How Advisers Can Steer Their Clients Through Market Volatility (and Strengthen Their Relationships)
Financial advisers need to be strategic when they communicate with clients during market volatility. The goal is to not only reassure them but to also help them avoid rash decisions, deepen your relationship with them and build lasting trust.
Market volatility can trigger powerful emotional responses in investors, often leading to rash decisions that compromise long-term financial health.
During these turbulent periods, how advisers communicate can mean the difference between client flight and strengthened loyalty.
Strategic communication during market volatility doesn't just prevent knee-jerk reactions; it can transform challenging market conditions into opportunities to deepen client relationships.
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Anchoring clients to their financial plan
Many people experience predictable emotional reactions when markets drop, including fear, anxiety and the urge to "do something."
These emotional responses can override logical thinking, pushing usually rational clients toward decisions that damage their long-term financial trajectory.
Your role extends beyond portfolio management to becoming an emotional anchor and the steady voice of reason when market headlines fuel panic.
When volatility strikes, it's crucial to immediately reorient clients to their personalized financial plan, reminding them that their portfolio was built specifically for their unique situation, risk tolerance and time horizon.
Using language like, "Let's revisit how today's market conditions fit within the strategy we developed specifically for you," can shift the focus from short-term fluctuations to their broader financial journey.
This market downturn also presents an ideal teaching moment to explain how different portfolio components are performing exactly as designed.
Walk clients through how certain assets provide stability during market declines, while others are positioned for long-term growth despite short-term volatility.
Be sure to translate complex concepts into easily understood language, avoiding jargon that might further alienate anxious clients.
Acknowledging emotions while maintaining focus
Another key to effective client conversations is to validate their concerns without reinforcing or boosting existing fear.
You can begin conversations by acknowledging the gravity of the situation, saying something like, "I understand this market decline feels concerning, and it's normal to feel anxious."
Then pivot toward the strategic elements of their plan, using statements that combine empathy with education: "While these market moves feel uncomfortable, they're actually consistent with scenarios we planned for when designing your portfolio."
In many cases, advisers can get ahead of this fear with proactive communication. During calmer periods, take some time to establish communication protocols, creating templates for various market scenarios.
Then, when markets drop, you can simply tweak the communication to fit the situation.
Your communication plan might include these proactive approaches:
- Develop a tiered outreach system where "nervous" clients receive priority personal contact
- Create educational content explaining market mechanics that can be quickly deployed to everyone on your list
- Establish regular communication cadences that increase during market volatility
- Prepare answers to common questions clients ask when markets drop
Building trust, improving retention
No matter how frequently you communicate with clients or what methods you use, honesty and direct answers will always win out over false reassurances.
Discuss potential negative outcomes in a straightforward manner, while contextualizing them within historical patterns and the client's specific timeline. Share relevant historical context without making promises about similar outcomes and emphasize process over predictions.
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Transparency about what you know (and don't know) builds credibility that results in improved trust and leads to longer client relationships.
We saw this in action with one of the adviser firms we work with during the pandemic. In 2019, the firm implemented a systematic communication plan for market downturns.
Their plan included webinars, personalized video messages from advisers and prewritten email blasts that could be sent within a day or even hours of a significant market event.
This approach helped the firm provide steady guidance when markets dropped in March 2020 and even resulted in multiple referrals from existing clients who appreciated the reassurance and consistent communication from their adviser during the early days of the pandemic.
Effective communication during volatility doesn't just prevent client departures — it strengthens relationships in ways that transform your practice.
You can position yourself as an indispensable guide by anchoring clients to their plans, explaining portfolio design clearly, communicating proactively, acknowledging emotions appropriately and maintaining transparent dialogue.
The most successful advisers recognize that market volatility is an opportunity to demonstrate value and build trust that leads to client relationships spanning generations.
AE Wealth Management, LLC (AEWM) is an SEC Registered Investment Adviser (RIA) located in Topeka, Kansas. Registration does not denote any level of skill or qualification. Information regarding the RIA offering the investment advisory services can be found on brokercheck.finra.org. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The personal opinions expressed by Ben Sullivan are his alone and may not be those of AE Wealth Management or the firm providing this report to you. This information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. None of the information contained herein shall constitute an offer to sell or solicit any offer to buy a security or insurance product. CFP Board owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the U.S. 4511538 – 6/25
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