With $300 billion up for grabs from affluent investors planning to roll over assets from former employer-sponsored retirement plans (ESRPs) into IRAs, 2012 is proving to be anyone’s game.
Having spent a number of years growing their DC plan balances, investors are reviewing their options carefully to ensure their retirement dollars continue to flourish – or at least stay intact.
What follows is a summary of key findings and related implications for financial professionals, distributors, and asset managers.
1. The Rollover IRA consideration pool has widened dramatically and now comprises more full-service providers than in previous years. While traditional online distributors are poised to retain the greatest percentage of their current ESRP assets, investors are warming up to more full-service providers, indicating a need for added support navigating the current marketplace.
- Full-service advisory firms across the National, Regional, and Independent channels are making significant in-roads with one-quarter or more of their respective customers planning to roll internally.
- As this momentum builds, traditional ‘discount’ providers must step-up their guidance and ‘advice’ offerings to ensure retirement assets remain in their coffers.
2. Rollover-related research is on the rise. Within the past 12 months, there has been an uptick in the amount of rollover research being conducted.
- More investors are researching rollover options online, contacting their former providers to inquire about rollover solutions, and contacting former employers for rollover kits.
- As investors become more knowledgeable, providers need to clearly demonstrate why their rollover solutions are best and equip plan sponsors with educational materials.
3. Ease of doing business and third-party recommendations are increasingly vital to Rollover IRA provider selection. When asked, ease of doing business is a key reason for selecting a rollover provider, particularly among unadvised investors. (Exhibit 1)
- Interestingly, alongside the greater adoption of social media, recommendations from friends, colleagues, and employers have grown in importance among all investors.
- Since many investors are choosing to bypass provider information and ask a trusted individual about their rollover experience with a particular provider, providers must ensure that the rollover process is efficient and error-free.
Overall, investors continue to have a healthy appetite for Rollover IRAs and the opportunity remains strong. However, as more full-service providers gain share, distributors and asset managers will need to work even harder to gain the attention of potential Rollover IRA candidates. The combination of product differentiation, unparalleled service, and a concerted effort to reach rollover candidates is the ticket to the big game.
About the Study
Investor Assets in Motion™ study was conducted by Cogent Research last November, surveying over 4,000 investors with at least $100,000 in investable assets, excluding real estate. The primary objective of the report is to help distributors and asset managers evaluate and maximize Rollover IRA opportunities.
The study investigates:
• Opportunities to gain Rollover IRA assets at the industry, asset manager, and distributor level
• Investors’ likelihood to roll assets from ESRPs held with former employers into Rollover IRAs
• Usage of and allocation to ESRPs and IRAs at the household level
• Specific steps investors have taken to get ready for retirement
About Cogent Research
Cogent Research helps clients gain clarity, obtain perspective, and formulate direction on critical business issues. Founded in 1996, Cogent Research provides custom research, syndicated research products, and evidence-based consulting to leading organizations in the financial services, life sciences, and consumer goods industries. Through quality research, advanced analytics, and deep industry knowledge, Cogent Research delivers data-driven solutions and strategies that enable clients to better understand customers, define products, and shape market opportunities in order to increase revenues and grow the value of their products and brands.