Pandemic Scrambles Fund Employees’ Retirement Timelines

Jan 25, 2021 | Ignites

By Beagan Wilcox Volz

The pandemic has thrown a wrench into the retirement plans of some fund industry employees. One high-profile case of this is Barbara Novick, a cofounder of BlackRock, who is credited with building a powerful lobbying arm within the world’s largest manager.

Novick told colleagues in early 2020 that she planned to retire last summer. But with the pandemic upending the markets, CEO Larry Fink asked her to stay on a few more months, The Wall Street Journal reported. Next week, she will transition from her role as vice chairman to senior advisor.

“It’s a trying period for the industry,” says executive recruiter Lawrence Lieberman. “And as a result of that, key individuals who have wanted to retire, have been, in lots of instances that we’re aware of, asked to delay their retirement.”

Executives who decided last year to push back retirement will likely see those plans through in 2021, says Lieberman, senior managing director of Princeton, N.J.-based Orion Group.

Fidelity’s president of personal investing, Kathleen Murphy, is doing exactly that. Murphy, who has led the $3.6 trillion division for the past 12 years, first told CEO Abigail Johnson about a year ago that she wanted to retire, the Journal reported last week. But she stayed on until the pandemic’s impact on the firm lessened.

“This past year, Kathy helped to steer Fidelity through a global pandemic while remaining steadfast in our commitment to our clients and associates,” Johnson wrote in a memo to staff that was cited by the newspaper.

Fund industry employees are far from alone in altering their retirement timelines due to the pandemic and its fallout. The pandemic has changed the retirement timeline for 30% of Americans, according to a Harris Poll survey of about 2,700 people conducted over the summer on behalf of Northwestern Mutual.

About 20% of those surveyed said they plan to delay retirement, and 10% will retire earlier than anticipated, the survey found.

The number of older Americans who plan to postpone retirement may be even higher, a separate survey suggests. Some 40% of those between the ages of 50 and 64 said they are likely to work longer than planned, according to a May survey conducted by Wells Fargo and Gallup.

More broadly, the pandemic has led many people to reevaluate their priorities in life, and this has impacted their retirement plans, says Jeanne Branthover, DHR International’s global leader of financial services and cohead of its New York office.

Some women in high-level positions at financial services firms have delayed retirement “because they feel that their people need stability — seeing them stay,” she says. “Change can be good, but during an uncertain time, change can be very unsettling to employees.”

Some people who before the pandemic had planned to retire in 2020 decided to continue working instead because they wouldn’t be able to do the things they wanted to do in retirement, such as travel or spend more time with grandchildren, says Andrew Nelson, director of workplace advisory at Human Investing, a Lake Oswego, Ore.-based financial planning firm.

“Their thought process is, ‘I might as well just keep working,’” he says. “[T]here’s not the life to retire into that they had imagined.”

In other cases, however, the pandemic has led executives to retire sooner than they had planned because they decided that “family [and] health … are more important [to them] than staying a few more years at work,” Branthover says.

And for some, the decision to retire earlier than planned has stemmed from being laid off or furloughed.

Shops that have offered buyouts or laid off employees in the past year include American Century, BNY Mellon, Franklin Templeton, Hartford Financial Services, Invesco, Northern Trust, Prudential, State Street, TIAA and Wells Fargo.

Nearly 80% of recently polled Ignites readers said they expected that buyouts and layoffs would lead employees who are further along in their careers to retire from the industry. Some 133 people participated in the October survey.

The pandemic has had a disproportionate impact on older Americans. As of April, the rate of employed U.S. workers age 65 or older had decreased by about 16%, compared with an 11% decline for workers older than age 16, according to a June paper by the National Bureau of Economic Research and Tulane University.

Nearly 50% of retirees say that they left the workforce earlier than planned, according to Employee Benefit Research Institute. About 35% of those did so because of a hardship, such as a health problem, while another 35% said they did so because of changes at their company. The remainder said they could afford to retire earlier.

In addition, the definition of retirement is also changing, and many people believe some type of work or volunteering is a key part of retirement, says Heather Hooper, chief retirement officer at Retirement Wellness Group, which advises plan sponsors.

Some people continue working in some way into their later years because it gives them a sense of purpose and they find it fulfilling, she says.

“I can almost guarantee that I’m never going to stop working,” she says, adding that she will likely volunteer, serve as a mentor or consult after she retires.