The Trump administration’s “Liberation Day” tariff announcement in early April led to a stomach-churning market free fall that many investors had never experienced before and none of us would soon forget.

While these types of market downturns may be hard to digest, they do provide financial advisors and investors with an opportunity to pause and set into action several wealth planning strategies that can lead to future benefits.

Here are five action items advisors can suggest to clients across the wealth spectrum that may lead to future asset growth, tax savings, and – most importantly – improved financial confidence.

1. Rebalance and diversify

Significant increases or decreases in the market can lead to changes in an investor’s target asset allocation. From 2017 to 2024, the S&P 500^® Index had increased in value by approximately 150%. Amid the tariff fallout in early April, markets declined sharply and threw certain assets classes out of balance. Given this dislocation, now may be a good time to rebalance portfolios and ensure proper diversification is being achieved. Rebalancing may help reduce overall portfolio volatility and lead to a less volatile experience for investors.

During the rebalancing process, it might be worthwhile for advisors and clients to review the tolerance bands they set up for asset classes and holdings. Revisiting tolerance bands during market downturns may be a better way of judging when to rebalance portfolios versus simply waiting until the end of the quarter or end of the year. In fact, past research from Gobind Daryanani CFP^®, Ph.D. that introduced the concept of “opportunistic rebalancing” found that using a 20% tolerance band may prove most effective.¹ Whether you choose tolerance bands or certain periods of time, just make sure you have a process in place to do it on a consistent basis.

2. Regular investing

During periods of volatility, investors can become nervous and emotional regarding their overall asset allocation and even the idea of investing in general. While this may be the case, continuing to save and invest is an important way to stay on track toward long-term financial goals and help manage inflation and/or longevity risk.

While staying invested for the long term may be the rational thing to do, in highly volatile markets, clients are often anything but rational. That’s why I think it’s important to instead focus on what may be the “reasonable” thing to do (Morgan Housel put out a great podcast on this idea recently, by the way). Put another way, what are the “baby steps” investors can take to continue down the right path in a way that doesn’t feel too scary?

Regular investing is one option, especially for those clients who may have cash sitting on the sidelines or allocations that need to be improved. Moving “significant” assets during these periods may feel too scary for clients, so splitting a larger amount into smaller, periodic deposits may be a “reasonable” way to accomplish your goals as an advisor in a way that feels better to the client.

3. Bucketing strategies

I have been a big fan of bucketing – or goals-based – investing strategies for years, and periods like the one we’re in now are one of the main reasons why. As illustrated below, this type of strategy allows advisors to allocate a client’s portfolio over a period of time and over a variety of investments.

The most important bucket during periods of volatility and high emotions is the first bucket: cash or cash equivalents. By allocating cash or a very conservative and liquid asset to this bucket, advisors can show clients that they don’t need to significantly change their longer-term allocations by selling stocks and bonds since they have assets available to cover their short-term needs.

This idea may help relieve clients’ anxiety and reduce the chances that they “catastrophize” the situation and make irrational decisions. In fact, past research comparing investors who held a single investment portfolio versus those who used a bucketing strategy during the Global Financial Crisis showed how bucketing can improve investor behaviors. During that period, 50% of those who had a single portfolio either fully liquidated or at least liquidated their equity positions, whereas 75% of those in a bucketing strategy made no changes (Widger & Crosby, 2014).²

Periods of market volatility are very common. For financial advisors, navigating volatility means having to manage clients’ finances as well as their psyches. The strategies outlined above leverage tried-and-true financial concepts and behavioral coaching techniques. By leveraging these strategies, my hope is that you can help clients take the lemons we’ve been given and make lemonade – or at least make what’s happening easier to swallow.

The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a financial professional. Federal and state laws and regulations are complex and subject to change. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus Henderson does not have information related to and does not review or verify particular financial or tax situations, and is not liable for use of, or any position taken in reliance on, such information.