Guiding Light - Strategies to Support Employees During Market Volatility

Market volatility can cause employees to feel uneasy about their retirement savings, often leading to impulsive decisions that could harm their financial future. As a plan sponsor, it’s crucial to take proactive steps to guide employees during uncertain times. Consider the following five strategies:

Provide Clear and Consistent Communication. During periods of market turbulence, silence can fuel anxiety. Keep employees informed through regular communications that address current market conditions, potential impacts on retirement accounts, and the importance of staying the course. Utilize newsletters, webinars, and email updates to maintain transparency.

Emphasize a Long-Term Perspective. Encourage employees to focus on long-term investment goals rather than short-term market fluctuations. Offer educational resources that explain the benefits of dollar-cost averaging and maintaining a diversified portfolio. Reinforce that historically, the market has recovered from downturns, rewarding those who stay invested.

Offer Financial Wellness Programs. Financial stress can negatively impact employee productivity. Implementing financial wellness programs can empower employees to make informed decisions. Partner with financial advisors to host workshops or one-on-one consultations to address individual concerns.

Encourage Diversification and Risk Assessment. Educate employees on the importance of diversification as a risk management strategy. Provide tools and resources that help them assess their risk tolerance and adjust allocations if necessary. Make it clear that diversification doesn’t eliminate risk but helps manage it more effectively.

Make Use of Digital Tools and Platforms. Leverage digital platforms that offer personalized insights and projections. This information allows employees to see potential long-term outcomes of their current investment strategies, which can reduce panic-driven reactions.

Educating employees during market volatility is essential to maintaining confidence and promoting sound financial decision-making. Your plan advisor can help you craft an effective and consistent communication plan. By connecting with your employees proactively, emphasizing a long-term perspective and providing practical resources, plan sponsors can guide employees through uncertain times while helping them stay focused on their retirement goals.

Informational Sources: Kiplinger: “Five Ways to Safeguard Your Portfolio in Market Downturns” (March 12, 2025); PLANSPONSOR: “How Should Plan Sponsors Communicate When the Market Plunges?” (August 5, 2024).

For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.

Kmotion, Inc., 12336 SE Scherrer Street, Happy Valley, OR 97086; www.kmotion.com

©2025 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance; nor as the sole authority on any regulation, law or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.