CAP members seeking reassurance but not changing investments

While a flurry of capital accumulation plan member activity might indicate their anxiety amid an economic crisis, not many are choosing to make changes to their investments right now.

In meeting with record keepers, Rosalind Gilbert, associate partner in the retirement and investment consulting group at Aon, says plan sponsors are more eager than usual for data on CAP member behaviour. “Given that it’s a particularly crazy time, we asked the record keepers to bring more information — Are members phoning the call centre way more? What are they asking about? Where are they going on the member portal and what kind of things are they doing?” 

Over the past few years, CAP members have tended to favour online portals as a source of information on their retirement benefits. However, during the coronavirus crisis, record keepers have been inundated with phone calls and don’t have the capacity to handle that massive influx, although the industry quickly hired additional staff to return wait times to their regular levels. “Recently, it’s the call centre volume that’s gone up and the numbers are ridiculous, like 3,000 per cent,” says Gilbert.

Read: Will coronavirus push changes to CAP landscape forward?

By and large, she says plan members aren’t having a knee-jerk reaction to market crash in terms of moving their money. Rather, they’re calling to ask questions and seeking reassurance that there’s someone they can talk to about their concerns. “‘What should I be doing? And what should I be thinking about? And where do I go to get this information?’ It’s not huge, crazy reactions that record keepers were concerned about.”

Indeed, during the month of March, Sun Life Financial only saw 1.8 per cent of CAP members asking to make changes to their investments, says Shawn Kauth, the insurer’s assistant vice-president of strategy, product and partnerships for group retirement services. 

Given the circumstances, that compares favourably to the less than one per cent who’d typically ask to make a change during a month, he says, noting not all these plan members are looking to mitigate risk either.

Read: Gather data on CAP member behaviour to inform communications in a crisis

“When they’re making a change, about 47 per cent of them are choosing to de-risk. They’re going to funds with less equity exposure,” says Kauth. “But a third of them are going to funds with a little bit more, so they’re seizing an opportunity. It’s not a big volume and, generally, [members are] becoming a bit more conservative.”

The spike in plan member calls to Sun Life has now tapered off, he says, likely due to increased transparency in how the government is handling the virus, including subsidy programs. However, he believes another jump in activity might be on the way.

“The full wave of the impact of layoffs has not yet hit. The insurers and the record keepers, we’re not seeing massive terminations or withdrawals yet. We haven’t seen any reduction or change in the volume of contributions . . . but I expect we might start to see that. Some members will stop contributing or change their contribution levels. We haven’t quite gotten to that stage, but that’s the sort of thing we’re taking a look for. We’re watching out for those leading indicators.”

Read: Are CAP sponsors changing contribution rates amid coronavirus?