Manage emotions and client expectations in volatile markets

Updated on 9 September 2025 | 5 minute read | Brie Williams, Global Head of Advisory Solutions and Wealth Intelligence, State Street Investment Management

Advisers help clients maintain a long-term perspective, navigate short-term hurdles, and manage behavioural biases.
Emphasising resilience and adaptability in portfolio construction strengthens clients’ financial security during unpredictable times.
Financial advisers can help clients avoid counterproductive behaviours and pursue their financial goals with confidence, especially in uncertain markets.

In the world of investing, market uncertainty driven by economic, geopolitical, and societal factors is a constant reality. Unexpected events and market shifts can disrupt portfolios at any time, regardless of broader economic trends.

For clients trying to navigate an unpredictable economic landscape, financial advisers are invaluable guides. You play a critical role in emphasising the importance of a balanced, long-term approach for clients, while also helping them address short-term challenges and avoid overly reactive or rash investment decisions. Equally important is your ability to help clients realign strategies and adapt as conditions change.

Managing client expectations in uncertain markets

Investing is inherently a human endeavour, making an understanding of behavioural biases and sentiment crucial. While clients can’t completely eliminate these biases, increased self-awareness can help mitigate their impact.

Advisers play a vital role in helping clients channel their emotions productively within their investment strategies. By integrating principles of behavioural finance, you can support clients in maintaining investment discipline and reducing decision fatigue.

Risk of trying to time the market

In times of uncertainty or volatility, you may find you have to spend more time actively managing client behaviour and emotions, as clients may be tempted to deviate from their long-term plan or to try to time the market.

But history shows that market timing usually comes at a cost. It’s nearly impossible to predict precisely when the market will take a downturn or rebound. And it is much better to stay invested over the long term. The below chart shows how much $10,000 would be after 30 years if you stayed invested in the Australian share market. It is a useful tool to highlight to clients the benefits of long-term investing.

If someone invested $10,000 in February 1995, that would be worth $123,000 30 years later. However, if you pulled that out for a day during severe market downturns, such as during the GFC and COVID, that would only be worth over $95,000 which is $28,000 less than if the money was kept invested.

Value of $1,000 invested in the S&P/ASX 300 Index 1995 - 2025

Notable market events: GFC: Nov 2007 – Mar 2009, Covid: Feb 2020 – Mar 2020

Source: FactSet, as of 28 February 2025 based on State Street Investment Management research using daily gross returns for the S&P ASX 300 Index. For the “Value if Selling after a Bad Day for One Day” time series, if a daily return ranked in the 20 worst days over the 30-year period ending 28/2/2025, the investor will sell the position meaning the next day return would be 0%. Index returns are unmanaged and do not reflect the reinvestment of dividends or gain/loss on transactions. Past performance is not a reliable indicator of future performance.

Setting expectations around risk perception

While market volatility can shape clients’ perceptions of risk, true risk assessment involves understanding financial goals, time horizons, and personal comfort with potential losses. Advisers can help clients manage risk more effectively by demonstrating how their portfolio aligns with long-term objectives, steering them away from reactions to short-term market fluctuations.

Advised Australians report higher financial confidence - a key measure of how they feel about risk - than unadvised Australians, a percentage which has also increased overtime.

Financial confidence

* The Value of Advice Index is based on consumer research undertaken for Financial Advice Association Australia (FAAA) by independent research firm MYMAVINS. The quantitative study undertaken in August to September 2024 involved an online survey of 1,193 respondents from Australia, each of whom was over 25 years earning over $90,000 a year or holding over $50,000 in investable assets. 

Actionable strategies

Keep the focus on what really matters: encourage clients to limit exposures to background noise – such as financial news and social media – which can distract from long-term performance trends and lead to unnecessary stress.
Reframe losses in terms of long-term goals: remind clients of their original objectives and show how short-term market movements have minimal impact on achieving these outcomes over time.
Employ decision-making tools: use structured approaches, such as decision trees, scenario analysis, or cost-benefit analysis to help clients evaluate options objectively and assess various factors to provide clarity and reinforce a disciplined investment process.

Empower clients to maximise their investment success

Whether clients view market downturns as opportunities to buy and hold, or fall victim to chasing returns, often depends on their adviser’s ability to steer conversations away from short-term performance metrics and toward decision-making that supports long-term goals.

There are several areas where advisers can and often do add distinct value within the framework of a trusted relationship. Nearly two in three clients of financial advisers report being highly satisfied with their wealth compared to one in three unadvised consumers¹.

Actionable strategies for helping clients

Simplify complex market dynamics: Uncertain market dynamics and unexpected events, such as interest rate changes, inflation, and geopolitical shifts, can make the investment landscape increasingly challenging for clients to navigate independently. Advisers can offer clarity and reassurance by distilling complexity into actionable insights, helping clients understand how their portfolios are built to be resilient across various scenarios.
Keep clients focused on what’s important: In today’s fast-paced news cycle, clients are frequently bombarded with information that can lead to panic or doubt. Helping them feel more secure in their financial strategies takes more than logic alone. Advisers often combine vigilance with empathy to help ease clients’ concerns and to move them away from an emotionally reactive state to one where they can confidently tap back into their critical thinking skills.
Support intentional decision-making through financial planning software: Technology is essential to fostering client engagement, connectivity, and transparency, especially among the younger generations. Financial planning software enables advisers and clients to collaboratively develop outcome-oriented plans, explore potential scenarios interactively, and dynamically monitor and adjust goals. This approach empowers clients to work incrementally towards their goals with greater confidence.

The value of building resilient clients

Today’s prolonged market uncertainty underscores the need for a deeper approach: strategic resilience.

Resilience is about more than enduring market movements or financial stress; it’s about enabling clients to adapt to uncertain market conditions with clarity and confidence, so that they can balance logic with emotion to make sound decisions under pressure.

Advisers can help build that resilience by helping clients understand both the risks they assume and their ability to bear those risks. It’s about empowering clients to make informed, purposeful choices that align with their risk tolerance, capacity, and financial objectives — even in uncertain or volatile markets.

What a resilient client looks like:

Understands that all investing carries risk, but avoiding it entirely means missing out on growth.
Knows their personal risk tolerance, taking only the level of risk that aligns with their comfort and capacity.
Can withstand market volatility and avoid panic-driven decisions during downturns, thereby sidestepping the crystallisation of temporary losses.
Adapts to changing conditions and recalibrates expectations, rather than fixating solely on staying the course.

The frontline of client protection involves equipping clients to make decisions that safeguard both their immediate well-being and long-term goals. This resilience is cultivated not just through portfolio construction, but through ongoing conversations that build confidence, clarify risk, and reinforce each client’s commitment to their financial journey.

Resilience as a strategic asset

Cultivating this adaptable mindset allows advisers to provide value that extends far beyond returns. Fostering strategic resilience not only strengthens client relationships but also equips clients to more confidently navigate future challenges. This approach positions the adviser as an essential partner in their lives, enhancing the client’s ability to manage risk thoughtfully and stay prepared for whatever comes next.