401(k) investors hold steady but hungry for info

A majority of participants aren't making investment changes within their 401(k) plans amid the recent market uncertainty, but many are looking for information.

Of Empower Retirement's nearly 9.5 million participants, "99%" have not made any investment changes since the market volatility began, said Claudia Step, senior vice president and chief client experience officer for Empower, during a webinar Friday hosted by the Defined Contribution Institutional Investment Association and SPARK Institute.

Ms. Step said that about 3.5% of participants have recently changed their contribution rate and two-thirds of those changes were to increase contributions. "Although these are small numbers, it's interesting to see more people are saving more than are changing their investment strategy," she said.

But Rob Austin, head of research at Alight Solutions, said he's noticed "change in attitude" with people's contributions as of late. In recent years, Alight's defined contribution plans have seen roughly 50% of new contribution dollars directed toward target-date funds, Mr. Austin said. But in March, it slipped to 44%.

"It's still the biggest asset class by far, but we're closely monitoring this to see if March was more of anomaly or if it was the beginning of a trend that maybe people are less enthusiastic about contributing to the target-date funds," Mr. Austin said.

There's been an uptick in participants directing money toward fixed income instruments, like stable value, money market or bond funds, Mr. Austin added.

At Empower, 18% of participants have made some sort of inquiry, like looking at their balance online or making a call seeking information, since the COVID-19 pandemic began, Ms. Step said. And while the call volume has been up recently, calls actually dipped this week at Empower. "I think people have settled into this new, I'll call it, 'abnormal,'" she said.

Mr. Austin said calls are coming into Alight from participants who say, "I think staying the course is the right thing to do but I just want to hear it from somebody else."

Andy Lovell, vice president of strategic partnerships at National Benefit Services, said the new working conditions for millions of Americans has presented challenges to record keepers and plan sponsors looking to engage with their participants. National Benefit Services has been encouraging plan sponsors to provide regular communication with participants online.

"All of this works towards an environment where we can try to create some sort of stability and a little bit of calm for some of the participants amidst all this chaos," Mr. Lovell said.