Data & Research February 10, 2015

Rollover Market Could See $382B This Year

About half of affluent investors with former workplace retirement plan assets could move that money into an individual retirement account (IRA) in 2015, says Cogent Reports.
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According to the 2014 annual Investor Rollover Assets in Motion study, a potential $382 billion could transfer into IRAs this year. Providers hoping to get a piece of the action should set their sights on Generation X and Generation Y investors, who are the likeliest to take action. The reason for the increased amount of money in motion is a rise in the number of households with at least $100,000 in investable assets, Cogent Reports finds.

Gen X and Gen Y investors with at least $100,000 in investable assets hold the largest proportion of their assets in former workplace-based retirement plans, and say the likeliest action they’ll take in the near future is to roll those assets over into an IRA.

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A combination of job jumping and experimenting with different careers has helped these younger investors accrue sizeable balances in these former employer-sponsored plans, according to Sonia Sharigian, senior product manager at Market Strategies International and author of the report. “The younger the investor, the more receptive and ready they are in terms of taking action,” Sharigian says.

Almost two-thirds of Gen X investors (61%) and 74% of Gen Y investors with former workplace retirement plans intend to roll funds into a rollover IRA within the next year, according to Cogent’s findings.  

According to the report, the distributor firms best positioned to capture rollover assets from investors with a former retirement plan are: Vanguard, Charles Schwab and Fidelity Investments.

Low fees and strong brand reputations are key factors that Gen X and Gen Y investors cite when choosing a rollover IRA provider for former plan assets, Sharigan says. “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,” she notes.

The top 10 preferred rollover IRA destinations are:

  1. Vanguard
  2. Charles Schwab
  3. Fidelity Investments
  4. Edward Jones
  5. Ameriprise
  6. E*TRADE
  7. USAA
  8. Merrill Lynch
  9. Wells Fargo Advisors
  10. T. Rowe Price

 

Cogent Reports is a division of Market Strategies International.

The Investor Rollover Assets in Motion report drills down into the assets investors hold in current and former employer-sponsored retirement plans to help firms maximize their opportunity to gain IRA rollover assets. The report provides sizing for the rollover IRA market, profiles investors likeliest to roll over plan assets, identifies the financial services firms best positioned to capture assets and analyzes the specific steps investors have taken to prepare for retirement.

 

Deals & People February 10, 2015

Groom Boosts Plan Funding and Restructuring Group

Employee benefits law firm Groom Law Group expanded its pension plan funding and restructuring practice with the hire of Joshua Shapiro as a senior actuarial adviser.
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John McGuiness, executive principal at Groom, says the plan funding and restructuring practice works with defined benefit pension plans facing financial difficulties—whether single employer, collectively bargained, or multiemployer plans.

“We are sure Josh’s expertise, from single employer plans to the recent multiemployer funding legislation, will prove particularly valuable with respect to our work for defined benefit plans and their stakeholders,” he notes, adding that now is a challenging time to run a pension plan of any type, healthy or otherwise.

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Before joining Groom, Shapiro spent five years as the deputy director for research and education at the National Coordinating Committee for Multiemployer Plans (NCCMP). In that role, he was a principal member of the team that spearheaded a legislative effort that resulted in passage of the Multiemployer Pension Reform Act of 2014. Prior to his work at the NCCMP, Shapiro worked as an actuary at a number of actuarial consulting firms working with pension plans.

Shapiro is a fellow of the Society of Actuaries, a member of the American Academy of Actuaries, and an enrolled actuary.

More information about Groom Law Group is available at www.groom.com. 

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