for 22% rate hikes, with statewide increases expected to hit 29.4% by 2025. The California FAIR Plan, which serves as the last resort for high-risk properties, is under serious financial strain.

Lending Tightens Up: Banks are reevaluating risks in fire-prone areas, and some investors are reconsidering whether to buy low in risky zones or stick with safer, urban properties.

4. The Bigger Picture: Economic and Climate Impacts

Economic Toll: The wildfires could shave 0.48% off LA County’s 2025 GDP (about $4.6 billion) and cost local businesses $297 million in lost wages. Total damages, including uninsured losses, could hit $164 billion.

Are People Moving Out? Climate migration is real—First Street projects 55 million Americans will relocate by 2055 due to climate risks. Some LA residents may take this disaster as a sign to move to the suburbs or even out of state, just like after the 2017 Wine Country fires.

5. What’s Next? Market and Policy Shifts

Fireproof Homes in High Demand: Buyers and developers are prioritizing homes with defensible space, fire-resistant materials, and urban locations. Expect to see a shift toward high-density, fire-safe developments in downtown LA instead of suburban sprawl.

New Rules on the Horizon: Governor Newsom has already fast-tracked rebuilding by suspending CEQA and Coastal Act requirements, but there’s a push for stricter building codes and new insurance models to spread out the financial risk.

Final Thoughts: A New Normal for LA Real Estate

The LA wildfires have accelerated changes in the real estate market, putting climate risk, affordability, and urban resilience front and center. While short-term disruptions dominate now, long-term shifts in fire-resistant design, redevelopment, and climate adaptation will reshape the market for years to come. The challenge? Balancing urgent recovery efforts with smart, sustainable planning.

18 Days of Trump – Major Moves Shaking Up America

Since taking office on January 20, 2025, President Donald Trump has wasted no time making waves. In just 18 days, he’s signed 51 executive orders, 8 proclamations, and 16 memoranda, rapidly reshaping policies on immigration, energy, governance, and foreign affairs. Here’s a rundown of the biggest shifts that could impact your clients, businesses, and investments.

1. Immigration and Border Security – Hardline Policies Are Back

National Emergency at the Southern Border – Trump declared a national emergency to fast-track funding for the border wall and sent 1,500 troops to boost enforcement. He’s also reinstating the controversial “Remain in Mexico” policy and suspending asylum claims for new arrivals.

Birthright Citizenship on the Chopping Block – A new executive order aims to deny citizenship to children of undocumented immigrants and noncitizens. Legal battles are already heating up as constitutional experts challenge the move.

Cartels Labeled Terrorists – Mexican drug cartels and Yemen’s Houthi rebels are now Foreign Terrorist Organizations, allowing for military action and stricter financial sanctions.

Mass Deportations Begin – ICE has already arrested over 460 undocumented immigrants with criminal records in the first 33 hours, focusing on sanctuary cities like Chicago and Denver.

2. Overhauling the Federal Government – A Major Reset

DEI Programs Dismantled – All diversity, equity, and inclusion (DEI) offices across federal agencies are shut down, with employees placed on leave. Agencies must report if they tried to “hide” DEI staff.

Federal Workforce Shakeup

• Hiring Freeze: Only military, immigration, and national security roles are exempt.

• Remote Work Ends: Federal employees are required to return to offices full-time.

• Schedule F Returns: This makes it easier to fire federal employees in policy-influencing roles—aimed at rooting out “deep state” opposition.

• Department of Government Efficiency (DOGE): A new agency, led by Elon Musk, will revamp federal software and bureaucracy.

3. Energy & Environment – Fossil Fuels Take Center Stage

Paris Climate Agreement? Gone. – Trump pulled the U.S. out again, arguing it puts an unfair burden on American industries.

Energy Independence Push – A National Energy Emergency has been declared, repealing EV mandates, slashing offshore wind restrictions, and expanding oil and gas drilling, including in Alaska.

Renaming Landmarks – The Gulf of Mexico is now the “Gulf of America”, and Mount Denali has reverted to “Mount McKinley” on federal documents.

4. Social & Cultural Policies – Reversing the Clock

Gender Recognition Limits – Federal agencies now recognize only two sexes (male and female), rolling back transgender protections in healthcare, passports, and military service.

January 6 Pardons – Trump granted over 1,500 pardons or commutations, including to Proud Boys and Oath Keepers leaders.

Anti-Censorship Order – Directs agencies to investigate and halt alleged government interference with social media platforms.

5. Foreign Policy & National Security – Big Swings, Big Risks

TikTok Gets a Reprieve – Trump delayed its ban by 75 days to allow a U.S. ownership deal.

WHO Withdrawal – The U.S. is once again cutting ties with the World Health Organization over its handling of COVID-19 and global health policies.

Tariff Policy Shake-Up – Trump imposed 25% tariffs on Canada and Mexico (paused for 30 days pending border security talks) and 10% on China under IEEPA, citing national security concerns. In response, Canada and Mexico levied tariffs on U.S. goods, while China restricted U.S. energy and agriculture exports and filed WTO complaints.

6. Other Big Moves

Regulatory Freeze – All pending Biden-era rules are paused or revoked, including LGBTQ+ protections and prison reform measures.

Infrastructure & AI Investment Boom – Trump secured $500 billion in private-sector AI investments and announced a $600 billion Saudi investment pledge for U.S. infrastructure.

Legal & Judicial Overhauls – Trump is launching investigations into alleged law enforcement weaponization under Biden and fast-tracking security clearances for political allies.

Challenges & Controversies – Will These Actions Stick?

Many of these executive orders face massive legal battles. Lawsuits are already underway against:

• Birthright citizenship restrictions (challenged by the ACLU)

• Schedule F terminations (opposed by federal unions)

• Environmental rollbacks (targeted by climate advocacy groups)

Meanwhile, Congressional Democrats are fighting back, vowing to block funding for Trump’s border security expansions and DEI shutdowns.

Final Takeaway – Fast & Furious Policy Shifts

Trump’s first 18 days have been a whirlwind of policy reversals, aggressive enforcement, and legal showdowns. Whether these moves hold up in court or withstand political resistance remains to be seen, but one thing is clear—America’s trajectory is shifting fast.

The Missing Piece in Financial Advice: Why Advisors Need to Rethink Their Approach

Financial advisors pride themselves on helping clients build wealth, protect assets, and plan for the future. But a groundbreaking study on the Quality of Financial Advice, which surveyed over 1,000 certified financial planners, reveals an inconvenient truth: many advisors may be unintentionally limiting their clients' financial potential.

The research, conducted through a rigorous field experiment, found that while financial advice is essential for guiding clients, biases, compensation models, and gaps in expertise can lead to suboptimal recommendations. Specifically, most financial advice is narrowly focused on traditional investments like stocks and bonds, while major wealth components - like real estate - are often overlooked. The study’s findings raise a critical question: are financial advisors truly offering holistic, unbiased advice, or are they operating within industry-imposed blind spots?

The Hidden Biases in Financial Advice

The study highlights four key challenges in the industry:

1. Familiarity Bias – Advisors tend to recommend investments they personally own or are most familiar with, even when better alternatives exist.

2. Compensation-Driven Advice – Commission-based advisors often lean towards higher-fee mutual funds over lower-cost ETFs, even when the latter is a better option.

3. The Real Estate Blind Spot – Despite being a significant portion of client wealth, real estate is rarely included in financial planning discussions.

4. Client-Driven Decisions – Many clients only receive recommendations on products they actively ask about, leading to missed opportunities for diversification and strategic planning.

These gaps don’t just affect clients; they also affect advisors, who risk losing credibility, trust, and assets under management (AUM) when they fail to provide holistic financial strategies.

Why Real Estate Must Be Part of the Conversation

For many clients, real estate represents a substantial portion of their wealth, yet it remains a blind spot in traditional financial planning. Ignoring real estate in financial conversations often leads clients to seek advice elsewhere - whether from mortgage brokers, realtors, or even competing financial institutions. This fragmentation can result in misaligned strategies and missed opportunities for long-term wealth preservation.

Advisors looking to deepen client relationships and enhance financial outcomes should consider expanding their approach beyond the traditional stock-and-bond portfolio. Incorporating real estate into financial planning allows for a more comprehensive, strategic wealth management approach.

Embracing a More Holistic Approach

The financial landscape is evolving, and advisors who broaden their expertise stand to gain the most. This is where tools, education, and data-driven insights become essential. Firms that provide advisors with comprehensive real estate insights, tax-efficient strategies, and long-term wealth planning guidance will be better positioned to serve their clients effectively.

Leveridge is one resource that aims to help advisors navigate this shift. By providing AI powered real estate data, planning tools, and educational resources, Leveridge supports advisors in expanding their expertise and delivering a truly holistic financial strategy to their clients.

Final Thoughts

Clients aren’t just looking for someone to manage their stock portfolios - they want a trusted advisor who can help them maximize all aspects of their wealth. Advisors who embrace this broader, more holistic approach will differentiate themselves, build stronger client trust, and ultimately, grow their businesses.

The industry is changing. Advisors who recognize and address these blind spots will be at the forefront of financial planning’s next evolution.