PLANSPONSOR - October/November 2018 - 26

Upfront
Act Wisely During Various Market Cycles
" If they can't answer whether they're
well-diversified or not, or haven't looked
into their investments in a long time, step
back and consider whether a professionally
managed target-date fund [TDF], a targetrisk
fund or managed account might solve
that for them, " she says. " Then they're not
having to be that cook in the kitchen-
having to be that expert in asset classes. "
Additionally, an income projection
tool can offer insight as to participants'
potential retirement future. " It will show
them not only their balance, but, if they
live to a certain age and their assets grow
a certain percentage, what their stream of
income would look like, " Steele says.
Plan sponsors can also refocus participants
on their respective time horizon.
How can they use their remaining saving
years to benefit their retirement?
Market volatility probably would not
be a participant's-or a sponsor's-first
answer, but Roy believes the rockiness can
help younger workers save. " It can allow
you, if you are in a systematic savings
program, to put your savings to work, to
buy more shares when markets are low
and build a greater nest egg over time. "
Those expecting to retire in the next
two to three years should have already
de-risked to protect wealth, Roy notes, and
she advises participants to allocate a " cash
THE record bull market may cause
retirement plan participants to be overly
confident, but they need to understand
market cycles and volatility to resist
making the wrong investment and
retirement savings decisions.
Katherine Roy, chief retirement strategist
at J.P. Morgan, calls it imperative
for defined contribution (DC) plan sponsors
to refocus participants on retirement
saving and encourage them to act wisely.
" Participants get so focused on where we
are in a cycle and get away from the longterm
investing and saving, " she says.
Participants can err when the market
seems strong. If they see an upturn, they
assume the market will remain on that
path and they pull funds from their plan for
other priorities, says Daniel Steele, national
sales manager at Columbia Threadneedle.
Focusing on the Future
Plan sponsors can take steps to encourage
retirement readiness, despite the market's
ups and downs. Asking employees whether
they are well-diversified is a great first step,
Roy says, as this helps shape a participant's
understanding of his holdings.
26 PLANSPONSOR.com October-November 2018 Art by Ellen Weinstein
cushion, " or emergency savings fund.
" [Doing so] is also equally important
to people getting closer to retirement, so
they have the liquidity or cash they need
for their income gap, " Roy says. That way,
" when they retire, they're not pulling
money out of a declining market, from a
sequence of returns risk perspective. "
Participants who are 10 to 15 years shy
of retiring should ask themselves if they
are de-risking appropriately, Roy says.
If they are unsure, it is crucial for them
to invest in a TDF or managed account,
based on their time horizon.
-Amanda Umpierrez
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PLANSPONSOR - October/November 2018

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