Hartford Funds has released its second-quarter markets outlook as the global economy continues to grapple with the war in Ukraine, inflation worries and a host of other issues.

With inflation reaching a 40-year high, this is the first time many financial advisers are counseling clients through a period of sustained inflation. Meeting the challenge may present a relationship-building opportunity as advisers work to support their clients.

In its report, “2Q Outlook: For Markets, It’s Complicated,” Hartford Funds says market complications are piling up to start the year and weighing on equity and bond returns. Among these are higher-than-expected inflation—the Consumer Price Index hit 7.9% in February—and the Federal Reserve’s response of a 0.25% interest rate hike. Market watchers say there are potentially a significant number of additional hikes to come.

As the report recounts, Russia’s invasion of Ukraine created a massive and distressing humanitarian crisis, which the report says has added another layer of market complexity, given Russia’s role as a global supplier of commodities.

Hartford Funds says it believes markets will continue to grapple with the trade-offs between inflation and growth, and the various central-bank responses. Inflation will be “higher and stickier” than expected, and the war in Ukraine and sanctions on Russia only bolster this view, given the likelihood of additional supply-chain disruptions and shortages in agricultural, metal and energy commodities. Higher energy prices could also weigh on growth, the report adds.

Shortages and supply-chain disruptions stemming from the Russian invasion of Ukraine could drive commodities prices higher, meaning inflation risk will remain higher for longer, the report says. Allocators may want to consider adding broad exposure to commodities, the asset class that has historically been most sensitive to higher inflation. Additionally, Hartford Funds says it believes Treasury inflation-protected securities may outperform U.S. Treasuries. Higher yields and inflation should support value stocks, but weaker growth would favor growth stocks.

Individual investors planning for retirement should pay close attention to inflation levels now and expect they may not be benign, writes Christine Benz, Morningstar director of personal finance, in a recent blog post. During most of the past two decades, the Consumer Price Index showed inflation increasing by just 2% or less most years—making it easy to ignore or downplay when forecasting retirement spending.

Recent events illustrate the risk of assuming that consumer prices would remain in a steady state, as the latest CPI reading showed an increase of nearly 8%, Benz says. Should inflation remain on the high side, retirees would need to withdraw more than they anticipated from their portfolios just to maintain their standards of living.

Rather than assuming that inflation will stay low in the years leading up to and during retirement, investors should use longer-term inflation numbers to help guide their planning decisions, Benz warns. Though it may seem a bit pessimistic to assume that the currently high inflation readings will persist in perpetuity, she notes that 3% or even 4% is a reasonable starting point for planning purposes.

Benz suggests that investors customize their inflation forecast based on their actual consumption baskets. She also argues that investors should lay in hedges to their retirement portfolios to help preserve purchasing power once retirees begin spending their retirement assets.

She suggests stocks, which historically have had a better shot of outgaining inflation than any other asset class, as well as TIPS and I-Bonds, commodities, precious-metals equities and real estate. Benz warns against holding too much in fixed-rate investments whose return potential is negative once inflation is factored in.

As many investors look at what they can do to protect against inflation, advisers have an opportunity to connect with them on the issue and build on the relationships they have with their clients. Bill McManus, Hartford Funds’ managing director of applied insights, suggests that advisers who haven’t managed clients through a high inflationary period reach out to others in their network who have been through it before.

“There are plenty of advisers who have managed clients through high inflationary periods, like we’re experiencing now,” McManus says. “Advisers who have not done so have the opportunity to start discussions with them about how to direct conversations with their clients, the right form of education and the right way to engage with them. You can help clients fully understand the impact of inflation, not only on them today, but on a go-forward basis.”

Advisers should first reiterate the basics and make sure the investor or client understands why they are working with an adviser, McManus says. Start by laying out the client’s long-term goals and look for things they can accomplish in the short term—basically, revisit the plan.

“From there, advisers can choose what type of information and education to bring to clients in light of this new environment that they might be experiencing and how it could affect the plan, and what types of changes could be made if the adviser deems necessary,” McManus says. “It is a great opportunity for advisers to reiterate or revisit the plan that they have put in place and what the client’s goals, both short- and long-term, are.”