In order to manage the threat of emotional decision-making, Hailer said advisors need to be discussing courses of action before market-changing events occur.

Some events, like war or natural disasters, are unpredictable. Others, such as a hike in interest rates or inflation, may be more possible to forecast and prepare for.

Either way, “when investors make emotional decisions, they decrease the odds of reaching their financial goals,” said Hailer.

Earlier research from Natixis on investor expectations further supports the idea that the job of advisor is, at least in some part, the job of psychologist.

In that survey, individual investors said they expect an annual return of 9.8 percent above inflation to account for all income needs in retirement. Those expectations are irrationally high when measured against historical rates of inflation and market returns.

Since 1964, inflation has averaged 4.2 percent. The S&P 500 has averaged 10 percent returns over the past 50 years. That means investors are expecting 14.2 percent annual returns — some 40 percent higher than annual averages.

The earlier data also suggests that individual investors may be failing to understand just how dangerous impulsive emotions may be to their portfolios.

Only 8 percent of investors said that keeping their emotions in check would better enable them to meet their financial goals.

The data clearly suggests advisors have much work ahead of them educating clients on the risk of emotional reactions to market swings.

Designing portfolios to individual goals may be one way to address unrealistic performance expectations. Natixis’ new data shows advisors are embracing the principles of goal-based investing.

Instead of measuring portfolio performance against index returns, 91 percent of advisors say they are designing portfolios, and measuring their success, against the personal objectives of clients.