NO MATTER HOW DILIGENT YOU ARE about saving and planning, when the market swings wildly, it’s normal to feel nervous or anxious. This is why it’s important to keep in mind that whether you’re just starting out, getting ready for retirement or already retired, stock market volatility is a normal part of investing. Since 1980, the S&P 500 has seen average drops of 14% within the year but still ended the year with positive returns three-quarters of the time, with an average return of 10%.¹

When markets get unpredictable, even the most seasoned investors might find themselves doubting that basic investing tenet. “Difficult markets often lead to emotional decisions that might not be in your financial best interest,” says Marci McGregor, head of CIO Portfolio Strategy in the Chief Investment Office for Merrill and Bank of America Private Bank. “That’s human nature.”

A financial advisor can help you keep perspective, avoid rash decisions and suggest some steps you might take to rebalance and help protect your accounts. They might even be able to suggest investment opportunities you could consider making while the markets are down. Below are a few questions for whenever the markets dip, plus some insights on how you could benefit from working with an advisor, wherever you are in your investing journey.

How should I handle market drops? Call your advisor if a steep or sudden market decline makes you uneasy. They could reassure you that you have time to recover and reset your short- or long-term goals and discuss whether you need to make any adjustments to stay on track. They should also walk you through all your choices as well as the fees and expenses involved, taking into consideration current market conditions and how much time you have to pursue those goals — things like saving for your children’s college, purchasing a home or covering caregiving costs for your parents. With the help of your advisor, consider whether you need to rebalance your investments. If volatility causes you to realize that you’re not as comfortable with risk as you thought you were, your advisor can work with you to make adjustments that may help to dampen the losses you might be experiencing.

Can I turn volatility into an opportunity? Simply staying invested in the stock market is one of the biggest opportunities you can take advantage of. That’s because pulling out when the markets are down puts you at risk of missing a recovery, notes McGregor. In addition to providing the important historical perspective that may help you ride out market swings, your advisor can suggest new investment ideas based on the latest market research that take advantage of lower stock prices and fit with your time horizon and risk tolerance.

Should I change my investments? If you’re close to retirement, you may be tempted to get out of stocks altogether. “But a too-conservative portfolio can be risky, too,” says McGregor. An advisor can show you how adjusting your asset allocation could potentially affect your portfolio’s return over time — an important consideration as you plan for upcoming major expenses, such as the rising cost of healthcare. “In some cases, as you approach retirement, you may even want to increase risk slightly on a calculated basis,” says Chris Hyzy, Chief Investment Officer for Merrill and Bank of America Private Bank. You might consider looking at dividend-paying investments or shifting some of your fixed-income holdings to stocks, for instance, at times when bond yields are low.²

What can I do to stay flexible? Depending on the extent of the volatility and its impact on your portfolio, you may have to consider working a little longer or putting off another goal, notes Ben Storey, director, Retirement Research & Insights at Bank of America. “An advisor can help you find other ways to adjust. You might talk about putting off the purchase of a second home, for instance, so that you can still retire when you want to.”

Do I have enough cash on hand? Plummeting markets can be especially nerve-wracking if you’re relying on funds from your retirement accounts to cover living expenses. “Your advisor can help you revisit your budget to see which nonessentials you can trim to free up income,” Storey says. If you do need more cash for a large expense or to pay down high-interest debt, your advisor might suggest working with a bank to consider low-cost borrowing options so that you don’t have to withdraw assets in a down market.

How can I protect my savings? In addition to working with you to evaluate and possibly adjust your asset allocation to help minimize losses and maintain a potential income stream, your advisor can suggest strategies for making your money last throughout what could be a long retirement and prepare for late-in-life expenses like long-term care.

Preparing for the next downturn

As concerned as you might be about your finances when volatility starts, you can feel more assured by working with an advisor who can help you prepare your portfolio to weather downturns when they hit. An advisor can help you make smart decisions by guiding you in establishing, reviewing and adjusting your investments to match your changing needs and life circumstances. It’s an ongoing process, but one that can make you feel more confident whenever downturns occur in the future.