Tame Volatility With Volatility

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You diversify the portfolio with asset classes, but that isn't enough to minimize volatility. You also need time. An approach that combines modern portfolio theory with behavioral finance could help you and your clients get the best risk-adjusted returns possible.

How You're Handling the Gyrating Markets

We asked you and other advisors to tell us how you're responding to the current market. What worries you? What are you telling clients? How are they being affected? What strategies and tactics are you pursuing? And what opportunities do you see? Here's what advisors said.

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Clients may not like volatility, but it offers advisors an opportunity to demonstrate their expertise. When markets get rocky, educate clients and prospects on your techniques for hedging volatility, capturing opportunities, and protecting the portfolio.

The True Cost of Volatility's Wild Ride

Clients may like a little excitement now and then, but can they stomach plunging drops in their account values? To truly test their risk tolerance, forget metrics like standard deviation and show them—in actual dollars—the hits they'll take under different conditions of volatility. The resulting performance may not be worth the pain.