people jumping over shark above choppy waves (Photo: Shutterstock)

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As we've been talking (virtually of course) to retirement planadministrators, one thing is clear: the waters are choppy at best,but employers have to be ready for a storm like we've never seenbefore.

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I've presented to several groups over the past fewweeks and we talked about retirement, 401(k), and healthcare benefit issues and everyone had plenty of questions. Our mainmessage to employers is based around thinking about participants.Retirement plan participants have likely never had more challengeson their minds. Just a few items on the list people are thinkingand worrying about include:

  • Mental and physical health
  • Job security
  • The ability to meet expenses
  • Social isolation
  • Communication and engagement

And there are many, many more.

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As the country strives to return to its workplaces, in additionto ensuring a safe place for employees to work, employers will wantto do all they can to lay out a roadmap for financial wellness andpeace of mind for their employees.

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Communicating with two kinds of participants

Employees who participate in qualified plans generally fall intotwo categories: the do-it-for-me investors and the self-directorinvestors. Employers need to provide information that allows bothcategories of investors to navigate in as smooth a fashion aspossible. Here are some of the messages we're recommending to sendto employees.

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The do-it-for-me investor

Avoid rash, emotional decisions. Timing themarket rarely works and the answer is rarely an extreme action.

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Assess whether the strategy you are using now suitsyou. How did you arrive in the current spot? If you made aproactive election, does it still match your risk profile andexpectations? If you're not sure, consult with your plan advisor.If you were defaulted into your strategy, this might be the besttime for a new risk profile and a conversation with youradvisor.

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Become better informed. Make sure you have asolid understanding of your plan; how is your current strategysupposed to perform during challenging market times?

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Commit to your strategy. That commitment willhelp avoid rash decisions. Understand your portfolio is beingmanaged by an investment professional or trustees in a manner thatis consistent with what you have selected.

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The self-directors

For what we call "self-directors," employees who are using thecore investment menu to build and manage their own investment mix,the messages are slightly different.

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Review your current investment strategy. How isyour account allocated? What investments are you holding? Thinkabout why you arrived at that strategy. Did you perhaps make thosedecisions based on the funds' prior performance alone? Did you usea method to assess your personal risk tolerance at the time? Areyou aware of whether your current investment mix provides yourdesired downside protection and upside opportunity?

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This might be the time to consider more do-it-for-meoptions. Find out if your plan offers age-based targetdate funds and/or risk-based portfolios. This is actually theperfect time to talk to your plan advisor or education teammember.

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Commit to your strategy. Once again, avoid rashdecisions. If you decide to continue to self-direct, bear in mindyou need to carefully monitor your account, consider ongoingchanges and determine action steps about any rebalancing that needsto happen.

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Remember employer fiduciary duties

At the same time, employers have to remember their own fiduciaryduties. There are multiple options for companies within the CARESAct and understanding the options is challenging but important foremployers.

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Employers must keep in mind all of the duties of afiduciary:

  • Loyalty
  • Prudence
  • Diversification of investments
  • Following the plan's terms
  • Monitoring service providers

All of those duties apply during a crisis. Litigation hasalready surfaced that shows this to be true, and economicindicators show that the potential for litigation may getworse.

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We're providing a recommended list of best practices fortrustees which includes the following:

  • Hold a trustee review
  • Evaluate service providers
  • Conduct brainstorming sessions about employee needs

So, although we haven't seen these kinds of waters before, thereare some navigational tools that should allow both employees andtheir employers to stay on course in the coming weeks andmonths.

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Matthew Eickman, J.D., AIF is the nationalretirement practice leader for Qualified PlanAdvisors.

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