Low Volatility Market: Ways to Reduce Risks That Persist

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Low Volatility Market: Ways to Reduce Risks That Persist

Aug 23, 2017

Senior CFP Board Ambassador Jill Schlesinger, CFP® offers tips for investors who might be complacent 

Rising asset values in the stock and housing markets, and low volatility, could be tricking investors into a sense of complacency.  To mitigate unanticipated risks, investors will need to revisit their financial strategy, said Senior CFP Board Ambassador Jill Schlesinger, CFP®. 

“Amid this environment, you might be wondering: What could go wrong? Remember that risks persist. While their existence does not mean that long-term investors should change their game plans, risks are a reminder to guard against complacency and to approach investing with caution.”

Through the first seven months of the year, none of three major stock market indexes has fallen by more than 5 percent. One gauge of market movement, the CBOE Volatility Index (VIX), which measures investors’ expectation of the ups and downs of the S&P 500 Index over the next month, recently dropped to its lowest level in 24 years.

One danger for individual investors in a low-volatility market is that they can be drawn into the illusion that investing is easy – or that they can beat the market. In her latest contribution to LetsMakeAPlan.org, Schlesinger offers the following tips to help investors avoid a false sense of security.

1. Have a financial plan: Control your financial destiny by creating a financial game plan with your CFP® professional, which considers your risk tolerance and puts you on track to save enough money to reach your delineated goals. 

2. Beware the savings trap: Rising asset values in the stock and housing markets can lead investors to gloss over the basics. “In 2006, I met with a then-client whose net worth had jumped because of a combination of a booming stock market and skyrocketing real estate prices,” Schlesinger said. “In his mind, he didn’t have to save more money.” You probably can guess what happened in the ensuing years.

3. Rebalance your diversified portfolio: There is no better time to rebalance your portfolio than when stock markets are calm and rising. Additionally, this could be an ideal time to replenish your emergency reserve fund, which is where you set aside enough money to cover six to 12 months of living expenses.

4. Stop trying to beat or time the market: Despite evidence that it’s nearly impossible to beat the market consistently over the long term, many investors still delude themselves into thinking they can do so. The same theory goes for those who may also be sitting atop some cash and waiting for the “right” time to put it to work. Who knows when that will be? Although you may invest at the seemingly “wrong” time, putting your money to work brings you one step closer to reaching your goals.

Americans who need help creating and sticking to investment and financial plans that work in all kinds of markets can turn to CERTIFIED FINANCIAL PLANNER™ professionals, who are trained to provide a comprehensive evaluation of their clients’ financial needs and recommend the most appropriate plan to address those needs.  CFP® professionals are also required to put their clients’ interests ahead of their own and adhere to a fiduciary duty when providing financial planning services.


The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board's mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.  CFP Board currently authorizes more than 77,000 individuals to use these marks in the U.S.

CONTACT: Jessica Lewis, Communications Specialist P: 202-379-2256 M: 301-655-03890 jlewis@cfpboard.org  

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CFP Board’s leadership and representatives are available for interviews and speaking engagements on personal finance, the financial planning profession, CFP Board and the CFP® designation.

Did You Know?

Among clients who work with an advisor, 87% of those working with a CFP® professional are satisfied or very satisfied, compared with 72% of those who work with an advisor without certification.
Anyone can call themselves a “financial planner.” Only professionals who meet CFP Board’s rigorous standards can call themselves CERTIFIED FINANCIAL PLANNER™ professionals.
The 2013 Household Financial Planning Survey shows that those with a financial plan feel more confident and report more success managing money, savings and investments than those without a plan.
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