The two greatest wealth management books ever written have sold a combined 1.8 million copies. One of them, Morgan Housel’s The Psychology of Money, accounts for 99.997% of those sales. My book, The Wealth Management Index, represents the remaining .003%.

A casual observer (me) might say that my book doesn’t deserve to be mentioned in the same sentence. So let’s talk about Morgan’s book instead. It speaks to a general audience, and we should be paying close attention to its wisdom as it helps us in our work with clients—and as it helps us curb our own appetites.

As markets move all over the place and as our income drops with our clients’ investment accounts, it is useful to remember that, according to Housel, “Volatility is a fee, not a fine.” Fees are the price we pay for getting something valuable. Heck, it is what clients pay us for—our hopefully sage counsel. A fine is a form of punishment.

Market fluctuations aren’t a punishment for being an investor, they’re the admission price. I remember being on a local talk show when I was in my 20s with the author of the book Wealth Without Risk. He was polished and glib. I was neither. I told him that everything he said was 80% right, but that it was the other 20% that made the biggest difference. After the show ended, people crowded around him. Even I almost asked for his autograph! He ended up being sued, and a California jury ruled he defrauded 29,000 people in the state.

We know that you can’t have wealth without risk or market returns without market volatility. We also know that today’s market heroes can be tomorrow’s losers. I realize that none of us promise stock market returns when things are going up or promise money market returns when things are falling (except maybe those who misunderstand indexed annuities), but it can still be challenging when clients are scared and may feel like we didn’t do enough to protect them.

Most clients want to know only that they are going to be OK. The only possible thing they can do with their money is spend it or give it away. We have to help them get comfortable with the volatility fee they pay, and that means knowing what their objectives are.

At our firm, we have always set aside one to three years of spending in a cash bucket that will be used during these times. If we perceive markets to be expensive, we will have higher levels of cash. When markets are like they are today, we will let the cash dwindle. This strategy may not be optimal, but optimization occurs when people are able to stay with a long-term plan. Every client is a single case, so asset allocation and cash strategies need to be tailored to individuals. Having the cash bucket goes a long way toward helping clients realize they will in fact be OK.

Yet markets like this do wreak havoc among older clients wishing to leave a legacy to charity. If they leave less to their kids, it is often not as big an issue because the kids generally have a time horizon long enough to recover. A client with a set dollar amount in mind for charity may not have that luxury.

Again, a bucket approach can let you determine which assets you wish to use to pay the volatility fee. It is much better to prepare for what is going to be happening than try to play prophet and predict it. We walk with clients during these times. That’s why they pay us.

Planners, of course, face a quadruple whammy: Our clients may be unsettled, the value of our personal portfolios might drop, our income may drop, and the value of our businesses may drop. (I think I just made myself anxious!) But really, this is a time when you want to increase your outreach and service.

New business often doesn’t come during times like this because unhappy investors may feel paralyzed. But once people get through the trouble, the client churn is virtually guaranteed. The best way to benefit is by delivering incredible service now. You may suffer shrinking margins by keeping staff, but during difficult times the clients need more of you, not less.

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