Investing

How Brexit May Impact the Market and Your Clients

By Rebecca Moore editors@strategic-i.com | June 24, 2016
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Retirement plan investors need to realize that equity markets go up and down, Barron says. Often, participants in defined contribution (DC) plans see investments go up and think that is the time to buy them, but when stocks go down, that is the time to buy. For DC plans, participants read, see and hear that stocks are plummeting and that creates great fear and concern. “It’s about communicating,” Barron says.

Multi-asset portfolios, such as target-date funds, are designed to help employees manage through complexity and change in the markets. For those participants who manage their own portfolios, sponsors should communicate that they need to manage their portfolios with their risk tolerance, goals and savings targets in mind.

“We are reaching out to our clients and pointing out that over the long term, the world survives. These short-term events don’t last, so don’t speculate on outcomes that are completely unknown,” Barron says.

For defined benefit (DB) plans, he suggests that if it’s been a while since plan sponsors looked at funded status and strategic asset allocation, now is time to do so. “Set it and forget it is not a best practice. They need to ask if there strategy still makes sense for them.”

Barron adds, “We frankly think this is not the end of the world, but when sponsors get a peek at something that could have a dramatic effect, that is a time to pull a committee together and review investing strategies.

Diversification doesn’t work all the time, but works a lot of the time, according to Barron. He suggests plan sponsors look at their investments and see how much diversification they have. Look at hard assets and assets generally uncorrelated with market swings.

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