Banks Capturing More IRA Rollovers from HNW Clients

A research report indicates that banks are capturing an increased share of retirement plan rollover assets from affluent investors.
A news release about the report from BAI Research and Financial Research Corporation (FRC), “2009 Retirement Study: Capitalize on Market Opportunities,” said banks snapped up 33% of the individual retirement account (IRA) rollover market in 2009, up from 23% in 2008, and 18% in 2007.

That compares to investment firms, which captured 57% of the IRA rollover market in 2009, down from 63% the year before, and insurance companies, which grabbed 9% of the rollover assets in 2009, the same as 2008. The data covers more than 2,500 mass affluent individuals between 35 and 70 years old with investable assets of at least $50,000, excluding defined contribution plan assets.

The report also indicated that overall wallet share capture among customers with a retirement relationship (76%) for banks denoted as the customer’s primary bank, is consistently and significantly larger than that of customers without such a relationship (26%).

Orphan 401(k)s remain an obvious opportunity, with $1 trillion up for grabs and 35% of mass affluent consumers holding an orphan 401(k) account in 2009, the announcement said.

“Going forward, banks and other financial institutions that are able to maintain compelling product offerings and services that are aligned with changing market conditions and investor preferences will be better positioned to retain and grow their marketshare,” said Bruce R. Fador, CEO of Financial Research Corporation, in the news release.

The online survey used for the report was conducted among a nationally representative sampling of consumers by Bellomy Research, Inc.