The golden rules of resilience: Escala’s blueprint for advisers in volatile markets

Market volatility is not a new challenge—it’s an enduring feature of the investment landscape. But for seasoned advisers like Scott Carmichael and Ben James of Escala Partners, it’s also a recurring test of discipline. In their view, the antidote to uncertainty is not prediction, but process.

Founded in 2013, Escala Partners is a high-end private wealth and investment advisory firm headquartered in Sydney and Melbourne. The firm provides bespoke investment strategies to high-net-worth individuals, family offices and institutional clients. Known for its deep expertise and disciplined investment framework, Escala is widely regarded as a leader in Australia’s independent wealth management market.

“Market volatility today is no different to any other upheaval over the past few decades,” says Carmichael, one of Escala’s founding partners. “What sees investors through these times is following the golden rules — long-term investment in high-quality, diversified assets across, and within, asset classes”.

Escala’s investment philosophy is built around durability. While the industry continues to adapt to new regulatory frameworks, digital innovations and shifting client demographics, Carmichael and James remain firm in their commitment to foundational principles. “That is the route to long-term outperformance,” Carmichael says. “The risk of short-term underperformance comes from making the wrong decisions at the wrong time; that is making emotional, behavioural-type decisions”.

In an era where artificial intelligence and digital advice promise faster, cheaper solutions, Escala’s approach may seem traditional. But it is precisely this grounded methodology — anchored in quality and patience — that has consistently protected portfolios from short-term turbulence.

Timing the market, James warns, is a game few can win. “Timing getting-in is hard, but timing when to sell is even harder,” he says. “In periods of volatility like we saw in April, we reflected on our long-term rules to stick with high-quality investment managers, let capital compound, use asset allocation as your key defence and trust the process”.

Their commitment to high-quality managers and a robust asset allocation framework reflects a conviction that the fundamentals still matter most. Escala’s advisers do not chase fads or overreact to headlines. Instead, they operate within a system that allows compounding to do the heavy lifting.

Carmichael’s “investment commandments” extend beyond portfolio metrics. They begin with a granular understanding of each client’s needs — liquidity, income, and inter-generational wealth considerations. “Investment planning goes hand-in-hand with succession planning around the type of assets that families have,” he explains.

One principle Carmichael lives by is the “4 per cent rule” for retirement planning — or its inverse: multiplying annual living expenses by 25 to determine the required corpus of wealth. “The rest of your portfolio basically runs for free,” he says.

This clarity of purpose is critical, especially during times of stress. But portfolio structure is only half the job. Advisers must also manage the emotional responses that volatility provokes. “Advisers often act like psychologists,” Carmichael admits. “We need to make sure that we’re communicating in both good and bad times, and stress-testing our client portfolios”.

Stress-testing isn’t theoretical — it’s behavioural. Carmichael’s approach includes posing tough hypotheticals to clients: “How would you feel if you faced a 20 per cent correction?” It’s about building emotional resilience alongside financial resilience.

The message for advisers is clear. Sophisticated technology, complex product sets, and regulatory reforms may change the surface of the industry. But beneath that, the job remains the same: keep clients focused, keep them diversified, and keep them in the market.

“In a world of unpredictable markets, discipline, communication and a robust strategy trump any crystal ball,” Carmichael says.

Advisers would do well to internalise these rules. Because in the long run, it’s not about outsmarting the market — it’s about surviving it with integrity and structure intact.