Stock market volatility: Why you need a financial planner

Stock markets have slipped almost 5% since the beginning of this year. With global markets in turmoil, analysts expect things to get worse before they get better. You can’t blame investors for feeling nervous. This is especially true for new entrants who have seen their gains of 2025 getting wiped out in the past few weeks.The best way to counter volatility is by following a disciplined asset allocation strategy. This involves periodically rebalancing the portfolio to restore the desired asset mix. Rebalancing is necessary because asset classes do not move in the same direction or at the same pace. Restoring the asset mix controls the risk and ensures stability of returns in the long term. “Rebalancing protects the portfolio against volatility helps small investors gain confidence,” says Rohit Shah, founder and CEO of Getting You Rich. When the markets tumble, a rebalanced investor is less likely to panic and more likely to remain invested.It is recommended that investment portfolios should be rebalanced at least once a year and after a significant movement in any one asset class. This should preferably be at the fag end of the financial year when you ought to book capital gains or losses.However, though rebalancing offers several benefits to investors, very few small investors actually undertake the exercise. This is because the rebalancing decision is a contrarian call, where the investor is expected to get rid of assets that have performed well and buy more of the underperformers. As experts say, rebalancing is like cutting the flowers and watering the weeds. This is where the role of a financial advisor becomes critical. Retail investors often let emotions dictate their investment decisions. They are driven by greed during bull runs and overwhelmed by fear when the bears start attacking. As a result, they are not able to take the right decisions and usually end up losing money. “A financial planner needs to act like a sherpa and guide his clients to their goals. A good sherpa neither lets a climber take undue risks, nor tells him scary tales,” says Deepti Goel, Associate Partner at Delhi-based financial advisory firm Alpha Capital. Instead, the sherpa guides the client to the right path and ultimately helps him reach his destination, she says.A good financial advisor will educate his clients and prepare them for market volatility before a correction happens, not afterwards. If investors are told upfront that equity investments will not have a straight line trajectory like a fixed income instrument, they are less likely to panic when markets correct. A financial advisor who doesn’t explain the inherent risks of equity before the investment is not a sherpa but a travel agent out to make a quick buck.