(b)lines Ask the Experts – Best Response to Participants About the Market

As the market has experienced a downturn,  I am fielding calls from our 403(b) plan participants regarding their retirement plan exposure to the stock market.

“Are there any best practice recommendations as to how I should respond to such inquiries?” 

Michael A. Webb, vice president, Cammack Retirement Group, answers:       

The answer to this can be a bit tricky, since the temptation that plan sponsor staff can have is to assist the participants directly, in the interest of optimal employee relations. However, doing so could place the plan sponsor at risk for having provided (or having been alleged by a participant to have provided) investment advice, which can have regulatory or other consequences for a plan sponsor, especially in the environment of a market correction.

Thus, for most plan sponsors, the employees should be directed to a resource OTHER than the plan sponsor for this issue. Fortunately, for many plans, there are typically outside resources to which employees can easily be directed. Many plan recordkeepers include some sort of advisory services as part of their service package, whether it takes the form of actual investment advice, or investor education services that can certainly be of value to participant with market-related inquiries. Personnel who field such inquiries have often addressed many such questions in the past, so they know precisely what to say to participants who express concern over market volatility. In addition, some plans engage independent investment advisers to counsel participants, to whom inquiries can be referred as well. 

In the unlikely event that those resources are unavailable to you, there are many external resources to which you can refer participants, starting with PLANSPONSOR, which has addressed the issue in a number of articles, most recently here and here. However, if you provide any articles to participants, you should be certain to state that such articles are being provided for informational purposes only and should in no way be construed as investment advice. 

The Experts thank you for your timely question!


NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.