I agree that volatility compared to permanent impairment of capital is not a good measure of risk but it is nonetheless a hugely important in client comfort along the way to their investing goals. We do a huge amount of work with our clients regarding emotional reactions to market movements etc and yet at points of significant volatility some will still let their emotions rule. The 'bucket' approach to managing client assets has merit but may also complicate things unnecessarily from a client point of view and may risk heightening emotional reactions to market movements if the different buckets are not viewed together as part of one overall portfolio.