Periods of volatility and uncertainty have always shaped the wealth management profession. Each generation feels that its turbulence is unprecedented, yet history shows us that while market shocks differ in their causes, the human response to uncertainty is remarkably consistent.

According to the Economic Policy Uncertainty Index, June 2025 recorded levels of anxiety almost as high as those in the early months of the Covid-19 pandemic in 2020, and not far behind the 2008 global financial crisis. Yet outside professional circles, public awareness of this recent spike remains low. For many clients, the experience is simply one of heightened financial stress, which could be part of a broader picture in which 70 per cent of Americans report anxiety and depression tied to financial uncertainty (Northwestern Mutual, 2024).

For wealth managers, this creates both a challenge and an opportunity: how to steady client confidence when markets, politics, and economics all feel unpredictable?

Technical tools help, but don’t always reassure
When clients are nervous, advisors often reach for technical solutions. Derivatives, structured notes, options, futures, or dynamic hedging can all play a role in mitigating volatility. They are valid and sometimes vital parts of the toolkit. But we must acknowledge that complex products do not automatically translate into client peace of mind.

In fact, psychological research shows that heightened anxiety reduces comprehension of complex information. A structured note designed to protect downside risk may be technically elegant, but if a client is in a state of fear, the nuances of payoffs and triggers may only add to their confusion. The advisor may have solved a portfolio problem, but not an emotional one. This is one reason why the best approach to dealing with anxious clients is to tackle the emotion first, then logic second.

Why emotional intelligence matters
This is where emotional intelligence becomes more than a “soft skill.” It is a professional competency as critical as technical knowledge. Wealth managers who integrate empathy, clarity, and emotional regulation into their practice provide the reassurance clients are looking for.

Empathy means listening for the emotional subtext, such as determining whether the client’s worry is about the market or their ability to provide for family, health, or retirement security. In this context, clarity means stripping away jargon and explaining strategies, whether derivatives or simple diversification, in everyday language that resonates with clients’ goals. Mean-variance optimisation models might sound clever, but the terminology won’t land with a client dealing with uncertainty. Finally, emotional regulation means projecting calm authority when clients are unsettled, modelling the steadiness they need to feel before making decisions.

Practical techniques
Wealth managers can put these principles into action in several ways:

-- Reframe uncertainty with perspective.

Every era feels unique, but distance shows patterns. Reminding clients that we have navigated previous crises, from the 1970s oil shocks to the 2008 GFC, helps them anchor today’s headlines within a broader narrative. Regardless of the era we are in, uncertainty is standard.

-- Be proactive with your communication strategy.

When uncertainty spikes, don’t wait for the flood of calls. Contact clients before they contact you. A short, calm update explaining both the technical strategies (hedges, rebalancing, structured notes) and the emotional reassurance (“your long-term plan still works”) goes a long way.

-- Educating your clients builds their confidence.

A lot of the time, uncertainty stems from a lack of knowledge or understanding. We are afraid of what lurks in the dark. Bite-sized, regular sessions – whether in-person, webinars, or newsletters – help clients understand not only the products they own but why. This reduces the risk of panic-driven decisions.

-- Spotting behavioural red flags.

Volatility brings two extremes: clients who retreat and avoid meetings, and those who call daily and overtrade. Both are emotional responses that, left unchecked, can damage long-term outcomes. Advisors should use coaching-style questions to uncover underlying fears and guide clients back to balanced decision-making.

-- Be transparent about cost and risk.

With tools such as derivatives and structured notes, transparency is key. Clients rarely expect certainty, but they do expect honesty about trade-offs, fees, and limitations. Clear, open dialogue is one of the strongest trust signals an advisor can send.

Trusted advisors
In wealth management, trust is the currency that underpins everything else. Clients do not judge an advisor by whether they predicted the next downturn or selected the perfect hedging strategy. They judge by whether, in the moment of uncertainty, they felt supported and understood. It is important to note that rapport and trust are not the same. Clients can like you but not trust you, so it’s essential to pay as much attention to trust building as to relationship development.

This is why emotional intelligence is a core ability in the profession. The technical toolkit may evolve with markets, but the human toolkit remains constant. Combining both is what defines the true trusted advisor.

Conclusion
Volatility will always be part of the financial landscape. The factor that reassures the client is the wealth manager’s ability to foster financial confidence through empathy and clear communication. This provides a proactive approach to dealing with emotions.

When clients feel calm and confident, they are better able to understand technical information and products that support their long-term plans. In this way, emotional intelligence is not just “soft,” it is a competitive advantage for wealth managers navigating uncertain times.

About the author
James Woodfall, founder of Raise Your EI, is a former financial planner who now advises financial services and firms on how they can leverage emotional intelligence (EI) to improve individual and organisational performance. He is also the author of The Heart of Finance. Co-authored with Cliff Lansley, it’s a practical toolkit enabling finance professionals to develop the emotional intelligence needed to build effective and profitable client relationships.

James Woodfall