Recent market events have been jarring – the S&P 500 dropping nearly 5% in a single day and major indexes posting their worst performance since 2020.
Tariff announcements, inflation concerns, and broader economic uncertainties have all contributed to this current market volatility. As financial advisors, we need effective strategies to guide clients through these turbulent times while maintaining their confidence in long-term planning.
So, how do you deal with market volatility?
In my recent conversation with Dr. Apollo Lupescu of Dimensional Fund Advisors on “The Bucket Plan On Demand” podcast, we uncovered three critical strategies that can help transform market turbulence into client confidence.
Here’s what we discussed:
1. Proactively Communicate and Educate Clients
The best advisors don’t wait for clients to call – they reach out first. My business partner Jason L Smith, founder and CEO of C2P and JL Smith Holistic Wealth Management, puts it perfectly in this episode of The Bucket Plan® On-Demand we recently hosted: “This is what differentiates the true elite wealth managers – they’re proactive versus reactive.”
Effective communication during volatility includes:
- Personal outreach: In our practice, we’ve seen tremendous success when advisors personally call their significant client relationships during volatile periods. These aren’t panic calls – they’re reassurance check-ins.
- Educational content: Provide clients with clear explanations about market dynamics, including how tariffs work and their potential impact. When Apollo and I discussed tariffs, he explained they typically create a one-time price adjustment rather than sustained inflation. Research shows that when washing machines received a 20% tariff in 2018, about 12% of that cost was passed to consumers, with producers and retailers absorbing the remainder.
- Focus on facts, not politics: When creating client communications, remember that market perspectives often align with political viewpoints. Stay focused on fact-based analysis rather than commentary that might alienate portions of your client base.
Related: Acquiring Clients Through Authentic Marketing: 4 Step Growth Guide for Financial Advisors]
2. Share Historical Context to Build Market Perspective
Historical perspective is one of our most powerful tools for calming client fears. It’s important to emphasize that since 1926, only 12 calendar years have seen market losses exceeding 10%, and major downturns of 20-40% typically result from unpredictable “Black Swan” events rather than telegraphed policy changes.
Key historical insights to share:
- Market efficiency and tariffs: Markets efficiently incorporate information and expectations about policy changes, including tariffs and market volatility impacts. As Apollo explained during our podcast, tariff announcements typically create short-term volatility, but their actual economic impact is often already priced in before implementation. This explains why reactive trading based solely on headlines frequently underperforms.
- Recovery patterns: Even significant events like the 2020 pandemic, which caused a 30% market drop, resulted in the market ending that year up 18%. This demonstrates the importance of time horizon.
- Rolling returns: Shift client focus from day-to-day volatility to rolling 12-month returns, which over the last decade have averaged approximately 13%, even accounting for periods of volatility.
Apollo emphasized that looking at longer timeframes provides crucial perspective – while the market might be down a few percentage points year-to-date, it’s typically up significantly on a rolling 12-month basis.
Related: How Financial Advisors Can Simplify Asset Allocation for Clients]
3. Use The Bucket Plan® Framework for Client Confidence
How to Talk to Clients About Market Volatility Without Sparking Fear
Arguably the most powerful tool in our communication arsenal during market volatility is The Bucket Plan® framework. This time-segmented approach provides a clear structure that helps clients understand why they’re protected despite market fluctuations, especially if they’re worried about protecting their retirement income.
The three-bucket approach provides:
- Direct security (Now Bucket): When clients express concern about covering expenses during downturns, remind them that their Now Bucket (0-2 years) should contain enough cash to fund immediate needs, shielding them from having to sell investments during volatility.
- Buffer zone (Soon Bucket): The Soon Bucket (3-9 years) creates a crucial time buffer of conservatively invested assets, allowing growth investments years to recover before being tapped for income.
- Long-term perspective (Later Bucket): The Later Bucket (10+ years) is designed for growth – and volatility, though uncomfortable, is expected. The time horizon allows these investments to weather volatility and potentially benefit from recovery.
Smith shared his “aha moment” about the bucket plan strategy during the 2000-2001 market correction: clients with properly funded Now and Soon buckets remained calm during significant volatility, while those without this structure experienced tremendous stress.
This 3-bucket retirement plan approach is so effective because it directly addresses sequence of returns risk—one of the greatest threats to retirement security during market downturns. By protecting retirement income in the Now and Soon buckets, clients can maintain their lifestyle while giving growth assets time to recover, significantly reducing the psychological pressure to make emotional decisions during market volatility.
The Bucket Plan® also helps identify strategic opportunities during volatility, including Roth conversions at lower valuations, disciplined rebalancing, and tax-loss harvesting – positioning you as a proactive advisor rather than just a portfolio manager.
Related: Financial Planning Simplified: Designing Your Client’s Bucket Plan
Download our free guide on The Bucket Plan® Best Interest Process
How C2P Supports Advisors During Market Volatility
At C2P, we’re committed to helping advisors thrive in all market conditions. Whether you’re navigating current volatility or building a more resilient practice for the future, we offer comprehensive resources to support your growth:
- The Bucket Plan® Training: Master our proven time-segmented planning approach through our Bucket Plan 1.0 training program, equipping you with both the technical knowledge and client communication strategies to implement this powerful framework
- Timely Communication and Content: Access turnkey client emails, presentation templates, and social media content designed specifically to educate and reassure clients in turbulent markets
- Practice Management Resources: From client acquisition to team building, our systems help you develop a sustainable and scalable advisory business
- Holistic Planning Tools: Expand your service offerings beyond investment management with our five-pillar approach to holistic wealth management.
Ready to build a more resilient practice? Our Bucket Plan 1.0 training program provides you with the framework, tools, and communication strategies needed to transform client conversations during volatile markets. Schedule a consultation to learn how C2P’s comprehensive advisor solutions can transform your practice during uncertain times and beyond.
Stay Informed with Industry-Leading Insights
Continuous learning is essential for advisor success. Stay at the forefront of industry developments by subscribing to our professional development podcasts:
The Bucket Plan® On Demand Podcast:
Hear from industry specialists like Dr. Apollo Lupescu on investment strategies, client communication techniques, and practical applications of The Bucket Plan® methodology. Recent episodes have covered market volatility strategies, tax-efficient planning, and building client confidence in uncertain times.
The Rainmaker Multiplier On Demand Podcast:
Learn practice management strategies from top-performing advisors who have built successful enterprises. Topics include scaling your business, team development, marketing strategies, and creating enterprise value.
For Financial Professional Use Only
The information provided in this presentation is not intended as investment advice or legal advice. The information provided is for informational and training purposes only. The information in this presentation was accurate as of the time the material was created. Tax laws and rulings can frequently change. Please discuss the client’s current situation with an accountant or tax advisor.