After an incredibly smooth 2017, the U.S. markets have experienced headline-grabbing volatility early in 2018. Steep market free falls give rise to concerns that participants will exit the market on a dip and fail to re-enter until after the market has recovered. In other words, historically, participants have sold at the wrong time and bought at the wrong time.
Data from the February market volatility suggests that retirement plan participants may be improving their response to volatility. This Pensions&Investments article notes that although trading activity reflected significant outflows from equities when the Dow Jones industrial average fell 1,175 points on February 5th, a significant amount of that money moved into balanced funds and target date funds. This represents a change from the past, when 80% of the money would go to cash and 20% would go to bond funds.
The article suggests two primary causes for the improved response: (1) the investment in actively managed funds (target date funds); and (2) continuing education about long-term investing. Those are encouraging developments. Active management is intended to promote greater discipline and more consistent market exposure. Yet participants need to receive education in order to behave in the intended manner. We have much work to do, but this data is encouraging.
“Keep calm and carry on”, as the article states.
Matthew loves to write. He also loves to think, though he’s probably a better writer than a thinker. He does not like to be on camera or in videos. This blog will allow him to write, challenge his ability to think, and, from time to time, test him with video blog entries.
He has a unique blend of legal and practical experience that helps us to serve our clients well. On the one hand, he has more than 12 years of private legal practice experience focusing exclusively on employee benefits, including time as a partner in an employee benefits boutique where he has represented clients in front of the DOL and IRS. On the other hand, he holds his FINRA Series 7 and 66 registrations and serves as the Director of ERISA Services for Qualified Plan Advisors.
Matthew likes to stay active. He provides fiduciary training, Investment Policy Statement design, and vendor oversight to our clients. He is an active member of the Employee Benefits Committee of the American Bar Association Tax Section, serving as Chair of the Defined Contribution Plans Subcommittee. He also has been appointed to the IRS TE/GE Gulf States Council and is a frequent speaker on regulatory developments, fiduciary responsibilities, and retirement readiness.
Most importantly, he stays active with his family. His wife, Laura, is the founder of REbeL, Inc., a not-for-profit organization. His three young boys are mixed up in far too many sports, and they enjoy traveling, watching college football, running with Dad, and rooting for the Huskers.
Latest posts by Matt Eickman (see all)
- Participants Improving Response to Volatility - February 26, 2018
- Trending: Increasing Use of Automatic Features - January 30, 2018
- Investors With the Best of Intentions to Start the New Year - January 9, 2018