High-balance retirement plan participants aren’t showing much loyalty to plan providers when it comes time to rolling assets into an IRA, and this could be a major opportunity for advisors.
Just 25% of plan participants who have performed a rollover of $200,000 or more since the middle of 2008 rolled all or some of the funds into an account held by their existing plan provider, according to a survey released Thursday by Spectrem Group.
According to the survey, 53% rolled over at least part of their balance to firms where they held other investments and 39% transferred funds to firms where they had an existing IRA.
Spectrem estimated the high-balance IRA rollover market, which includes both high-balance rollovers and the consolidation of IRA accounts totaling $200,000 or more, consists of more than 935,000 individuals with $365 billion of assets.
“With just one in four high-balance retirement plan participants selecting their existing plan providers at rollover time, it’s clear that plan providers have an opportunity to make significant gains in the $365 billion high-balance IRA rollover market,” said George H. Walper, Spectrem’s president. “Further, less than two-thirds of these participants used an advisor in the process, suggesting that both providers and advisors should work to improve communications with this important group.”
Fifty-nine percent of high-balance participants used an advisor in the rollover process, with the remainder either requesting a hard-copy rollover application directly from their providers (22%) or handling the process online (19%).
The survey is based on online interviews conducted in July of 650 individuals who rolled over or consolidated balances of at least $200,000 from employer-sponsored retirement plans within the prior two years. A subset of 503 performed a rollover.