When it comes to measuring defined contribution participants' reactions to market volatility, it depends on who is doing the counting and how they did the counting.
Earlier this month, Alight Solutions issued a report saying that December 2018 was the most active trading December in the history of the firm's tracking of trading among 49 clients in its 401(k) index.
Last year was the most active in five years. And last quarter was more active than all but seven quarters measured by the firm's 401(k) index, which was launched in 1997, Alight said.
However, officials at two large record keepers — Vanguard Group Inc., Malvern, Pa., and T. Rowe Price Group Inc., Baltimore — said they saw little change in overall trading activity among their clients' participants during the recent market turbulence. The S&P 500 index dropped 9% in December and 13.5% during the fourth quarter of 2018, according to the Alight Solutions report.
Meanwhile, several consultants said trading activity among their clients — ranging from very small to very large sponsors — didn't reveal panic trading.
They attribute participants' relative calm to the influence of plan designs — for example, target-date funds reduce participants' emotional response to market volatility — and education efforts.
"I didn't see much of anything" among clients, said Martin Schmidt, principal at MAS Advisors, Chicago. He attributed participants' muted behavior in part to their investing in managed accounts and target-date funds.
"Plans that have managed accounts as the qualified default investment alternative creates another layer so people won't overreact," said Mr. Schmidt, whose clients range in assets from $200 million to $4 billion.
"Managed account providers sent messages to stay in for the long run," he said. "If you have a target-date fund as a qualified default, that's similar to managed accounts in mitigating some of the issues."
Timing might have played a role in the lack of frantic trading because the market plunge in December "came up so quickly," he said. Some clients had closed their offices in mid- to late December.
"The phones lit up more than usual, but I didn't see participants jumping in and out of the market," said Jason Chepenik, managing partner, Chepenik Financial, Orlando, Fla., whose DC plan clients have assets primarily in the $10 million to $25 million range but some are as high as $150 million.
December's call volume was up by about 10% to 15% vs. October and November, he said. The more active traders were those near retirement with large accounts who moved money to stable value and fixed-income funds from equity funds, he said.
Mr. Chepenik said his firm's staff members sent email messages to clients' participants providing information on market volatility and reminding them about the long-term strategies for retirement investing. "The outreach calms them," he said.