They can also shock-proof portfolios with drawdown strategies that lessen volatility’ s sting.
For the clients of Crewe, whose headquarters is in Salt Lake City, being prepared means planning for liquidity. Willmering says that requires a clear strategy years before retirement, and anticipation about where cash will come from if markets turn negative. Without that, early drawdowns can have an outsized impact on portfolio longevity, since it’ s harder to come back up from an early market decline( this is also known as sequence-of-returns risk).
Chris Mellone, a partner and financial advisor at VLP Financial Advisors in Vienna, Va., takes this logic a step further. His firm builds portfolios for retirees with five to seven years of distributions set aside in more conservative investments
such as short-term government and intermediate-term corporate bonds.“ The reason why we think that’ s important is that for most of the really nasty bear markets the equity market is underwater for roughly that time period,” he says.
That structure is designed so clients won’ t have to sell any equities in a downturn— perhaps the single most important lever advisors have in volatile markets. It also reduces reliance on forecasting, which can be inherently unreliable over short time frames.
Forecasting, after all, is a dangerous game. Willmering recalls a quip from one of her college professors— that economists exist“ to make astrologers look good.” In the end, process and discipline matter more than trying to anticipate near-term moves.
Still, diversification is more difficult in an environment where securities that are supposed to be unrelated are moving more in tandem. In 2022, stocks and bonds declined together, and the pain of that is still fresh in advisors’ minds, especially now that there are signs it could happen again.
“ In the current environment, stocks and bonds, and even gold to some extent, are all correlated,” Mellone says.
That has led some firms to adjust around the edges of their fixed-income exposure. Mellone’ s team, for example, has increased allocations to shorter-duration bonds and floating-rate debt, which are less sensitive to rising rates and inflation.
Willmering says she similarly favors the short- to intermediate-term part of the curve— roughly two to seven years— for clients with near-term cash needs.
But those are refinements, not wholesale changes. Across the board, advisors describe a reluctance to make reactive shifts
According to data cited by Mellone, the market always sees an average decline within any given year of about 14 %( even if it ends up positive), with 20 % drawdowns occurring roughly once every six years.
in response to short-term volatility.“ We tend to make strategic changes typically three to four times per year,” Mellone says, noting that those changes are usually driven by structural considerations rather than recent market moves.
The Data Says Do Nothing
That steadiness also takes into account some historical perspective: that the market is always choppier than people think. According to data cited by Mellone, the market always sees an average decline within any given year of about 14 %( even if it ends up positive), with 20 % drawdowns occurring roughly once every six years.
From that vantage point, the recent 9 % correction in major indices in March and early April doesn’ t stand out as extraordinary. What does feel different is the stacking of risks— geopolitical tension, inflation uncertainty and policy am- biguity— into a compressed period. That“ shock stacking” can influence clients’ behavior and cause them to drift away from portfolio fundamentals.
Jeffrey Fratarcangeli, who heads Fratarcangeli Wealth Management in Bloomfield Hills, Mich., says the financial impact on his clients may be limited but, at least for the time being, the psychological effect is real.“ Maybe I won’ t quite buy that discretionary item yet, or maybe I won’ t fly first class, maybe I’ ll drive this time,” he says, describing how clients adjust spending at the margins when uncertainty rises.
So far, those adjustments appear incremental, particularly among high-networth retirees who have benefited from years of strong markets. Mellone says his clients’ spending has remained largely the same, though he is seeing an increase in their financial support for younger family members— to help them with housing or income gaps.
Still, advisors are watching the economic landscape closely. Consumer spending— particularly by baby boomers in their early retirement years— has been a key pillar of economic resilience. A sustained pullback, even if gradual, could have broader implications.
Inflation is another variable shaping both planning and behavior. While few advisors expect a return to the near-zero inflation environment of the past decade, there is debate over how much to adjust assumptions. Mellone’ s firm has increased its baseline planning assumption for inflation from 2.5 % to around 3 % for the long term.
Willmering says it can be useful to model scenarios at higher levels, such as 4 %, to illustrate the cumulative impact on purchasing power, though she, too, relies on 3 % for portfolio construction.
For Fratarcangeli, the message advisors need to communicate most clearly, especially to clients encountering this kind of volatility for the first time, is that uncertainty is a defining feature of portfolio management— that the abnormal is normal.“ The market is going to crash once a year,” he says.“ So it’ s better to prepare them for that— rather than talking about the great things that are coming.”
52 | FINANCIAL ADVISOR MAGAZINE | MAY / JUNE 2026 WWW. FA-MAG. COM