Today’s economic landscape is complicated by factors that just didn’t exist for previous generations — and that points to a need for plan sponsors and financial professionals to implement new approaches to helping plan participants.Changes in wage growth, inflation, interest rates, market volatility, geopolitics and life expectancies all contribute to a financial reality that’s not what it was even a decade ago.
For employer-sponsored plans to meet the evolving needs of participants, retirement and financial planning efforts need to address these changing variables with plan offerings and retirement planning strategies that meet the need.
The traditional “set-it-and-forget-it” approach isn’t really viable anymore. Instead, today’s essential blueprint starts with a proactive approach, and makes room for the ways that different economic factors can impact individual plan participants.
If it all sounds discouraging, keep this in mind:
And the financial professionals who serve them have plenty to gain, too.
Maintaining an existing plan — and participant portfolios — with an “as-is” approach may result in lost opportunities. But for sponsors and planning professionals, there’s much more to consider than overall plan participation and performance. Consider the impacts of these developments:
Economic conditions aren’t fixed, so it stands to reason that a “fixed” retirement plan strategy may not be as effective as one that helps sponsors and participants adapt to changing conditions.
Risk exposure is a reality, too. Taking a reactive stance could lead to a plan that doesn’t perform as intended; it could even expose plan sponsors to fiduciary risks.
Getting proactive with the plan — and with participants — can help identify new opportunities as they arise, and manage risks before they take hold. A simple step like implementing regular, systematic plan reviews and individual portfolio reviews can make a difference, enabling a timely response to changing circumstances that can transform challenges into opportunities.
A more proactive, consultative approach can also help elevate the participant experience and help kindle an overall improvement in their retirement confidence.
In a dynamic — and sometimes volatile — economic landscape, agility and adaptability aren’t just competitive advantages; they’re a must. Those who prepare in advance are more likely to be ready to pivot when economic indicators change.
How do different parties stand to benefit by adapting now? Here are a few ways all constituents benefit from a plan that’s ready to adapt and keep delivering key must-haves, even amid changing circumstances:
Adapting to change and being proactive aren’t just about staying competitive; they are crucial for ensuring that retirement plans continue to meet the evolving needs of everyone involved in a fast-changing economic landscape.
Helping employees navigate today’s financial complexities demands an updated approach. Varying wage growth, inflation, market ups and downs, and longer lives all add up to a new reality — and that calls for a new way of helping people save and invest.
All together, proactive plan management and guidance can even lead to better work engagement, lower turnover and stronger client relationships for financial professionals.
SOURCES
1 CDC.gov, Fast Stats: Life Expectancy, February 7, 2023.
2 BLS.gov, Commissioner’s Corner: More Ways to Look at Wages and Inflation, February 13, 2023.
CMRS-5779434.1-0623-0725