4 retirement plan trends employers should track in 2023

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With the end of the first quarter of the year already on the horizon, it’s a good time for employers to recalibrate their retirement plan objectives for the remainder of 2022.

“First, employees want — and need — more guidance than ever from their employer as questions surrounding retirement plans become more complex,” according to a new Financial Trends report from Marsh McLennan Agency. “Second, employers need to take a thoughtful approach to managing their retirement plans.” The report identified four financial trends for employers to consider.

Trend 1: Planning a financial future in a volatile market

Markets can go up and down at a moment’s notice. For many, market fluctuations can be quite stressful. It also can be difficult to think long term when the present seems dire. When down times do happen, people often turn to their employer for questions regarding their retirement plan.

“Employers are the first line of defense in terms of throwing their employees a life preserver,” said Ryan Stover, principal for MMA Retirement Services. “One way employers can help is by staying ahead of an economic downturn. Markets are cyclical, and educating along the way — not just in times of crisis — is important.”

This often comes in the form of providing access to independent financial counselors offered through an employer-sponsored benefit. “What we’ve found to be most effective is when an employee can engage with a financial professional and talk about their specific situation,” he said.

Trend 2: The convergence of retirement and wealth

These days, employees are asking their wealth managers more about retirement and asking their retirement advisors more about wealth management. People want more holistic advice when it comes to their financial well-being. In this case, employees are becoming increasingly interested in how their retirement planning affects their wealth and vice versa.

“It’s mission-critical to engage in that conversation as early as possible,” Stover said. “There is a point in time where an employee needs to take a close look at what they’re saving, what their balances are, what their goals are and what their timeline is. The most an employer can do is make it easy to access professional help.”

Trend 3: Alternative assets

Interest in alternative assets has increased recently for several reasons, with inflation and a desire to diversify investments as the major factors.

Related: 2022: 10 things that defined the year in pensions

“For the most part, 2022 was a year that people would want to forget,” said Tim Swanson, chief investment officer for Compass Financial Partners. “It’s logical that when you open up your statement and see the path you’re on is continually losing money, you’d want to do something different. It’s like saying, ‘My head hurts, because I’ve been banging it against this wall for a long period of time. Maybe I should stop banging my head against the wall.’ People look to alternative assets because many are real, physical assets that tend to do better in periods of time when the economy is humming.”

Trend 4: Inflation and potential recession

Continuing inflation and the risk of a potential recession are top of mind for most people.

“That’s evidenced by what the Fed projections are showing,” said Zach Rosenoff, senior investment analyst for MMA Retirement Services. “The majority of forecasters agree that inflation will get back in check, loosely meaning inflation averages somewhere in the 2% to 3% range over the relative near future, such as a three-year window.”

These trends can provide a solid foundation for building an effective benefits strategy for 2023 and beyond. “Found in all four of the trends is one simple message — be proactive, not reactive,” the report concluded. “It’s critical to understand and address risks before they arise and to not panic when they do.”