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In the opening months of this year, the steep market drops of 2022 appeared to be fading. Inflation, though persistent, was levelling. The job market was doing well. There was talk of recession, but it was to be a controlled one, inflicted in part by the Federal Reserve’s continued interest rate hikes. Then, on March 10, the country’s 16th-largest bank suddenly failed in a matter of days.

Matthew Eickman, the national retirement practice leader for Qualified Plan Advisors, notes that his firm is reminding plan sponsors of the diversity that protects their participants from failures in specific market sectors.

“Optimism has continued into early 2023, even in light of SVB and other banking system challenges,” Eickman said by email. “Plan committees are interested in the answer to this question: ‘How much exposure do our plan’s investment options have?’ Once they are reminded that most plans are not directly tied to the performance of one market sector or industry, they are able to quickly return to the performance of the plan’s investors, rather than merely its investments.”

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