PLANADVISER - July/August 2022 - 14

trends
Asset Flows Affect Plan Decisions
Clients can adjust for the economy to protect participant savings
PARTICIPANTS' swelling account balances from stock market
gains in recent years might have masked the urgency for
sponsors to fortify their plans against the potential for asset
loss. The time to act is the present, industry experts say.
" While not well-publicized, there is, now, and has been
for several years, more money being distributed from plans
than being contributed to them, " says Fred Reish, a partner
and chairman of the Financial Services ERISA [Employee
Retirement Income Security Act] team at Faegre Drinker.
" That's not obvious because of the significant stock market
gains over the past decade. But someday the market will go
down, and that dynamic will be exposed. "
It is too early to arrive at any grand conclusions as to how
plan assets may have suffered from COVID-19's workforce
and economic dislocations, as well as, more recently, inflation
and stock market declines, says Katie Hockenmaier, U.S.
defined contribution research director at Mercer. However,
she notes, some manufacturing-and-technology-sector plan
sponsors are clearly in a position of asset outflow.
She says she has seen no significant drain on plan assets
from the " Great Resignation, " but " when we get to the end of
'22, it will be much easier-even midway through this year-
to see what impact is being made to plans, " she says.
Tracking asset flows can tip sponsors off to any challenges
they might have, says Alexa Nerdrum, managing director,
retirement, at WTW. " We're seeing that the pandemic really
didn't lead to some of the mass distributions plan sponsors
and others were expecting. " An estimated 2% to 4% of participants
made retirement account withdrawals, after passage
of the Coronavirus Aid, Relief and Economic Security-or
CARES-Act provided special distribution and loan rules
for retirement plans and individual retirement accounts,
Nerdrum says. Meanwhile, savings rates and plan balances
have kept growing, she notes.
Advisers need to factor conditions in the economy into
how they advise plan clients, notes Jason A. Johnson, senior
vice president - wealth management, and a retirement plan
consultant and wealth adviser, with UBS Financial Services
Inc. " During periods of high growth, it's important to
consider adding or increasing auto-enrollment percentages
and adding auto-escalate. During periods of contraction,
plan sponsors can suspend auto-escalate features, " he says.
" It's also important to evaluate the qualified default investment
alternative and consider re-enrollment, " Johnson says.
" Participants who take too much risk typically make drastic
changes to their asset allocation after a downturn, which is
usually a bad long-term decision. " Re-enrolling them into the
appropriate QDIA usually lessens the volatility, as the portfolio
is more diversified and the asset allocation corresponds
to a participant's age and years until retirement, he says.
" Of course, participants can always choose what they feel
is best for their situation, but plan sponsors have a fiduciary
responsibility [to them]. This is where an experienced retirement
plan [adviser] can add real value, " he says. -Noah Zuss
14 | planadviser.com July-August 2022
Art by James Heimer
http://www.planadviser.com

PLANADVISER - July/August 2022

Table of Contents for the Digital Edition of PLANADVISER - July/August 2022

Balancing Act
Greater Access
Previewing Plan Features
A Different Way to Save
Next-Level Options
New Territory for Income?
Compliance for Wealth Managers
If Caught Off Guard by A Failure
Larry E. Crocker
PLANADVISER - July/August 2022 - C1
PLANADVISER - July/August 2022 - FC1
PLANADVISER - July/August 2022 - FC2
PLANADVISER - July/August 2022 - C2
PLANADVISER - July/August 2022 - 1
PLANADVISER - July/August 2022 - 2
PLANADVISER - July/August 2022 - 3
PLANADVISER - July/August 2022 - 4
PLANADVISER - July/August 2022 - 5
PLANADVISER - July/August 2022 - 6
PLANADVISER - July/August 2022 - 7
PLANADVISER - July/August 2022 - 8
PLANADVISER - July/August 2022 - 9
PLANADVISER - July/August 2022 - 10
PLANADVISER - July/August 2022 - 11
PLANADVISER - July/August 2022 - 12
PLANADVISER - July/August 2022 - 13
PLANADVISER - July/August 2022 - 14
PLANADVISER - July/August 2022 - 15
PLANADVISER - July/August 2022 - Balancing Act
PLANADVISER - July/August 2022 - 17
PLANADVISER - July/August 2022 - 18
PLANADVISER - July/August 2022 - 19
PLANADVISER - July/August 2022 - Greater Access
PLANADVISER - July/August 2022 - 21
PLANADVISER - July/August 2022 - 22
PLANADVISER - July/August 2022 - 23
PLANADVISER - July/August 2022 - Previewing Plan Features
PLANADVISER - July/August 2022 - 25
PLANADVISER - July/August 2022 - 26
PLANADVISER - July/August 2022 - 27
PLANADVISER - July/August 2022 - A Different Way to Save
PLANADVISER - July/August 2022 - 29
PLANADVISER - July/August 2022 - 30
PLANADVISER - July/August 2022 - 31
PLANADVISER - July/August 2022 - Next-Level Options
PLANADVISER - July/August 2022 - 33
PLANADVISER - July/August 2022 - 34
PLANADVISER - July/August 2022 - 35
PLANADVISER - July/August 2022 - New Territory for Income?
PLANADVISER - July/August 2022 - 37
PLANADVISER - July/August 2022 - Compliance for Wealth Managers
PLANADVISER - July/August 2022 - If Caught Off Guard by A Failure
PLANADVISER - July/August 2022 - Larry E. Crocker
PLANADVISER - July/August 2022 - Cover3
PLANADVISER - July/August 2022 - Cover4
https://www.planadviserdigital.com/planadviser/july_august_2022
https://www.planadviserdigital.com/planadviser/may_june_2022
https://www.planadviserdigital.com/planadviser/industry_leader_awards_2022
https://www.planadviserdigital.com/planadviser/march_april_2022
https://www.planadviserdigital.com/planadviser/january_february_2022
https://www.planadviserdigital.com/planadviser/november_december_2021
https://www.planadviserdigital.com/planadviser/september_october_2021
https://www.planadviserdigital.com/planadviser/july_august_2021
https://www.planadviserdigital.com/planadviser/may_june_2021
https://www.planadviserdigital.com/planadviser/march_april_2021
https://www.planadviserdigital.com/planadviser/january_february_2021
https://www.planadviserdigital.com/planadviser/november_december_2020
https://www.planadviserdigital.com/planadviser/september_october_2020
https://www.planadviserdigital.com/planadviser/july_august_2020
https://www.planadviserdigital.com/planadviser/may_june_2020
https://www.planadviserdigital.com/planadviser/march_april_2020
https://www.planadviserdigital.com/planadviser/january_february_2020
https://www.planadviserdigital.com/planadviser/november_december_2019
https://www.planadviserdigital.com/planadviser/september_october_2019
https://www.planadviserdigital.com/planadviser/july_august_2019
https://www.planadviserdigital.com/planadviser/may_june_2019
https://www.planadviserdigital.com/planadviser/march_april_2019
https://www.planadviserdigital.com/planadviser/january_february_2019
https://www.planadviserdigital.com/planadviser/november_december_2018
https://www.planadviserdigital.com/planadviser/september_october_2018
https://www.planadviserdigital.com/planadviser/july_august_2018
https://www.planadviserdigital.com/planadviser/may_june_2018
https://www.planadviserdigital.com/planadviser/march_april_2018
https://www.planadviserdigital.com/planadviser/january_february_2018
https://www.planadviserdigital.com/planadviser/november_december_2017
https://www.planadviserdigital.com/planadviser/september_october_2017
https://www.planadviserdigital.com/planadviser/july_august_2017
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