When I think about the next downturn, I think about rats.

We recently had a leading neuroendocrinologist, author and expert on stress, Dr. Robert Sapolsky, speak at our national conference. He detailed a classic 1970 study that found when rats were given a warning before getting a small electrical shock, they experienced significantly diminished stress levels compared to rats that received no warning. The latter group apparently lived in an unpredictable world of stress.

Sapolsky noted that having another rat in the cage also helped minimize stress.

While I don’t want to compare financial advisors and their clients to rats, this research has important implications for how we prepare clients for the next down market.

I’ll admit, I have no insights or prediction on when the next serious market downturn will occur, only that it is coming.  Like death and taxes, down markets are unavoidable for market investors. The only question is when—next week, next month or several years from now? The fact is, I know it is coming and I am perfectly fine with it happening.

Over the last 113 years, from 1900 to 2013, we’ve seen 32 bear markets (defined as a market decline of 20 percent or more from peak to trough). That averages out to one bear market every three and a half years.

Periodic market declines are the necessary and normal price of successful investing. It is unrealistic to expect to earn the long-term historical returns of global markets and the companies they represent without experiencing some ups and downs along the way. To state the obvious, if there were no risk, there’d likely be no return.

But, there is something that can transform declines from an annoying blip into a permanent loss: human behavior.

I’ve been asked numerous times over the past six months about what keeps me up at night as CEO of Loring Ward. My answer is consistent: the threat of clients changing their long-term plans when the next downturn happens. I am convinced that the best portfolio in the world can quickly be ruined by bad investor behavior. When short-term emotions get in the way, they can potentially compromise, even derail, long-term financial plans.

Knowing all this, and not forgetting the rats, my challenge to all financial advisors is this: What are you doing—while markets are still performing well—to prepare your clients (and yourself)?

If there ever were a time for proactive leadership and demonstrating the value you provide, it is now. Your role as a trusted advisor is to help your clients manage through bear and bull markets and keep them on track towards what matters most—achieving their long-term goals! There is no better time than today to have that conversation.

What really crystalized this for me was talking to an advisor who works with us in northern Virginia. A few months ago, she started having extensive conversations about risk with her clients. She reviewed their plans, and if a client was ahead of goal, she discussed dialing back some of the risk in the portfolios. She also educated her clients about the historical inevitability of down markets, and how, in the larger context of most long-term plans, declines may be little more than a brief, necessary pause.

As more than one client told her, “I am so relieved that you are thinking about this.”

We feel this kind of risk discussion with clients is so important that we recently sent 3,000 “Risk Conversation” kits to all the advisors who work with us. In the kits were educational materials, including brochures, charts, even a letter advisors could use to help educate clients and put down markets in perspective. The reaction has been overwhelming. Advisors are grateful for the support and encouragement and more importantly, for making it easier for them to educate clients. 

I was heartened to see how many any advisors sent out special mailings and e-mails of the materials in the package to their clients and started scheduling meetings. As one advisor wrote me, “I think our clients will be much more prepared and less rattled because of your thoughtfulness.”

From rats to investors, stress is a universal response to potentially frightening situations. By staying ahead of down markets with education, perspective and a focus on long-term goals, you can make investing much less stressful and help clients weather whatever markets throw our way.

Alex Potts is the president and CEO of Loring Ward Group Inc. and the SA Funds – Investment Trust family of mutual funds. He has also served as CEO of RNP Advisory Services Inc., a registered investment advisory firm.