As headlines turn negative, clients naturally become anxious. It is during these moments that guidance from a trusted adviser is most valuable.
Putting uncertainty into perspective
Every market cycle brings periods that feel uniquely uncertain. Whether it was the oil crisis of the 1970s, the dot-com crash of 2000, or the global financial crisis in 2008, each episode felt extreme at the time. Yet, these events were temporary setbacks within a long-term upward trend. The key message for clients is simple: Uncertainty is normal, and markets have historically rewarded those who stay invested.
The real risk is not short-term volatility. It is making emotional decisions, such as exiting the market and then struggling to re-enter at the right time. Even professional investors find it extremely difficult to consistently time markets.
Anchoring clients to what matters
One of the most powerful ways to guide clients through uncertainty is to anchor discussions around their original investment objectives. Every investment plan should be built on three core pillars:
- Time horizon
Remind clients how long their money is meant to stay invested. Short-term market movements matter far less over the long term.
- Risk tolerance
Clients need to understand what downside risk looks like before it happens. We use Value at Risk (VaR) to frame this, describing the potential level of loss a portfolio could reasonably experience over a year. This allows you to ask an important question: “Is what we’re seeing still within the expectations we agreed upfront? This often helps reframe fear into something anticipated and manageable.
- Real return expectations
Bring the conversation back to outcomes that matter, growing wealth above inflation over time.
Refocusing the conversation on what drives returns
Clients are often drawn to short-term decisions and focus on manager selection. However, as advisers, it is critical to redirect focus to the decisions that matter most, such as:
- Strategic asset allocation (SAA)
This is the foundation of the portfolio and the primary driver of long-term outcomes. Clients need to be reminded that the most important decision has already been made, the right long-term asset mix. Staying invested in this allocation is what gives clients the highest probability of success.
- Strategy diversification
Within each asset class, different investment styles and strategies perform at different times. This provides an important message for clients: Not everything needs to work all the time for the portfolio to succeed. Diversification across strategies helps smooth outcomes over time.
- Manager selection
While important, this is often over emphasised. Use this as an opportunity to shift focus away from short-term performance comparisons and back toward the broader portfolio design.
- Tactical asset allocation (TAA)
Clients often expect active changes during uncertain periods. It is important to set expectations clearly:
- Tactical decisions are limited and measured
- They are not meant to replace long-term strategy
- Getting timing right consistently is extremely difficult
A useful way to frame this: “We make small adjustments where appropriate, but we don’t try to predict markets, we manage risk within a disciplined framework.”
Guiding client behaviour during volatility
Periods of market stress are ultimately behavioural tests, not investment ones. An adviser can help clients:
- Avoid emotional decision-making
- Stay aligned to their plan
- Maintain a long-term perspective
Practical ways to do this:
- Revisit agreed risk levels (e.g. VaR)
- Remind clients of past market recoveries
- Shift focus from short-term performance to long-term goals
- Reinforce that volatility is to be expected and not a failure of the strategy
Uncertainty does not require a new strategy; it requires conviction in the existing one. An adviser can provide clarity when clients feel uncertain, and discipline when they feel tempted to act.
By anchoring conversations to long-term goals, reinforcing the importance of strategic asset allocation, and setting realistic expectations around risk and market behaviour, you can help clients stay the course and ultimately achieve better outcomes. In uncertain times, the greatest value to clients is not predicting markets but helping them remain invested.
Equilibrium is dedicated to enabling advisers to focus on what truly matters: spending more time with their clients and growing their business. Through our strategic partnership, Equilibrium brings the power of balance into your financial advice practice. For more information visit eqinvest.co.za.
Equilibrium Investment Management (Pty) Ltd (Equilibrium) (Reg. No. 2007/018275/07) is an authorised financial services provider (FSP32726) and part of Momentum Group Limited, rated B-BBEE level 1. Momentum Global Investment Management Limited is an authorised financial services provider (FSP13494) and is exempt from the requirements of section 7(1) of the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS) in South Africa, in terms of the FSCA FAIS Notice 9 of 2025 (published 9 January 2025).
