On Monday, August 24, 2015, the Dow Jones Industrial Average (DJIA) dropped roughly 1,100 points in the first five minutes of trading, losing approximately 585 points on the day. As was the case in the market downturns experienced during 2008-2009, call center volumes spiked, running approximately 40 to 65% higher than usual, with similar spikes being seen online.
However, according to a majority of service providers contacted, less than 1% of participants made any changes to their portfolio, which was consistent with 2008.
The good news is that the majority of participants are seemingly not reactionary, despite such volatile market conditions. Nevertheless, plan sponsors can ensure that measures are taken to reinforce participant messaging and maintain sound investment choices.
What a plan sponsor can do:
- Continue to review and monitor the investment line up offered to participants according to the guidelines set forth within your Plan’s Investment Policy Statement. Ensure that asset classes are well represented, with diversified offerings within each (ex. growth/value;passive/active), and portfolio composition is as advertised.
- Work with your service provider(s) to understand how call center representatives are handling participant inquiries in light of such market conditions. Ask for and review the “script”. Request call activity reports if not otherwise automatically available. Assess qualityof the participant experience through participation satisfaction surveys and/or through testing of calls in a live environment, if possible.
- Review the education plan that has been developed with the service provider. Ensure appropriate messaging to targeted audiences.Specifically work with your service provider to address participants who are not currently adequately diversified, encouraging an appropriate asset allocation strategy in conjunction with a periodic rebalancing service to maintain investment strategy over time.