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IRA Rollovers Ramping Up

The IRA rollover market — already a large component of the nation’s retirement savings — could see another surge in the next 12 months, according to a new report.

More than one in two (51%) affluent investors with a balance in a former employer-sponsored retirement plan (ESRP) expects to move their money into a rollover IRA in the next 12 months, according to the 2014 annual Investor Rollover Assets in Motion study from Cogent Reports. That, coupled with an increase in the number of investors with more than $100,000 in investable assets, could mean a potential $382 billion transferring into IRAs this year, according to the report.

Most Amenable

The report also notes that those vying to capture these assets would be well served to target Gen X and Gen Y investors, who the authors claim are the most amenable to taking action. Additionally, according to the report, Gen X and Gen Y investors with at least $100,000 in investable assets hold the largest proportion of their assets in former ESRPs (the result of “early-career exploration and job switching”) and cite the highest likelihood of moving those assets into a rollover IRA in the near future. In fact, the report states that 61% of Gen X investors and 74% of Gen Y investors with former ESRPs intend to roll funds into a rollover IRA within the next year.

In addition, Cogent Reports identified the distributor firms best positioned to capture rollover assets from investors who own a former retirement plan. Vanguard, Charles Schwab and Fidelity Investments are the top preferred rollover IRA providers with the greatest potential to attract and retain these sidelined assets, according to the report, noting that “softer, more personal outreach is also influential among these younger investors, who also consider providers they have established relations with — especially firms that make them feel like a valued customer.” 

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