Simply publishing the results of employee surveys on volatility concerns may help employees feel that their concerns are shared and help them take action to resolve those concerns. Sponsors can also use the survey results to direct employees to information on their financial wellness intranet sites.
In the fall of 2023 news of worker strikes seemed to be everywhere. In November, there was even news about a strike of union workers who worked for the union. Many employees and plan participants may worry about how these strikes could impact the economy. This may be especially true for employees who have family members in countries where strikes can have long-term disruptive effects on the economy. Other employees may be concerned about how military action in the middle east region could impact the economy. These concerns about worker strikes and military action sometimes center around the impact that these actions might have on the stock market, and specifically, retirement funds.
First of all, if there is any question about it, financial concerns or even financial anxiety about market volatility is definitely an area plan sponsors should consider addressing. Financial concerns are a large part of employee stress. That stress can impact performance and retention, dragging down the overall performance of a company. Sponsors may want to work with the human resources office to remind employees of the financial counseling available through their employee assistance program (EAP).
What exactly is volatility? Volatility is a measure of the increase or decrease of a stock over a period of time. On an individual stock, higher volatility can relate to the risk of investing in that company as it can predict fluctuations over time. On a market-wide basis, volatility refers to the aggregate of the stock prices moving up or down.
Plan sponsors may want to consider addressing employee concerns over market volatility through their financial education programs. As we’ve written before, [1] the best approach to market volatility may be a PAUSE. Volatility can have Positive effects, such as creating opportunities to invest in companies with growth potential at a discounted price. It’s also important to be Accurate about volatility. Volatility does not necessarily mean risk or recession. A recession is usually defined as a long period of low economic growth. High volatility is not indicative of a coming recession, instead it’s the opposite: prolonged periods of low volatility sometimes are predictors for recessions. Often concerns voiced about volatility are actually concerns about being prepared for the Unexpected or learning about risk tolerance. Similarly, sometimes anxiety about volatility may indicate a concern for knowledge and Skill level to understand how retirement plans work or specifically, how funds (groups of stocks) balance risk. Finally, that lack of skill may also raise concerns due to a mismatch between Expectations and reality. While what causes the market to fluctuate may vary, some volatility is always to be expected.
Employee surveys can help plan sponsors gauge the concerns of their plan participants. The twin characteristics of employee surveys – that they are anonymous and ubiquitous – may make surveys the best method for gauging employee concerns about volatility. New software makes distributing and collecting results from surveys easier than ever, and some employee survey software can cost as little as $7 a month.
Plan Sponsors can use the results of these surveys in a variety of ways. Simply by publishing the results, employees may feel that their concerns are shared, and be more likely to take action to resolve those concerns. Sponsors can also use the survey results to direct employees to information on their financial wellness intranet sites. Lastly, sponsors may want to consider sharing these results with the plan’s financial advisors to help them direct group education sessions focused on volatility.
[1] https://www.bcgbenefits.com/blog/market-volatility
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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