When the stock market is uncertain, your share plan communications have to work that little bit harder. Here’s why (and how).
We recently looked at inflation’s impact on share plan buy in, and the effects of the National Insurance rise. With nearly everyone feeling the squeeze, how do you keep the conversation upbeat and communicate good reasons to invest?
Building on that theme, here we take a look at a specific piece of the puzzle: managing share plan communication during a downturn. How can you support participants who are feeling anxious about heightened global and stock market uncertainty? How do you address their fears, and discourage them from making knee-jerk decisions when they see worrying headlines about stock market blips?
1. Ease Anxiety
Seasoned investors are used to riding the ups and downs that inevitably come with being a shareholder, but less experienced ones aren’t. Employees with money in company share plans or pension schemes, but with little else in their investment portfolio, often fall into this bracket. They might be tempted to make rash decisions about opting out when they see worrying headlines about the markets. But with the right internal communication and education, you can empower your people to make the right choices for them, and allay any fears when stock markets do inevitably take a tumble from time to time.
First and foremost, the more knowledge employees have about how share plans work, the better. This includes the risks involved, and how these weigh up against the benefits on offer. Anxiety is often created by a fear of the unknown – so if you fill in those knowledge gaps, you’re far less likely to see employees panic or worry further down the line when they think their share plan might have hit a rough patch because of what’s happening in the news.
2. Build confidence
One of our clients creates an educational blog, aimed at both its first-time share plan participants and those wanting to learn more about how their share plan works. It puts things into context to explain, for example, how the company’s performance has remained strong despite the effects of the recent pandemic. It also encourages participants to follow its share price, pointing to resources that allow them to do so.
Through the use of clear, everyday language and digestible infographics, this blog paints a transparent picture. This builds confidence because it helps people – and particularly those who might be unfamiliar with the world of stocks and shares – to understand the bigger picture. We think it’s a great example of best practice communication, because when people feel informed, they’re far less likely to be driven by fear or worry.
3. Explain the technicalities
It can be unnerving seeing the value of your portfolio tumble, and you can feel powerless. Anxiety can cloud judgement and prompt sudden decisions when stock market performance is low, when sometimes the best thing to do is remain calm and wait for things to level out. But losses are nominal until a share is actually sold. While that in itself may seem an obvious message to a seasoned investor, for a less confident one it can be powerful, and create a reason to stick with a share plan they may otherwise have bailed on.
4. It’s all in the messaging
There are all sorts of ways you can create employee confidence around share plans and other investments, and it’s all in the messaging.
For example, when you educate employees to think of a share plan or pension pot as something that can help them achieve their long-term financial goals, they’re less likely to worry about the short-term impacts of stock market fluctuations. Helping your people understand dividends can also help them trust that their money is being looked after. And education around the diversification of your company stock portfolio, and how this helps reduce overall risk to investors, can be another way to increase confidence among your share plan participants – both at the buy-in stage and during difficult times.
Our best piece of advice, above all of this, is to take a temperature check. Talk to your employees to uncover any fears or worries they may have. Now is as good a time as any – everyone has been hit hard by the pandemic, inflationary rises and now news of the devastating conflict in Ukraine. These are difficult times, on many fronts. As an employer, you may feel just as bewildered by the terrible world events as your employees do. But while you can’t fix the big-scale crises, you can support workforce by showing you are listening to their concerns and looking out for their financial wellbeing, and this can help ease any personal and emotional struggles they may be experiencing.
We understand share plans and employee engagement. Want to know more about building reassurance and trust in your share plan communications? Get in touch.