Relationships Foster Success in Rollover Market

Retirees who have a positive relationship with their plan provider are more likely to keep their assets with that provider, a study found.

According to a LIMRA study, “Asset Retention: Keys to Success in the Rollover Market – 2012 Results,” each year, more than $350 billion becomes available for rollovers as retirees and pre-retiree workers leave their employers. The challenge for plan service providers is to find ways for their company to keep plan participants’ money under their management.

“We found that nearly 40% of participants make the decision to stay with their current plan provider, either through a retail or institutional relationship,” said Matthew Drinkwater, associate managing director, LIMRA Retirement Research. “It’s important for plan service providers to proactively reach out to participants. Those who have strong relationships and satisfaction levels with their plan provider are more likely to stay with them.”

The study found that several factors influence participants who stay with their plan: 

  • Retirees and pre-retiree terminations who were contacted by their plan providers when they left their former employers were much more likely to keep their money with the provider;
  • Personalized investment guidance and discussions of post-retirement needs in the years leading up to retirement; and
  • Financial advisers influence decisions to switch companies; but individuals whose decisions were influenced by provider-affiliated professionals were three times as likely as those influenced by non-affiliated professionals to stay with the plan provider.


On the other hand, says the study, nearly half of retirees and preretirees have not yet made an affirmative decision to keep their money in their current plan. Among those who roll over assets with another company, many cite consolidation of assets as the reason. Similar to past LIMRA rollover studies, the “three Cs” of consolidation, control, and convenience appear to be the top reasons for switching plan providers.

With rollovers to IRAs projected to grow to $575 billion in the next three years, Drinkwater noted that it is worthwhile for providers to pursue assets. “The study told us that in addition to reaching out to participants, the method of contact matters,” he said. “An in-person visit or a phone call is more personal than an e-mail or direct mail, and works better in building a positive relationship.”

Conducted in 2012, the LIMRA study surveyed 2,131 recent retirees and preretirees (ages 55 to 70) who terminated with their employer in the last three years, were involved in making financial decisions for the household and had at least $10,000 in their defined contribution plan at the time of retirement and/or termination.