Volatility: Best and worst of times

Over the past six years, financial advisors have been dealing with volatile market or political events that have led markets to spiral and to seize up, although for short periods of time.

There was the COVID shutdown in 2020, just weeks after the January 6 attack on the US capital.

Soon came Russia’s full-scale invasion of Ukraine in 2022, along with the first spike in interest rates in living memory for many advisors.

Add in the regional banking crisis in 2023, President Trump’s tariff announcements in 2025, and now the conflict in Iran, which caused oil prices to have their largest quarterly spike in more than three decades.

That’s a lot of client hand holding for financial advisors to do in a relatively short period.

Meanwhile, large broker-dealers and large registered investment advisors have been developing or sticking to strategies and tactics to combat the pain of intense, short-term market volatility.

To help financial advisors and their workloads, big firms have been investing millions of dollars in better technology, particularly time- and cost-saving functions that rely on artificial intelligence.

To boost yields in client portfolios, big firms have been expanding their suites of alternative investment products.

And to tie advisors to the mothership, some large firms have been increasing payouts on assets managed in-house by investment management programs and RIAs owned by broker-dealers.

“It’s a lot easier for advisors to not leave a big firm these days than it has been in the past,” says Larry Roth, managing partner at RLR Strategic Partners and former CEO of broker-dealer networks.

After the shocks of market volatility, the broad stock market has snapped back and recovered.

From January 2020 to May 27, 2026, the S&P 500 Index is up close to 132 percent.

And financial advisors who pulled clients out of stocks during and after each shock of volatility have customers who missed out on some of the bounce-back, leading to uncomfortable client discussions.

“Financial advisors who panicked and took money out of market during one of these events have been lambasted by clients because they missed out on the market bounce,” says one senior industry executive, who spoke privately to InvestmentNews about the matter.

“When the world ultimately normalized, risk appetite returned and investors refocused on fundamentals,” says Stephen Schwarzman, chairman and CEO of Blackstone Inc., during a conference call in May with analysts. “To that end, what we see through the lens of our extensive global portfolio is an economy that has been highly resilient through the macro shocks of the past several years.”

Cutting advisor pay at any time will have a negative impact on firms trying to keep their advisors happy. Cutting compensation during an era punctuated by bouts of market volatility will cause some advisors to look to work elsewhere.

Toward the end of 2024, UBS said it was redrawing its pay plan for advisors in the Americas. A few months later, in February,  the firm reported that it expected some financial advisors to leave the firm after the move; the firm was cutting in 2025 a bonus for teams that was unique in the industry.

It also cut rates on its pay grid that squeezed advisors who were the lower producers of revenue, a long-running tactic by large firms to boost margins.

At the end of June 2025, UBS reported a net decline in financial advisor headcount over 12 months of 229 fewer advisors at UBS in the Americas, with a total of 5,773. A year earlier, the firm reported 6,002 advisors employed in the region.

UBS management had apparently seen enough, and last September appeared to be backtracking from the pay reduction in some advisors’ overall compensation. The firm announced internally it would add to some advisors’ pay in 2026, if they met certain targets.

In contrast, Cambridge Investment Research Inc., a broker-dealer with a sizable RIA, Cambridge Investment Research Advisors, in 2024 said it was willing to pay potential financial advisor recruits a better deal if they move client assets to the firm’s in-house money management system, WealthPort.

“Despite all the volatility, some broker-dealers have increased compensation, with some paying from 95 to 100 percent of the fees to advisors on their RIA business,” Roth says. “They have moved much closer in parity to the giant custodians, Schwab and Fidelity.”

“The broker-dealers then turn around and make money off advisors on custody and affiliation charges, along with compensation that comes from product companies,” he adds.

Don’t look for broker-dealers to stop there, regardless of any further bouts of market volatility.

“The days of ‘invest and forget’ are not viable,” says the senior industry executive who spoke privately to InvestmentNews. “The large broker-dealers and RIA aggregators are concentrating their power on the investment management side of the business. They can save on costs and expenses, and big firms are under pressure to drive revenue and this is a way to do it.”