Building resilience for retirement: Evolving defined contribution plan menus in a new regime
A key feature of the new market regime is that we are in a world shaped by supply. Structural changes are not just from the long tail of the pandemic, but aging populations, geopolitical tensions and the energy crisis are also straining global supply chains and impacting economic output.
Looking ahead, we expect these structural changes will contribute to continued inflation pressure, cross asset class volatility and interest rate uncertainty. Central banks cannot solve supply constraints. That leaves them raising interest rates and engineering recessions to fight inflation, which is why the relationship between stocks and bonds may be more dynamic moving forward. The recent bank failures of Silicon Valley Bank and Signature Bank highlight examples of financial cracks that can emerge under these conditions.
It is important to provide participants with an appropriate set of tools to help navigate this new environment and support their retirement objectives. For plan sponsors and advisors, this may require evolving investment menus across asset classes.
In this guide, we highlight four investment actions for plan sponsors and advisors to consider within a plan’s core menu. While our focus is on active core menu strategies, we believe many of these themes are relevant for the QDIA as well, including in the selection and evaluation of target date solutions. It is important that plan fiduciaries consider these ideas among other plan-related factors, as each action may not be applicable to all plans.
Investing involves risk, including possible loss of principal.
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