Keep Calm and Communicate: How to Help Participants Stay Sane Amidst Chaos

The financial markets are mercurial by definition. For long-term investors, such as retirement savers, the best course of action historically, has been to ride out volatility. That said, keeping participants informed along the way will help to maintain peace of mind and perspective.

Take the Long View

Provide employees with context. Market volatility is expected and with a properly diversified retirement portfolio, investors will rebound with the market. According to the New York Times, one of the most widely searched question the week of March 9, 2020 has been, “Should I put my 401(k) in bonds?” The answer: yes to some but not to all.¹

At State Street, our index-based target date funds apply a finer lens to asset class and index selection, utilizing more asset classes than other leading index-based managers. In doing so, our differentiated glidepath management approach strives to mitigate the risks investors face along their savings journey. Beyond deep diversification, we express our commitment to delivering better retirement outcomes across market cycles by offering:

• Low-cost, all index lineups
• Thoughtfully constructed, “through” glidepath
• Securities lending capabilities, intended to enhance returns
• An array of investment vehicles, including collective investment trusts (CITs), custom separate accounts and mutual funds
  

Communicate Early and Often

Saying nothing isn’t an option, particularly when people are panicked. Having a communications plan in place and letting employees know what information they can expect from their employers and when it will be delivered – from updates on in-office practices to telecommuting to employee benefits – will help people feel grounded in a swirl of information.

Specific to retirement savings plans, sponsors should reiterate the strategies behind their plans, articulating the built-in diversification of default options and the range of investments available within the core menu, intended to dampen volatility.

As part of our on-demand participant communications library, we’ve put together a sample communication to assist your effort in addressing participant concerns around market volatility. Preview it now and contact us if you would like assistance with customizing it for your own use.

While central communications should be structured, consistent and delivered when expected, another level of organic conversations should also be taking place. Organizations are comprised of people with personal and professional obligations, which will invariably conflict during this uniquely interconnected era. Thanks to technology, teams can stay in contact and keep current on individuals’ needs for flexibility. Like the market, we’ll all need a little room to rebound.

Maintain Empathy

Finances are emotional. Retirement savings are no exception, particularly as the difference between a successful and less successful strategy translates into material impacts on people’s day-to-day lives. Amidst the chaos, sponsors need to take an empathetic tone. By offering resources for additional support, such as access to financial advice or opportunities for greater wellness (like Employee Assistance Programs), employers are recommitting to their employees, building organizational trust and showing humanity – virtues that are particularly meaningful during times of stress.