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Communicating Through Volatility

The COVID-19 pandemic continues to have an unprecedented impact on our work and our lives. Some things are forever changed while others will carry on as before. One thing is certain: there is still a future to plan for, and retirement plans will continue to play an important role. With that in mind, we are pleased to provide our clients with the information here. As advisors, we are available to talk through ways to approach the challenges you’re facing as a plan sponsor.

Communicating Through Volatility

In recent weeks we’ve experienced some of the most impressive swings ever in the U.S. stock market. Naturally, this rollercoaster ride causes participants concern. It’s more important than ever during times of volatility to remind them of the reasons to participate in their 401(k) plan, as well as the factors that went into their plan investment decisions.

Here are two key reminders to share with participants that could help them ride out their fears. Doing so may be a critical factor in their long-term financial well-being.

Reminder: Stay in.

If at all possible, participants should continue investing in the plan. It’s likely that some have already stopped participating or even taken hardship withdrawals. It’s also likely that some wake up every morning wondering if they should take their money and run. Reminding those participants that the plan is the best means to save for the long-term benefit could be helpful. As you provide information about any changes to the plan’s rules about accessing their money, be sure to include messaging about the benefits of staying the plan. One great benefit in the depths of a bear market is the ability to invest at deep discounts. By continuing regular periodic investments, participants have the opportunity to purchase funds at bargain prices.

Reminder: Stay invested.

As your investment value plummets, it is tempting to stop the bleeding by moving everything into cash. It’s true that no one really knows what the markets will do tomorrow. That’s why focusing on strategy rather than current balances may save participants from big mistakes. Young participants should be congratulated for starting on the journey and reminded that they have time to recover from market declines. Older participants—at least those who paid attention to lessons from the past—have hopefully moved away from riskier investments, thus insulating themselves somewhat against market swings. All should be reminded that continuing regular investments in the plan, if possible, is a wise course.

Make your message easily understood

The basics of good communication are particularly important when times are challenging. Communicate clearly, using words that are simple and easily understood. Use real-life, personal examples when you can. Include graphics that emphasize and clarify the point you’re making. Highlight the main points with color, font size, symbols or other creative means. Sum up with key action points or takeaways.

Communicating with plan participants becomes even more important when things go off­track. Take a measured, thoughtful approach, remembering that participants need to hear the truth as well as empathy from their employer.

If you need Help with your retirement plan, you can contact us below.