Juxtaposition

Alison Cooke Mintzer (photo by Chris Ramirez)

Well, here we are, one year later. A year that was experienced in so many different ways by people across the country, in terms of work and employment, family and health, and so much more. On our end, I think it’s clear that the year has revealed the precariousness of so many Americans’ short- and long-term financial security.

I’ve heard from some that this past year gave them more family time, or that the disruption didn’t last too long, as their small office reopened last year and staff go a few days a week, or that the consensus was, yes, it was a transition, but life didn’t change too much.

Those people were financially secure enough to feel that way. But that was a luxury not shared by the rest of America. For many of them, it was a year of disruption and despair, of losing jobs, or coping with illness and sadness, exemplified by studies showing increased rates of depression and alcohol/drug abuse.

That dichotomy also exists with companies; some of your clients are in the first camp, with strong revenues and a growing employee base, while others are grappling with furloughs, layoffs and office closures. As we get closer to a post-COVID world, how are you preparing to help each client align its offerings with what its particular employee base needs to improve its financial well-being? Examining the needs of participants these next few years will be vital to helping them be confident financially. The year behind us has revealed many divergent perspectives across demographics. Some demographic groups have felt the economic cost at a disproportionate rate: specifically women and people of color.

We’ve also discovered that it’s not enough to help people “save for retirement”; we need to help people “save.” The past 12 months, and what we’re hearing from plan sponsors, have made it clear that, if, as an industry, we continue to emphasize or spend the most time on reviewing investment lineups with our clients, we’re missing the boat. The investments, while important, should take a back seat to examining the plan demographics and reviewing the plan design features or ancillary benefits that can most improve employees’ financial security.

If we’re serious about helping to improve Americans’ financial future, the retirement plan industry—which we know is where most Americans amass any sort of real savings—should prepare to broaden its focus on what programs employers can implement today to better their employees’ outcomes in the short- and long-term future.

We already see that change occurring as recordkeepers start to embrace the concept of emergency savings. A recent study from nonprofit Commonwealth, the Defined Contribution Institutional Investment Association (DCIIA)’s Retirement Research Center and the SPARK [Society of Professional Asset Managers and Recordkeepers] Institute reported that, although recordkeepers’ primary objective is to support retirement savings, they increasingly understand that other aspects of a plan participant’s financial life are crucial to his ability to save for retirement.

It’s impossible to say what things will look like once the cases and transmission rates have declined and we get enough people vaccinated to return to something like a “normal” state. Yet, I believe this pandemic brought to light that our industry, and the American workforce we set out to help, has a long way to go if our goal is truly to bring people to financial security.