The vast majority of people build their wealth through markets – and advisors offer crucial advice, insight, and strategy through their investment management services. While these services are helpful in good times, their value is most salient during periods of market turbulence, when advisors must coach their clients through uncertainty and anxiety. Potentially concerning market patterns emerge regularly (and according to some media,"concerning patterns" are emerging all the time), such as the current concern about a potential "AI bubble" that could trigger a correction. This chatter naturally creates concern for clients, who will turn to their advisor for help – placing advisors directly into the recurring 'scary markets' conversation that tests both their investment philosophy and their ability to communicate it effectively.
In this 181st episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how advisors can lead clients through a "market fears conversation". The challenge for advisors is not to dismiss these concerns reflexively as something "already planned for", which may be technically true but does not alleviate client concerns in the moment they are most fearful.
Instead, effective scary-market conversations begin with empathy, not explanation. Clients typically deliberate internally for days or weeks before bringing their concerns to their advisor, meaning that by the time they call, they are already emotionally activated. Acknowledging that their fear is understandable – and even shared – helps create the psychological safety necessary for productive dialogue. From there, advisors can slow the interaction by creating space between stimulus and response, allowing emotions to settle before triggering action. This deliberate pacing reinforces that the advisor is not reacting defensively or dismissively, but thoughtfully and intentionally.
Now on firmer (and calmer) footing, the advisor can reconnect clients to the deeper foundations of their financial decisions. Revisiting purpose, values, and long-term goals reframes the market discussion away from headlines and toward the reasons the portfolio exists in the first place. From that foundation, advisors can remind clients how their investment process was built: portfolios were designed using long-term historical evidence that already includes periods of extreme uncertainty, speculative excess, and painful drawdowns. While the triggers for market stress change with each 'crisis', the common thread is that such periods eventually resolve, even if the path is uncomfortable. The assumption that markets ultimately recover is not blind optimism; it is the central premise underpinning long-term capital market participation.
Importantly, advisors can also demonstrate that 'staying the course' does not mean doing nothing. Rebalancing, gradually adjusting risk profiles to align with a client's life stage, and maintaining exposure across asset classes enable portfolios to respond systematically without resorting to binary, all-or-nothing bets. This framework helps counter the seductive appeal of going entirely to cash (which introduces a second, often more stressful decision in turn: when to get back in). By walking clients through what 'waiting until the dust settles' would actually look like, advisors can gently show that reentry typically coincides with higher market prices, not lower risk.
Ultimately, these conversations highlight the true value of financial advice during periods of uncertainty. Advisors are not merely portfolio managers, but emotional anchors who help clients navigate fear without making irreversible decisions they may later regret. While the repetition of scary-market discussions can be taxing for advisors, each instance is often the client's first encounter with that level of anxiety. Approaching each conversation with patience, compassion, and intellectual clarity allows advisors to reinforce trust, strengthen relationships, and fulfill their role as steady guides through uncertainty. In doing so, they help clients remain aligned with strategies that are imperfect but enduring – and better positioned to support long-term goals despite the inevitable discomfort along the way!
