Data and Research January 29, 2021

Americans Thinking of Reallocating Portfolios Following Election

The right messaging and access to advice can help retirement plan participants make the right decisions for their financial future.

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Half of Americans said they are changing their investment strategy as a result of the presidential election, and 52% of working Americans are seeking more guidance on their financial strategy, according to a survey conducted by The Harris Poll on behalf of Empower Retirement and Personal Capital.

According to the survey report, “Back to (Financial) Basics: How Americans Are Responding After an Unprecedented 2020,” many respondents want to improve their financial stability. Seventy percent are saving more, 33% say they are more likely to work with financial professionals, and 25% are prioritizing saving for retirement.

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Survey respondents expressed more worry than ever about various financial issues. Seventy-nine percent are more pessimistic about health care costs now than they were last year. That pessimism extends to taxes (82%), the price of higher education (81%), interest rates (80%), retirement planning (80%), the stock market trajectory (79%), Social Security (78%), the housing market (75%) and COVID-19 stimulus (72%).

Steve Jenks, chief marketing officer at Empower, says the 50% who are thinking of changing their investments would serve themselves well if they stuck with their strategies for the long term. “At Empower, what we have seen over the past year are a couple of trends that are important to highlight,” Jenks tells PLANSPONSOR. “When the pandemic first hit, we did not see a significant flight to safety. Those who were invested remained invested for the most part, and they rode out the market volatility. The retirement investor proved to be quite resilient in this respect.”

However, Jenks said, many retirement plan participants phoned the Empower call center to voice their concerns. Luckily, he says, call center representatives were able to emphasize the importance of keeping one’s eyes on the long term, and most participants did not change their portfolio allocations. “This trend has highlighted the importance of advice provided by in-person engagements,” he adds.

For those seeking guidance about their financial plans, “sponsors should help participants take advantage of advice offerings that are available to them,” Jenks says. “There is no one-size-fits-all message for employees who feel the need to make a change to their plan. Some participants may need to make a change; others may not. The important element to any change is to not act with emotion. Instead, a wiser course of action is to seek the help of a professional adviser. Every individual has different needs and should weigh those needs against whatever action they need to take.”

Benefits January 29, 2021

Help With Emergency Savings and Caregiving Among Top Benefits Trends in 2021

Interest has also increased in enhancing workplace giving and volunteer programs, student loan debt help and health care advocacy.

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Employee benefits executives have found that employers are offering several types of benefits this year for the first time, many as a result of the pandemic.

Most notably, many employers are offering automatic emergency savings programs and caregiving support, according to Fidelity.

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“The financial impact of the pandemic has highlighted the importance of having an emergency fund to help employees avoid tapping their retirement savings to cover financial emergencies,” Fidelity says in a research report, “Top Employee Benefit Trends for 2021.” Recent Fidelity research indicates eight in 10 Americans plan to focus on emergency savings this year. “A growing number of employers are providing information and resources to help employees understand how to create an emergency fund, as well as exploring adding an emergency fund option that would allow employees to contribute directly from their paycheck,” Fidelity says.

Fidelity also says more employers are willing to give “broader support for employee total well-being with an increased focus on employee caregiving roles. Employers are increasingly focused on providing benefits to support caregivers, such as paid caregiver leave, elder care and parent support groups, and child care support and tools to assist new parents.”

Fidelity also says more employers are offering “workplace giving and volunteer programs to help employees support their community and the causes important to them. Many of the events of 2020—including the pandemic, natural disasters and social justice issues—have prompted an increasing number of employers to consider adding a workplace giving program to their benefits offerings.”

Sensitive to the fact that Americans are carrying $1.6 trillion in student loan debt, Fidelity says, more employers are willing to help their workers with this debt. “These include employer contribution programs that make after-tax contributions on their employees’ outstanding student loans,” Fidelity says.

For those whose have lost a relative to COVID-19, or who were laid off or put on furlough, help with mental health has also become important, Fidelity says. As a result, “many employers will be focused on providing emotional and mental health support, additional telehealth and telemedicine benefits, and stress management,” Fidelity says.

Finally, employers are showing “a lot more interest in advocacy and transparency services related to health care benefits,” says Kim Buckey, vice president of client services at DirectPath. Its advocacy program permits workers to call an 800 number and get a second opinion on a medical issue, and its transparency program gives workers various in-network pricing options, Buckey says. Some employers are tying these into rewards options, whereby if the worker selects a less expensive, in-network option, they will get a small reward, such as a $500 gift card, she notes.

Buckey adds that many employers are sticking with the virtual open enrollment sessions and options that they used last year.

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