Trump Could Make Surprising Tech Announcement Any Day

Elon Musk is heavily invested in a cutting-edge new technology. In fact, Musk has turned the new president on to this breakthrough. And President Trump could make an announcement any day that could spike the price of stocks in this sector.

Q4 Market Roller Coaster Reveals Retirement Planning Pitfalls

Benzinga Advisor
January 11, 2025

The roller coaster markets of the last quarter of 2024 hold some important lessons for how advisors should approach retirement planning with their clients.

While last November’s election sent the markets on a rally, with the S&P 500 ending up 5.9% that month, the same index fell 2.4% the following month, as the much-vaunted Santa Claus Rally failed to appear and Federal Reserve Chairman Jerome Powell signaled slower rate cuts in the future.

But despite this turmoil, American investors were very restrained. Data from the Alight 401(k) Index shows that on average only 0.011% of 401(k) balances were traded daily in December. Only two of the month’s 21 trading days showed big spikes in trading activity, including December 18, when Powell warned that rate cuts will be slower in 2025 and 401(k) trading activity jumped five times over.

For advisors, this shows that most prefer a one-and-done approach to retirement investing that they can decide on once, and then never touch. The enduring popularity of target date funds shows as much, though Alight's Rob Austing points out that target date funds also had the most withdrawals in December. This suggests that on those really volatile days, such as December 18, investors can see even target date funds as being too risky.

It’s important, then, that advisors work with clients to select target date funds with a date and risk profile that really suits the client, so they feel confident sticking with it through thick and thin.

Another lesson is that even hands-off clients, even during largely hands-off markets, may well look for changes during big market events. Advisors need to be prepared, with plans for how to respond, and with adjustments and reviews to reassure and readjust.

According to Alight, on 14 of December’s 21 trading days, equity funds were the most traded in 401(k) accounts. This suggests that retirement investors may be overexposed to equities, forgoing the benefits of diversification. Recent stock market performance makes this understandable, but advisors should be ready to advise clients on the risks of forgoing diversification.

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