Educating employees on the current economy crisis.....

I had a phone call from one of our vested employees this morning who was panicking due to taking another major hit on his 401k (his portfolio is down        -40.5%). We have received several calls like this and I am starting to wonder if it might not be better to be pre-emptive. I am tossing around the idea of writing an "article" talking about what's going on in the economy right now and what economists are recommending we do about it. Our employees are panicking but not taking the time to read and listen to gather information to become better informed. So my question is this: are there any laws or regulations regarding giving information to our employees? I don't want to cross the line by giving them advice and open ourselves up for possible lawsuits, but at the same time I feel we have a responsibility to help them educate themselves. Has anyone else sent out any memos or information regarding what's going on with the stock market and economy right now?


  • 8 Comments sorted by Votes Date Added
  • Since you are not dispensing advice, but only passing on information, you should be fine.  See if your 401(k) provider has any info.  They are usually happy to come in and give a talk or diseminate information whenever you need them to do so.
  • I agree with efeldman.  I would have your provider come in and talk individually with the employees. They are the "experts" on this matter.



  • A third vote for seeing what resources your recordkeeper/provider has to give out.  I would not personally write something.

    The question also becomes are you a fiduciary of the plan?  i.e. someone who could be held liable for bad plan decisions?  If so, your responsibility is much higher than others.  Could this communication throw you into a fiduciary position? It might.

    "....The duty to act prudently is one of a fiduciary’s central responsibilities under ERISA. It requires expertise in a variety of areas, such as investments. Lacking that expertise, a fiduciary will want to hire someone with that professional knowledge to carry out the investment and other functions. Prudence focuses on the process for making fiduciary decisions...."

    I am a fiduciary on our 401(k) plan and I would never write something because I lack the expertise.  However, I am responsible to make sure the plan fees are reasonable and the plan is run in a manner that is to the best interests of the employees.




    On HR.BLR.Com, there is extended discussion of employers' obligations and liabilities regarding employees' 401(k) investments.  This discussion can be found at the link  below:   (note :  you have to be a subscriber to to see it.)  If you're not, and you want a copy, email me at, and I'll send it to you.  (I'm a BLR staffer)





  • We had our 401k advisor lined up to present "lunch and learns" the last week in September.  He also wrote a one page payroll stuffer we sent out on the Thursday before his arrival.  Also, after the presentations, we allowed him to walk around our facility and chat with folks one on one.
  • I have been trying to get our 401K company out to do something like that, but they really aren't being very cooperative. In the end I just put a note in our weekly newsletter with the online link and phone number for Principal's website and customer service. We ARE the fudiciaries of the plan and I definitely don't want to be held liable. Thanks for the advice!
  • All plan sponsors are automatically considered fiduciaries. This is not something you can avoid. There are however various safeguards that can be used (ie. ERISA Section 404(c) compliance) to provide relief of some fiduciary liabilities.

    Depending on the size of your plan, Principal Financial may or may not have assigned your company an account executive. One thing I can assure you of, is that Principal is not going to "advise" your employees. This is the job of the broker of record, who may or may not be licensed to do so. Unfortunately because the Principal plan is an insurance based plan (group annuity), the SEC and FINRA have allowed individuals with only a life insurance license to broker the plans to businesses. A life insurance license does not qualify the broker as a Registered Representative or a Registered Investment Advisor.

    What State are you in?


       - Jay


  • That seems strange that your 401(k) company is not cooperating with you. That is part of their job. Our people have come out several times since the economic downturn and have also done phone conversations with our employees who were panicing. I would check with them again and make sure you are talking to someone in charge and who knows what they are doing. If they are not interested in helping your employees it may be time to switch companies.
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