In Volatile Times, 401(k) Education Is The Theme Of The Day

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Nationwide Financial, Columbus, Ohio, is rolling out tools designed to help investment professionals leverage 401(k) Day, Sept. 3, to build qualified plan sales.

Created by the 401(k) Profit Sharing Counsel, Chicago, as a way to focus on employee education, 401(k) Day provides an opportunity for investment professionals to talk to their plan sponsor clients about fiduciary responsibilities, participant education and plan design, Nationwide says.

Many investment professionals use this time to have seminars for clients employees, which can result in additional individual sales, the company says.

Nationwide has made available a qualified plan market guide, which explains the market for small business qualified plans and offers strategies for approaching clients. Also available is a 401(k) Day checklist, which offers a list of items that can help build qualified plan business, Nationwide says.

Michael Peddicord, national marketing director, Nationwide, says agents neednt let 401(k) participants panic as their retirement funds dip in the currently volatile market.

He says agents can suggest participants “look at history, because typically when youve had market declines in history and when the news gets terrible and everyone says this is the worst market ever, the investors who stick with it benefit quite a bit.”

Peddicord mentions 1987 in particular, when the market dropped to 2800.

“Theyre now looking at a market thats around 8500,” he says. “Their account almost tripled in value over that 10-plus year period of time. Their patience paid off.”

The time to pare back is when theres a state of euphoria in the market, Peddicord says, because “theres a lot of optimism priced into the market.”

Some agents want to know what to say to baby boomer 401(k) participants who are concerned about their elderly parents living on shrinking retirement funds. Often, they dont feel their parents have time to wait for a market turn-around.

Peddicord says elderly 401(k) participants arent usually adversely affected by market volatility.

“Typically an 85-year-old is not going have a huge exposure to the market,” he says.

“By the time theyre 85, theyll have a small exposure to the market and should be invested in conservative stocks for some growth, but mostly income.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, July 29, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.