According to the Cerulli Associates report “IRA Rollover and Retention: Strategies and Positioning,” nearly 40% of advisers’ books of business are attributable to rollovers, which are viewed by advisers as the ideal opportunity to capture client walletshare.
“A majority of advisers are using the rollover event to get clients focused on the need for a comprehensive plan. This approach undoubtedly reveals additional asset gathering opportunities beyond the initial rollover, as well as the chance for more fee opportunities uncovered in the planning process,” says Tom Modestino, Senior Analyst and author of the report.
The report explains that a significant number of advisers are also using the rollover event to set client wheels in motion for consolidation of assets held at different firms in different account types.
When it comes to the methods that advisers are using to capture rollovers, Cerulli says most are relying on “tried and true” methods, such as referrals from existing clients. However, the report goes on to note that most advisers are looking for help in improving their odds of capturing rollovers and see education and training as key means of doing so.
Still, among the advisers surveyed by Cerulli in 2007, nearly half said they “never” took advantage of employer relationships to target rollovers, and just 13.5% said they took advantage of that channel “always.” Similarly, 49% said they “never” target rollovers from a qualified plan sold by an adviser, whereas just about one-in-four said they “always” did (the remainder did so “sometimes”).
Nonetheless, the adviser interest in rollovers presents opportunities for manufacturers, according to the report’s authors. Although less than half of advisers view training focused on effectively targeting rollovers as beneficial to their practices, the Cerulli report says that better marketing materials and retirement income training are viewed as being instrumental in helping to capture additional rollover dollars, according to the report.
“This indicates that training, in general, is viewed by advisers as a way to increase rollover business and stay ahead of the competition. Manufacturers and broker/dealers who create programs that deliver this advice will be serving their advisers well and meeting their needs head-on,” said Modestino, in the report.