During the depths of the stock markets' reaction to the COVID-19 virus, most participants in the Missouri Deferred Compensation Plan didn't flinch.
"So far, over the past month, we have seen less than 15% of unique participants log on to their online accounts and less than 1% execute fund transfers," Cindy Rehmeier, manager of defined contribution plans for the Missouri State Employees Retirement System, Jefferson City, wrote in an email on April 7. "So over 99% staying the course is a good thing."
The plan covers state employees as well as faculty and staff at 10 state universities. According to its website, the plan had $2.24 billion in assets as of February and 68,355 participants.
One feature of the plan's multifaceted education campaign is the listing on its website of 10 financial crises and disease outbreaks — and what happened to the S&P 500 index one year after each event. "Using history to help steer away from knee-jerk decisions is the key," Ms. Rehmeier wrote.
Here's the list: the 1987 market crash; SARS; avian flu; Lehman Brothers bankruptcy; swine flu; the Sept. 11 terrorist attacks; Ebola; Zika; the Brexit vote; and the December 2018 market correction.
In eight of 10 examples, one-year-later S&P 500 returns were higher by double digits ranging from 12.6% to 37.8%. The Lehman Brothers bankruptcy (down 6.6%) and the 9/11 attacks (down 20.6%) were the only exceptions.
"With regard to calming participant fears resulting from recent market volatility, the approach is similar to that of the (2008-2009) financial crisis and that is reminding participants to continue to think long term," Ms. Rehmeier wrote.
The plan's website says participants should ask themselves three questions before making any "drastic" changes:
Has a major life event occurred or has there been a change in your current living situation? Have your retirement plans changed? Have your retirement savings goals/needs changed?
"If you answered "no" to any of the above questions and are solely basing your decisions on media headlines, panic, and short-term performance, you may want to revisit your decision," the website said. Actions "should be based on your personal, long-term goals and needs."
Ms. Rehmeier's staff has responded to the economic damage and uncertainty caused by the COVID-19 virus with web-based education efforts as well as reminding participants that phone calls and free one-on-one education webinars are available to replace in-person meetings.
During the crisis, the staff incorporated a series of 'how-to" miniature tutorials as well as webinars encouraging a greater use of on-line tasks such as accessing their accounts, changing a contribution, adding or changing beneficiaries, changing future allocations and re-setting user IDs and/or passwords. The plan conducted a total of 46 webinars and seminars in January and February.
The plan's headquarters closed March 23, but the call center remains open.
Participants also can access their accounts online 24/7. And those individuals without a computers can use a mobile phone app to get the same access.
"It is the new norm for participants, and takes some adjustment, but many are willing to learn and try something new," Ms. Rehmeier wrote. "A portion of our outreach in the past had been virtual, but shifting to 100% virtual almost overnight was definitely unexpected."
