If you’ve ever taken a cruise, you’re familiar with the term ‘lifeboat drill’. This is where the captain has all the cruise ship guests don life vests and gather on the decks to learn how to use the boats in the unlikely case that the ship goes down. Now, the actual probability of your cruise sinking is incredibly low (a mere 55 ships have sunk since 1979) and the likelihood that you’ll die even if your ship goes down is even more remote (only 172 people have died on cruise ships in the past 35 years). However, the chance still exists, so cruise companies continue to perform lifeboat drills before any ship sails off into the ocean.

You might be wondering why we’re talking about cruise ships in a financial planning blog. Am I right? Well, the reason is simple: lifeboat drills is a term I use to describe the precautionary measures I take with my clients to prepare them for a dip in the market—and I suggest that your financial planner does the same. While the possibility of needing a lifeboat on a cruise ship is remote, the possibility that the market will dip is very real—and I dare say inevitable. If history is any indication, the market will go through a ‘correction’ about every five years and this correction will last approximately three to four months. And guess what? We’re overdue.

What is a Lifeboat Drill in Financial Planning?

When I conduct lifeboat drills with my financial planning clients, I am sitting them down to prepare them ahead of time for what the market will likely do. Sometimes I build it into our regular meetings and other times I will call a meeting to exclusively discuss a possible market correction and how it will affect my clients’ goals.

In most cases, I advise my clients to ride out the correction as it will right itself soon enough and will not have a lasting impact on their portfolio. The important thing is to prepare my client before the dip happens. This prevents them from making rash decisions based on emotion instead of rooted in facts.

Why Your Planner Should Conduct a Lifeboat Drill with You

Lifeboat drills are just another way your financial planner can act as a fiduciary and mentor. Spur-of-the-moment, emotional decisions can destroy your portfolio, and it’s your advisor’s job to help you avoid them. If you feel your advisor is letting you react to things like negative financial news or dips in the market, it might be time to consider dumping him or her for an advisor who has your best interests at heart.

If your advisor conducts lifeboat drills with you, it’s a good indication that they are focused on what really matters—helping you make good decisions about your financial future. An advice-based financial planner does not get commissions from any sales or trades and it is in their best interest to give you sound advice that will benefit you over the long term. If you feel your advisor is encouraging you to make changes to your portfolio based on the market so he or she will receive a commission, it’s a red flag you need to pay attention to.

Has your financial planner taken the time to conduct a lifeboat drill with you and proactively address any fears you may have when there is a market correction? If your financial planner is acting more like a salesperson and less like a fiduciary, it may be time to make a change. If you have any questions about market corrections or about your long-term financial strategy, please reach out.


Patrick Tucker, the owner of True Measure Wealth Managementhas over 20 years experience in the industry and has spent the last 15 years learning the ins and outs of the fee-only advisory business. He focuses on client behaviors and what ‘wealth’ means for each individual client to provide caregiving plans that lead to a mindful fulfillment of financial goals. A lifelong learner, Patrick uses his continued knowledge to become a valued partner for his clients and help them explore the wisdom of true wealth.