When markets experience volatility, even the most level-headed investor can let their emotions or other influences affect their decisions. Read on to find out why volatility can trigger financial biases and how these might affect you. 

For the average investor, it’s important to take a long-term approach. While returns cannot be guaranteed, investing over a longer time frame gives markets more time to smooth out their natural peaks and troughs.

Headlines about market crashes or sudden rallies can set you on edge even if you’re usually calm. 

Volatility affects investors because uncertainty triggers an emotional response. When you’re thinking logically, you might note that markets have historically recovered from downturns. However, it’s easy for worries to creep in. You might ask yourself: “What if the market doesn’t recover this time?”

As investments are typically tied to personal goals, these initial worries can spiral, allowing emotions to drive your decisions. 

4 types of bias that could affect your investment decisions during volatility 

1. Herd mentality 

When there’s uncertainty in the market, it’s natural to look at what other people are doing. It can often seem like everyone else is taking the same approach. This can lead to a bias known as “herd mentality”, where you’re tempted to follow the crowd. 

It might feel like there’s safety in numbers, but it’s important to avoid making decisions that aren’t right for you just because others are doing the same. 

2. Loss aversion

No one wants to see the value of their investments fall, and psychological research suggests that investors fear losses more than they enjoy gains. So, to avoid or reduce losses, investors might sell because they’re worried markets will fall further.

However, this may lead to investors turning paper losses into actual ones. In contrast, sticking to your long-term plan and being patient could mean you benefit from a market recovery.

3. Recency bias

The theory behind recency bias argues that investors place too much emphasis on recent events. So, you might decide that a dip in the market is actually part of a long-term trend, even if the data suggests otherwise.

Taking a step back to look at the bigger picture could help you keep recency bias in check. 

4. Confirmation bias

Confirmation bias refers to the tendency of investors to seek out information that supports their existing views. 

If you’re worried about markets falling, confirmation bias can lead you to dismiss positive data in favour of negative information. This bias can intensify your fears and lead you to make decisions based on only a small portion of the available data. 

Practical ways to reduce the effect biases have on your investment decisions 

Emotions and bias interfering with your logical decision-making is normal, but that doesn’t mean it’s harmless. Successful investors manage short-term market movements so they can stick to their long-term plan and adjust when it suits them.

Here are some strategies you could try next time you’re tempted to respond to market volatility.

1. Review your financial plan

Before you make any changes to your investments or financial plan, take some time to revisit it. Your plan should centre on your goals and circumstances, so revisiting it could remind you why you chose your strategy and why sticking with it could be beneficial. 

2. Reduce your exposure to the news

It can be hard to escape headlines and constant updates, but limiting your exposure might be useful. You may reduce how frequently you check the news, log on to social media, or even monitor the performance of your portfolio.

Be mindful of the source of the information as well – is the source likely to present changes to the market negatively or exaggerate the effects?

3. Look at the historical data

Investment returns cannot be guaranteed, but looking at past performance might be a useful exercise if you’re tempted to make knee-jerk decisions. Historically, markets have recovered and grown over the long term, even after sharp drops.

4. Talk to your financial planner

Finally, your financial planner can offer valuable advice as they understand your circumstances and goals. Talking through the options could highlight where bias might be influencing your decisions and offer a different perspective that allows you to remain focused on your long-term goals. 

Contact us to talk about your investments 

If you’d like to talk about your existing investment portfolio or would like to understand how investing could fit into your overall financial plan, please get in touch. 

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Thinking about what might happen after you die isn’t easy. It’s hard to imagine the world simply continuing. That’s likely one reason why so many people put off writing a will for “another time” or decide to “sort it later”. But the reality is, none of us know when we’ll die. 

Having a will in place means your estate will be dealt with according to your wishes. It will also spare your loved ones from having to deal with working out how to manage your affairs while they’re still navigating their grief. You can cover important issues such as:

• Appointing a guardian for any children or dependants
• Deciding how to leave your property
• Taking steps to protect unmarried partners or stepchildren
• Reducing the amount of Inheritance Tax (IHT) applied to your estate. 

A Lasting Power of Attorney (LPA) is another important consideration in your later-life planning. While we all hope to maintain good physical and mental health, you just don’t know what’s around the corner. An LPA means that you know people you trust will be making decisions about key areas of your life, such as your healthcare and finances. 

In this guide, you can find out more about how making a will and setting up an LPA can give you and your loved ones peace of mind about the future.

Download your copy here: 12 practical reasons to write a will and name a Lasting Power of Attorney

Please note: This guide is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate estate planning, tax planning, Lasting Powers of Attorney, or will writing.

It was just 50 years ago that the Sex Discrimination Act 1975 allowed women to open their own bank account or take out a mortgage alone. Progress has been made since then, yet the gender wealth gap remains. 

Indeed, according to an April 2025 article from Legal & General, the gender pay gap was 13.1% in 2024. This has an immediate effect on short-term finances and larger implications when you calculate the impact it has on long-term wealth. 

For example, at the age of 50, the average man has almost £85,000 in a pension. The average woman has less than half this at just under £40,000. 

So, women could find themselves at a disadvantage when managing their finances when compared to their male counterparts. Read on to find out why working with a financial planner could help women close the gender wealth gap. 

1. Improve your financial confidence 

One of the reasons that some women experience a wealth gap is a lack of financial confidence, which leads to them taking a risk-averse approach to their finances. 

A March 2024 survey carried out by HSBC found that 2 in 3 women don’t feel confident enough to invest, and 1 in 4 avoid investing because they feel like they don’t have the necessary knowledge. 

If you want to increase your wealth, investing may provide a way to generate returns that are higher than the interest rate you’d receive from savings and inflation. However, investing does come with risks, and this puts off a significant portion of women, so they miss out on potential returns. 

Working with a financial planner means you have someone you can turn to when you have questions about investing or another aspect of your financial plan. Knowing they’ll offer advice that considers your circumstances could give you the confidence to invest.

2. Make career breaks part of your financial plan

Another key reason for the gender wealth gap is that women are more likely to take a career break to look after young children. 

During this time, you may pause pension contributions and other steps that build long-term wealth, such as making regular investments. 

A financial plan can incorporate your career breaks and identify where there might be a shortfall as a result. For example, if your plan shows you may fall short at retirement, you may prioritise continuing contributions while you’re caring for children, increase contributions when you return to work, or delay your retirement. 

By assessing the long-term effect of a career break, you can weigh up the implications and be aware of how you could close potential wealth gaps. 

3. Offer support during a relationship breakdown

A relationship breaking down is often an emotionally difficult time. For many women, it’s also financially challenging.

According to an April 2025 survey from Legal & General, women’s incomes are cut in half following a divorce, and it leaves 24% of them in a financially vulnerable position. As well as losing the income of a partner, women are twice as likely as men to reduce working hours post-divorce to accommodate childcare responsibilities.

This reduced income not only places pressure on your immediate budget but also affects your ability to save for the future.

In addition, 28% of women waive their right to a partner’s pension as a part of a divorce settlement, which creates further retirement risks. 

Seeking professional financial advice when you’re dealing with a break-up might be the last thing on your mind, but it could help you understand your new financial position and, if you’re divorcing, which assets you might be entitled to. 

4. Create a plan that allows you to retire in confidence 

As mentioned above, women often have less saved for their retirement, which could place pressure on their finances later in life. This is further compounded by women having longer life expectancy on average, meaning the savings they do have will need to stretch even further. 

Working with a financial planner could help you see if you’re on track to have “enough” in your pension to provide the income you need, make additional contributions if necessary, and review how your money is invested to get the most out of it. 

Creating a retirement plan that’s tailored to your financial circumstances and lifestyle goals could help you approach retirement with greater security and peace of mind.

Contact us to talk about your wealth 

If you’d like to create a tailored financial plan that helps you get the most out of your wealth, please get in touch. 

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.