much of the financial advice that many may consider “obvious” is not, as Jane Austen so astutely put it in the opening line of Pride and Prejudice, “a truth universally acknowledged”.
Following the latest trend can be a terrible investment strategy, but a pretty decent guideline for plan sponsors looking for insights into what their workforce’s educational needs are, and what employees want to know. From the most sought-after answers on social media, here are five trending topics that can help sponsors glean important insights
1. “The market is down…but more importantly, so is my 401(K)! What should I do?”
Did you know that when there’s a penalty kick in a soccer game, goalies jump to the right or left 94% of the time, even though the most successful strategy is to do nothing and stay in the middle?[1] The 2007 study from whence these numbers originated theorized that the goalies wanted to be perceived as doing something (jumping) and were afraid of appearing inactive and then missing the ball. Similarly, with the market down, there are a surprising number of people tempted to sell off their assets at a loss. Market uncertainty has translated into emotional uncertainty, and many are feeling restless and find it increasingly difficult to “do nothing” while watching their 401(K) balances dwindle.
Helping employees keep a cool head and make logical (not emotional) decisions is particularly important during times of market volatility and downturn, and perhaps even an opportunity for sponsors to re-emphasize the importance of asset diversification and the wisdom of long-term, logical investment decisions over short-term, emotional ones.
2. “Help! I’ve somehow become responsible for a family member with no savings / managing the estate after the death of a loved one / am being pressured into a bad financial decision / another type of unexpected and complicated financial situation!”
At least once a week, a panicked Redditor on the Personal Finance subreddit (a public forum on social media site Reddit dedicated to personal finance) will post some variety of this topic as they scramble to figure out a workable solution for an unexpected, long-term, and/or life-altering financial burden they’re suddenly expected to solve or handle. For those not already in the middle of these disastrous situations, it is vital to learn how to initiate and conduct those difficult conversations with, say, parents with unknown or dubious financial savings, or navigate wills and estate planning, saying “no” to high-pressure money-related requests from family and friends, or other complex financial and emotional turmoil before it strikes. And for those who aren’t able to get ahead, a “what do I do now?” roadmap for common, if difficult, life events can be a lifesaver.
3. “I fell for a scam…what do I do now?
There’s no shortage of financial scams out there, and there has been a significant uptick since 2020, prompted by the Covid-related stimulus payments, and now student loan forgiveness. Helping employees learn how to identify scammers or attempts at fraud is an important preventative, but some scams can be extremely convincing and there will always be those who will fall victim. This topic is always trending, and providing trustworthy, actionable, and easily understood advice will always be relevant; even if the attending employees never click a phishing email or fall for a fake call from a collections agency demanding they pay off an overdue loan in iTunes gift cards, this is the type of situation that, unlike #2 above, can often easily be prevented through vigilance and knowing the quintessential signs.
4. “I don’t know what all these extra benefits are, and at this point I’m too afraid to ask.”
Optional benefits can include a multitude of opt-in insurance coverage offerings including long- and short-term disability, life, accidental death and dismemberment (AD&D), critical illness (CI), or even pet insurance, as well as childcare, wellness, or commuter benefits, or even identity theft protection, or even the ability to pay a monthly fee to have a lawyer on retainer.
These can be difficult decisions for employees, especially knowing that each of these decisions can be broken down into smaller, more incremental steps. Deciding to opt-in to AD&D coverage is one thing but figuring out what level of coverage to select is another. Sponsors know that employees already find benefits coverage intimidating and being able to address these concerns on a group- and individual level can help make this process more accessible and, well, beneficial, for employees.
5. “I don’t know what to prioritize and I’m overwhelmed”
Pay off the debt, build an emergency fund, invest, or meet that 401(K) company match? Especially for young employees, or those reaching big life milestones like buying a house, or having their first child, can feel overwhelmed and under-resourced in the face of many competing financial priorities. There are new people entering the workforce every day, and it can be difficult to get started on the right foot if you don’t know where to even start. “Emergency fund first, debt second, then everything else depending on your priorities,” is usually a good rule of thumb, much of financial advice that many may consider “obvious” is not, as Jane Austen so astutely put it in the opening line of Pride and Prejudice, “a truth universally acknowledged” (or even known!). Fiscal responsibility 101 is going to be essential for young employees, and frankly, even the not-so-new and not-so-young employees as well, and offering financial advising (perhaps as an optional benefit, even?) can help those making or planning more complex decisions.
[1] https://www.sciencedirect.com/science/article/abs/pii/S0167487006001048
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
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