At least one major recordkeeper has noted a big uptick in participant trading in the wake of recent market moves – but have NAPA Net readers sensed any shifts in the plans they support?
The Alight Solutions 401(k) Index™ found that 401(k) trading activity has been exceptionally high in recent days, with trading on Feb. 5 almost 12 times the “normal” level of trading. Alight notes that the last time trading occurred at that level was in August 2011, coinciding with the last time the S&P 500 saw its biggest single-day drop.
A plurality (45%) of NAPA Net readers responding to this week’s poll said they had sensed an uptick in concerns among some, but not all, participants in the wake of recent market volatility among the plans/participants they support. That said, the overall sentiment was more sanguine: 29% said “not really” in response to that question, while 7% flatly stated “no,” and 6% said they had been “too busy to notice.” Just about 3% said it had been “pervasive,” while another 1 in 10 said that they had noticed that uptick among participants – but among plan sponsors, not so much.
‘Standing,’ Still
Concerns notwithstanding, action was muted. Asked if they had seen an actual movement of account balances in response, 36% said they hadn’t, another quarter said “not really,” and about one in five were in the “among some, but not most” category. Roughly 13% said they had seen that action among participants but not among plan sponsors, and the rest had been “too busy to notice.”
We asked readers if they have done anything special/different in terms of plan or participant communications in the wake of the recent market volatility – and 4 in 10 said they had, though just over a quarter (27%) had not. As for the rest – well, it depended on the plan/participant. “Just made sure to address the volatility with plan sponsors during plan review meetings,” noted one reader. “One client requested a piece on volatility,” explained another. “Our quarterly employee communication email did contain an asset allocation change; the first change in six months,” said another.
“We’ve been sending out communications around ‘volatility is normal,’ showing the historic average intra-year declines, and showing the length of this expansion compared to historic averages. Then we have a nice conversation about buying on sale,” explained one reader. “The volatility was very short lived which I think helped people not make a knee jerk reaction with their portfolios,” observed one reader. “Very few participants even notice it happened.”
“We believe that setting personal financial goals, taking into consideration market volatility and tolerance for same is the best way to manage expectations and behavior,” noted one reader.
‘Home’ Based
We also asked what, if anything, NAPA Net readers had done with their own retirement portfolio – and for the very most part the response was “nothing.” Roughly 6 in 10 said they hadn’t made any adjustments, and another 16% hadn’t because they were in a managed account. Just under 1 in 10 had made changes, but only because this was the time when they would normally rebalance their account. The rest had moved more into equities. (None had moved to bonds/cash – unlike the participants tracked in the Alight 401(k) Index.)
Speaking of “normal” rebalancing, we asked readers how often they generally looked at their retirement plan investments:
22% - quarterly
15% - monthly
14% - annually
12% - semi-annually
5% - every week
However, the remaining one-third didn’t do so with any specific frequency.
So, where does that leave us? Well, “Close your eyes and ride with the waves,” counseled one reader.
Another commented: “You can lead a horse to an auto-rebalancing, crazy-great return and low-volatility trough, but they still know better than you and will take their own circuitous route to the Avian they think is at the end of the road, thank you very much.”
Thanks to everyone who participated in this (and every) week’s NAPA Net reader poll!
