How to Protect Your Company’s 401(k) From Stock Market Volatility 

Let’s be real—watching your company’s 401(k) go up and down with the stock market can feel like riding a rollercoaster. But don’t panic! Stock market volatility is inevitable—but your company’s response to it can make a significant difference in employee retirement outcomes. As a plan sponsor, you play a critical role in helping your workforce stay focused on long-term goals, even when markets are unpredictable.

Volatility Is Normal—But It Doesn’t Have to Derail Your Plan

Stock market volatility means prices go up and down—sometimes fast and without warning. Market fluctuations can cause concern among employees, especially when they see their account balances drop. This often leads to reactive decisions like pulling out of investments or reducing contributions—actions that can undermine long-term growth.
 
As an employer, you can help your employees mitigate this by:

• Providing education on market cycles and long-term investing.
• Offering diversified investment options to reduce risk.
• Encouraging consistent contributions, even during downturns.

Avoid Market Timing Pitfalls

Trying to “time the market” is one of the most common mistakes investors make. Employees may feel tempted to sell during downturns and buy during rallies—often locking in losses and missing out on recoveries.
 
Your role as an employer? Reinforce the value of staying invested and provide access to professional guidance that helps employees make informed decisions.

Behavioral Finance Matters

Ever heard of loss aversion? Simply put, we tend to react more strongly to losses than to gains—and that can influence how we invest. Loss aversion can lead to poor investment behavior. An investment strategy that focuses on the short term rather than long-term benefits can lead investors to miss out on potential gains. Studies show missing just a few of the market’s best days can significantly reduce long-term returns.

By partnering with retirement plan advisors like Fisher\SMB™, you can offer resources that help employees understand these biases and stay the course during volatile markets.

Smart Plan Design for Volatile Markets

To help your team weather market volatility, consider:

• Diversified fund lineups that include stocks, bonds, and international options
• Auto-enrollment and auto-escalation features to encourage consistent saving
• Target-date funds that adjust risk over time
• Regular plan reviews to ensure alignment with employee demographics and business goals

Support Your Team—And Your Business

A well-managed 401(k) plan not only helps employees build financial security—it also strengthens your company’s value proposition. During uncertain times, proactive communication and thoughtful plan design can reinforce trust and retention.

Let’s Talk

We’re here to help you and your employees navigate the complexities of retirement plans, especially during volatile markets. Contact us to talk about what your business needs.