I could not bear to write another email with the subject line reading Covid-19 or market volatility. Obviously, there is only one story at this moment…these are unprecedented times. The reaction has also been unprecedented to date as the early rumblings of government intervention and stimulus programs from a variety of entities around the world come in.
The kick the cat joke – and for anyone who does not know I have a cat named Little Foot who I love immensely and is not up for any kicks – came on Monday. After two weeks of endless client calls on the historically fast bear market and “new reality” that we are dealing with, my phone started blowing up with text messages that Tom Brady was leaving the Patriots. Thus, my response to some buddies in an effort to generate a laugh in very unfunny times was “would you like to next come over to kick my cat?”.
Ok, so for most of you Tom Brady leaving the Patriots is probably not on par with being forced into semi-isolation and/or seeing the market declines of the past month. Actually, it’s not even close for me either and I am a pretty hardcore fan. It was nice to have a few texts and emails about something other than Covid-19, but obviously at the moment from a health, lifestyle, and an investor perspective there is only one story in the world at the moment that seems to matter, and it is not TB 12 or who is going to win the primaries.
With that being said, I did want to provide some thoughts on where we think things are as we write this on Wednesday, March 18th and to provide some context and perspective to help see a path through the woods. Because this too shall pass…
Staying in Front of Participants
In 2008 and 2009 RSG was a much smaller company. There were three of us taking hundreds and hundreds of calls. While that was painful and scary, I learned one valuable lesson which is being reinforced to our much larger team today: BE PROACTIVE. It is human nature and solid business that when times get tough people focus on their core business. For most in the 401(k) space, this is not a core business and usually is a bit of an afterthought. This leaves participants lost, scared, and often emotionally reacting to the volatility in a way that has proven destructive by both behavioral finance studies and the annual Dalbar Research report on average American investor returns.
In 2008 – 09, in the credit crisis of 2011, in Q4 2018, and now today in the Coronavirus pandemic, RSG has decided to take the opposite approach. We have formed participant support hunt groups off our toll-free line to get participants connected more quickly with our team; we have provided bulleted participant impact speaking points and shared those with our clients; and we have created mini-market volatility presentations to ensure that RSG’s participants are more educated, less emotional, and more strategic than the “Average American” during this difficult time. To hear the second of these participant market volatility update presentations, just released to our clients yesterday, feel free to click here.
If someone says, “this time is different”, then it is usually the right time to turn the page and/or channel. But at this point, without question, elements of this event and subsequent bear market are in fact different. One such example, and one reason so many people (including myself) feel a bit stunned, is how fast this has happened. For some context on how the world’s fastest bear market came into existence, click here from a great article from Charles Schwab.
The American Retirement Association (ARA) has been busy in Washington. The federal response to the Coronavirus in their words, has been divided into a three-step process. Step three is where we expect to see the actual money/cash and/or tax incentives get to individuals and small business owners. The ARA thinks that ERISA plans to play a role in the relief. Extending taxes due on distributions, raising loan limits, and waiving 10% early distribution penalty are just a few of the proposals the ARA is trying hard to have Congress consider as part of the phase three response. It is too early to know what will make the final cut, but it feels highly probable that qualified retirement plans play a role. Click here to read more on this topic.
Did You Know?
Most people believe the best two quarterbacks (and two first ballot hall of famers) in the NFC South now are Tom Brady and Drew Brees. When we are not focusing on historic pandemics such as this, we often focus on the trends in our industry. Living longer, living better, living more actively are significant trends we focus on. But a lighthearted example of this may be that we have two of the best quarterbacks in the game with a combined age of 83!
Also, a friendly reminder RSG is here for you during this uncertain time. It’s business as usual and RSG has prepared ongoing video presentations on the Coronavirus Market update. We are happy to assist you with any questions regarding your account. Please feel free to call 866-352-7731 then press 5 to speak with a Relationship Manager.
Here is a look at RSG’s virtual meeting best-practice guide! (P.S. this is just for a laugh!)
Midwest Office: 328 South Jefferson, Suite 420 Chicago, IL 60661
New England Office: 25 Market Street, Suite 2B Portsmouth, NH 03801
