Participants Worry About The Political Environment
The year 2020 will go down in infamy. While the stock market continues its roller coaster ride and the media debates what will or should happen next with the pandemic, defined contribution participants continue to watch their account balances. After taking a deep dive in April and March, recovery is slowly happening during the summer months. But just like everyone else, plan participants are worried about what is yet to come.
In recent research completed by Spectrem Group, participants were asked what national concerns they were the most worried about.
The political environment and upcoming presidential election are the greatest concerns of plan participants followed by the national debt. While the political environment is generally always at the top of the concerns identified by investors of all types, the upcoming presidential election is generally only a concern during election years. The national debt is an interesting concern that seems to be increasing with younger households – those who arguably will ultimately be more likely to have to solve the issue. Fifty-eight percent of participants are worried about tax increases. This is slightly lower than prior years while climate change (57%) has increased significantly as a concern. The current presidential administration is behind climate change and is actually lower than in the past. This may be due to the fact that it is an election year and Anti-Trump individuals may believe he will be voted out while Trump supporters know how he will act in office and are not concerned. It’s interesting to note that cyber-attacks continues to grow as a concern and terrorism is somewhat lower than in the past.
So why should financial providers and advisors care about the concern participants have regarding these national issues? The primary reason is to provide information regarding the issues and their impact on the markets and financial issues. It would not be improper to discuss with or provide information to participants regarding how the markets might react during a Presidential election year based upon historical information and the analysis of your own experts. Similarly, providers and advisors should continue to educate participants in an unbiased manner regarding tax issues and climate change initiatives. Finally, protecting oneself against cyber-attacks and explaining how your organization protects itself is important information to share with participants.
Financial providers and advisors need to continue to educate themselves regarding what participants are worried about and provide advice and information regarding these concerns. Spectrem’s report 2020 DC Insights Attitudes Concerns and the Upcoming Election provides information regarding all of these issues.