Three weeks into the most significant Middle East conflict in a generation, financial advisors are navigating an unusual emotional landscape with their clients. Some clients are anxious because their portfolios have fallen. Others are sitting on strong gains in Canadian energy names, gold, and defensive sectors — and feeling quietly uncomfortable about it. A third group has simply stopped paying attention, overwhelmed by the volume and intensity of daily news from the conflict zone.

All three groups are at risk of making financially suboptimal decisions driven by emotion rather than planning. The advisor’s job is to recognize which psychological state each client is in and respond accordingly. This week, the conflicted-profit client deserves particular attention — because the behavioral risk they face is less visible and less discussed than the panic-selling client, but just as costly.

The Psychology of Profiting During a Crisis

Behavioral finance researchers have documented what they describe as “moral-financial dissonance” — the psychological discomfort that arises when an investment gains value in circumstances that are objectively harmful to others. An investor watching their Suncor position rise 30% while reading about Iranian missile strikes on civilian infrastructure in Dubai is experiencing two signals simultaneously: a financial gain signal and a moral distress signal. Those signals conflict, and the brain’s natural resolution is often to eliminate the conflict by eliminating the gain — selling the position to restore moral coherence.

This dynamic is real and measurable. Studies of investor behaviour during previous geopolitical shocks — including the 2022 Russian invasion of Ukraine, which also produced an energy price spike and similar conflicts for holders of energy equities — found that self-directed investors were significantly more likely to sell profitable energy positions in the first two to four weeks of the crisis than in equivalent non-crisis conditions. The selling was not correlated with changed fundamental views on the companies. It was correlated with news consumption and stated feelings of discomfort about the source of the gains.

The Two Emotional States: Conflicted-Profit vs Headline Fatigue Conflicted Profit Holding gaining energy positions Feels morally uncomfortable Watching news intensely Risk: Premature selling driven by guilt, not plan Script: Separate values from investment discipline Headline Fatigue Tuned out after 18 days of news Passive, not monitoring Feels no urgency to act Risk: Portfolio drift unchecked concentration risk Script: Re-engage with specific, actionable question Two client psychological states during prolonged geopolitical crisis

What to Say to the Conflicted Client

The most important thing an advisor can do for a client experiencing moral-financial dissonance is to name the conflict explicitly rather than pretend it doesn’t exist. Clients who feel guilty about gains are waiting for permission to feel differently — and a sophisticated advisor can provide that reframe.

The most effective reframe is not ethical (“it’s okay to make money during a war”) but structural (“your investment plan was built to perform in precisely these conditions — that’s what a good plan does”). The portfolio did not cause the war. It was designed to provide financial stability regardless of what happens in the world. The stability your energy holdings provide right now is the same stability that helps you reach your retirement goal, your children’s education, your charitable giving. Disconnecting investment discipline from event-specific guilt is the advisor’s job in this conversation.

A second useful reframe: clients who hold their disciplined positions and rebalance thoughtfully will be in a better financial position to give, to support causes, or to take meaningful action on values they care about than clients who sell impulsively. Financial strength serves the values — it doesn’t contradict them.

The Tuned-Out Client: A Different Risk

At the opposite end of the emotional spectrum is the client who has simply disengaged. Eighteen days of war coverage, assassination reports, airport attacks, and oil price swings have created a form of news fatigue that manifests as passivity. These clients have not panicked. They have not called. They are simply not thinking about their portfolios at all — which means they are not aware of the concentration drift that may have occurred in their energy holdings, and they are not positioned to make thoughtful decisions ahead of the FOMC meeting this week.

The re-engagement conversation for this client needs to be specific and low-friction. Not “we need to review everything” but “I noticed your energy allocation has drifted from your target — I have a specific question for you that will take five minutes.” A specific question with a bounded scope pulls a tuned-out client back into engagement more effectively than a general invitation to revisit the financial plan.

Both client types need the advisor to be the stable, informed presence that financial volatility makes hard to find anywhere else. The news is loud, the markets are moving, and the headlines are alarming. The most valuable thing you offer right now is not information — clients have access to unlimited information. It is calm, structured context delivered by someone who knows their specific situation. That is the irreplaceable service.