As an advisor, you’re aware that market volatility and downturns are inevitable. While these events can be stressful, history indicates that the markets eventually recover. Your clients, however, may be feeling panicked. In times of market volatility, you need to fulfill the role of advisor and of coach.

To help you better understand investor psychology, what actions your clients may be apt to take during market volatility, and what you can do to manage their emotions, we invited Dr. Daniel Crosby, Chief Behavioral Officer at Brinker Capital, to offer his insights in a guest post.

Thank you, Dr. Crosby!

What Your Clients Are Feeling

Your clients are afraid. They can’t help it. This fear is not just psychological, it’s physical too. Our bodies are wired to hang onto fear as an evolutionary vestige, and stressful stimuli takes us right back to that place, even if it’s been a long time.

Research also shows that loss hurts about two-and-a-half times more than a comparably sized gain feels good. There’s an asymmetry in the way that humans process risk and reward.

Humans tend to think that what’s happening now is all that will ever be—we project the present moment into the future indefinitely. You know that when it comes to the markets, that’s not true.

The current carnage is scary, the news is inflammatory, but this too shall pass. No matter what’s happening in the markets, good or bad, it will eventually swing the other way. You also know that periods of downturn actually plant the seeds for a much more attractive short- and long-term return profile for the market.

In the face of all of this, it’s your job to empathize with your clients, understand where they’re coming from, and normalize what’s happening.

Support Your Clients With The Four Ps

At Brinker Capital, we have a four-step system for talking clients through market volatility, “The 4 Ps:” Purpose, Proof, People, Process.


This step involves re-centering your clients on their purpose. Remind them that their financial plans account for market volatility. While you never could have predicted the coronavirus, you knew that there would be drawdowns at some point. There will be a tomorrow.


Once you remind them of the value of their plans and their goals, give them proof that what you’re recommending is sound. Ground them in evidence and market history. Because the current market volatility is related to the impact of COVID-19, show them what has happened to the markets with regard to other recent disease-related outbreaks, like SARS, Ebola, or the swine flu.

The smartest people in the world are currently working to fight the coronavirus. Life will eventually go back to normal. Humanity can beat this, and the markets historically rally after sharp drawdowns.


Consider all the voices in your clients’ heads right now–their friends, family members, the media. You need to ground your advice in the bedrock of evidence-based investing. Show them research, reports, and quotes from reputable names and institutions. When people are uncertain, they tend to defer to experts. Those experts can provide calm in the face of fearmongering and help reinforce the plan you have in place.


People have a bias to act when they feel like “the game is on the line.” You know that sometimes the best course of action is to do nothing, but your clients may not be receptive to that advice. It can feel dismissive or flippant to tell someone who has worked so hard to amass their wealth to do nothing, when they feel like they’re watching it slip away.

Suggest actions your clients can take to help them feel more in control. From a portfolio perspective, you may recommend tax-loss harvesting or strategically capitalizing on buying opportunities. But, you can also recommend actions unrelated to their finances, replacement behaviors, like meditating, exercising, and maintaining social connections.

Some of your clients are probably struggling to balance what they feel with what they know. Even though they have probably experienced a recession or two and understand the business cycle, the mind is wired to respond to perceived threats. Even if it’s contrary to their best interests, they may want to act. As you help them through this period of uncertainty, consider what you can do to help them maintain a sense of calm and confidence in the face of fear and anxiety.

Dr. Daniel Crosby
Chief Behavioral Officer at Brinker Capital

Educated at Brigham Young and Emory Universities, Dr. Daniel Crosby is a psychologist and behavioral finance expert who helps organizations understand the intersection of mind and markets. Dr. Crosby recently co-authored a New York Times Best-Selling book titled, Personal Benchmark: Integrating Behavioral Finance and Investment Management.

Follow Dr. Crosby on LinkedIn for additional commentary and perspective related to behavioral finance as you engage your clients in all seasons of the markets.

The information, analysis and opinions expressed herein are for informational purposes only and do not necessarily reflect the views of Envestnet. These views reflect the judgment of the author as of the date of writing and are subject to change at any time without notice. Nothing contained in this piece is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type.

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