(401k Specialist) - With so much talk of inflation, Ubiquity Retirement + Savings polled plan sponsors and financial advisors on their expectations on the market by the end of 2023. For some, the results were quite the opposite of current market responses.
According to the Ubiquity “State of the Industry” survey, 56.4% of financial advisors believe inflation will be lower by the end of 2023, vs. expectations in Q4 2022. Responses from plan sponsor were on the contrary—57.3% of employers expect inflation to be higher by year’s end.
“One party is going to be right,” said Ubiquity Founder and CEO Chad Parks in a press release. “It will be interesting to see where inflation is at the end of 2023 and whether plan sponsors or financial advisors had a better feel for this in Q4 2022.”
Despite the differences in opinion, both plan sponsors and advisors agree there will be two interest rate hikes from the Federal Reserve this. Concerns over inflation and low investment returns were still reported by both groups, with 57.2% of plan sponsors citing worries over inflation and 56% on poor investment returns. On the advisory side, 59.4% said they have concerns over inflation, while 58.4% mentioned fears over lower investment returns. Over half (57.4%) of financial advisors and 61.9% of plan sponsors expressed apprehension on the impact a potential recession would have on 401(k) plans in 2023.
As an answer to their own concerns, most plan sponsors (80%) say they will maintain their employee match throughout the year.
“With both groups anticipating two rate hikes from the Federal Reserve in 2023, low-cost and effective retirement plan solutions are a necessary component of a small business offering and benefits plan,” said Parks.
The research comes as the retirement industry grapples with the possibility of a recession this year, combined with current inflation worries and overall market uncertainty. TD Wealth recently reported on retirement planning concerns from business owners, who are struggling with savings given the current inflationary market and supply chain issues.
Women are also feeling the effects, with a Nationwide Retirement Institute survey reporting an upswing in delayed or canceled retirements since 2021.
Still, there is hope for participant, many of whom remain confident in their finances and retirement planning despite the doom-and-gloom.
By Amanda Umpierrez
January 12, 2023
