Brokerages Big Winners in Rollover Game

As retirees begin rolling trillions of dollars out of their 401(k) plans, large brokerage houses will likely be among the first places they turn, according to Dow Jones. A Cerulli Associates report shows that the vast networks of financial advisers affiliated with big firms will likely recommend their customers to transfer 401(k) money to bank Individual Retirement Accounts. “It’s all about who has the relationship,” said Tom Modestino, a senior Cerulli analyst and author of the report. Those already controlling employees’ 401(k) plan administration are likely to be among the first retirees turn to when looking for a place to move their money, he said. Citigroup’s Smith Barney division has seen a 25% jump in demand from Baby Boomers of all income ranges looking for Rollover IRAs, according to managing director Ellen Beslow. “For many people, it’s the largest sum of money they will see in their life. They don’t want to make a mistake,” she said.  Investors also want to se the money they’ve accumulated last, encouraging them to seek professional advice. Fidelity,the largest 401(k) provider, has made concerted efforts to retain clients, emphasizing that rollovers are not part of a transaction, but rather an overall strategy. Rick Meigs, president of the 401Khelpcenter.com noted that brokers are working hard to improve their connection to clients, but there is more to be done. “Most of the plan providers are not doing a good job of capturing these rollover dollars,” he said. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.