Supporting Your Employees Through Market Volatility: Insights for Retirement Plan Sponsors

Recent economic uncertainty, driven by interest rate shifts, federal funding freezes, policy changes in Washington, and lingering impacts from geopolitical events, has left many feeling uneasy about their financial futures. As a Plan Sponsor or business leader, understanding and addressing the emotions and concerns of your employees is crucial, especially during turbulent market periods.

Understanding Your Employees’ Perspective

Market volatility affects employees differently, depending on where they are in their retirement planning journeys:

•  Early-Career Employees might be experiencing their first major market downturn, feeling unsure about the future. They may question whether continuing their contributions is prudent. This could be their first time participating in a 401(k) or 403(b) plan, so they may not know where to turn for reliable information.

• Mid-Career Employees might worry whether the current volatility is derailing their long-term retirement goals, feeling anxious about balancing short-term financial stresses with long-term security, and questioning if the risk they've taken on is appropriate.

• Employees Approaching Retirement face the immediate stress of wondering if their retirement timeline and financial readiness are impacted by market downturns, prompting difficult decisions about delaying retirement or adjusting their plans.

 Recognizing these distinct emotions helps you offer targeted support.

Your Own Feelings as a Plan Sponsor

 If you're experiencing some unease right now, rest assured you’re not alone. Beyond managing your retirement plan, you're also balancing multiple competing priorities in running the business, especially during uncertain economic conditions. You might be asking yourself: How significantly is our organization impacted by these shifts? Will there be layoffs, or budget adjustments required? Do these realities mean our retirement plan design needs immediate modifications? And layered on top of this is the added concern about market volatility and its implications for your employees' financial well-being. It's completely understandable — and even prudent — to feel cautious. This is precisely the moment to lean on your Retirement Plan Advisor’s expertise to make informed, proactive decisions that benefit both your organization and your employees.

Taking Positive Action: How You and Your Retirement Plan Advisor Can Help

Here are some practical ways you can support your employees while managing your fiduciary responsibilities effectively:

 Clear, Regular Communication

Employees often need reassurance during volatile markets. Offer consistent, clear communication on the plan’s investments, and the broader economic context. Plainly explain market volatility in relatable terms, emphasizing long-term investment principles and the risks of making reactionary decisions. Encourage employees to stick with their long-term strategy rather than making emotional changes.

 Emphasize Education and Financial Wellness

Now more than ever, employees need resources to improve financial literacy. Providing financial wellness tools and resources can help employees make informed decisions. With guidance from your Advisor, consider reinforcing education around market volatility, investment principles, and the benefits of consistent retirement contributions despite short-term market fluctuations.

Remind participants about diversification, time-tested investing strategies, and ways to manage anxiety during market swings. Sticking to the basics may be comforting to some employees, as volatility doesn't deter us on our journeys.

 Engage with Your Retirement Plan Advisor: Now is an ideal time to partner closely with your Retirement Plan Advisor. Your Advisor can help by providing timely resources, such as educational webinars or brief Q&A sessions, to help ease anxiety and prevent impulsive financial decisions. They can also guide you in crafting clear communications and longer-term strategic education plans for participants, and can provide valuable insight and fiduciary guidance to help you make these decisions carefully, ensuring compliance, clear communication with participants, and thoughtful implementation that aligns with the diverse needs of your workforce.

 Supporting Employees at Different Career Stages

Consider tailoring your approach to address the distinct needs of employees at different stages of their retirement journey. Employees nearing retirement might benefit from targeted resources about preserving retirement assets or understanding their distribution options. Mid-career participants might need encouragement and clear education about the importance of staying the course. For younger employees, reinforce foundational principles about compounding, consistent contributions, and the natural ebb and flow of the market.

 Consider the Emotional Impact: Beyond just financial planning, acknowledging the emotional impact market turbulence has on your employees is vital. Make mental health resources available, emphasizing holistic wellness. Volatility is stressful, and support from an employer goes beyond dollars and cents.

 Use Regularly Scheduled Committee Meetings to (Re-)Address Vital Plan Items:

• Review and Reaffirm Your Plan’s Investment Strategy: With your Advisor, consider reviewing your plan’s investments to ensure they continue to align with long-term objectives, especially in the face of significant economic shifts. This might involve evaluating bond durations, exploring stable-value options, or re-assessing target-date fund selections.

• Evaluating and Adjusting Your Plan Mid-Year: Given the significant economic disruptions this year, it might be necessary to revisit certain aspects of your retirement plan sooner rather than later.

 Your Opportunity to Lead - Guidance Through Uncertainty

Navigating market volatility isn't just about managing investments — it's about demonstrating leadership and care during difficult times. You have a critical role as a fiduciary, communicator, and leader during uncertain times. Your employees look to you not only for guidance but reassurance. By proactively communicating, leveraging your Advisor’s expertise, and focusing on participant education, you provide the stability employees need to remain confident in their financial futures.

 If you have concerns about your plan's strategy during volatile markets or want assistance in communicating effectively with participants, don't hesitate to reach out. Together, we can navigate through uncertainty and reinforce your commitment to your employees' long-term financial well-being. We remain committed to guiding businesses and employees alike, offering fiduciary advice, practical education, and thoughtful support in navigating challenging economic environments.

 Let's work together to keep your retirement plan resilient — no matter what the markets bring. If you're interested in working with a Retirement Plan Advisor, reach out today at Christina.Tunison@lpl.com to learn how we can support your plan.

This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

 #712373 Mar2025