Everyone knows that the Baby Boomer generation represents the wealthiest generation in American history–it controls more than $7 trillion in wealth that will be spent in retirement or transferred to heirs. It’s a no-brainer that a majority of advisors concentrate their marketing efforts on the upcoming wave of Baby Boomer retirees. Moreover, IRA rollovers are particularly attractive for advisors–the assets are sitting in an account, waiting to be transitioned.
But what many advisors may not know about rollovers is that investors transitioning between jobs represent the majority of IRA rollovers. According to Financial Research Corporation (FRC) data, 70% of rollovers are the result of a job change.
AdvisorBenchmarking survey results show that only a very small percentage of advisors’ clients were using advisory services when reinvesting their lump-sum distributions during a job change. For example, more than one third (37.44%) of advisors report that less than 20% of retirement plan rollovers come from job changers. Only 8.5% of advisors say that more than 80% of their clients’ retirement plan rollover assets come from job changers. The amount of assets that are out there, but clearly not coming to RIAs, represents a substantial opportunity for those interested in pursuing this lucrative market.
While the “job changer” segment of the market holds opportunity for advisors, pursuing this market segment requires a degree of specialization. You’ll need to be proficient in helping workers through their transition–especially in the areas of severance, stock options payouts, budget and income planning, and tax and health care coverage issues surrounding job changes.
Once you build your expertise in the many areas–both financial and emotional–of the job-changer market, how do you find job changers? This market segment is difficult to enter and it’s important to develop an appropriate marketing plan to reach these potential clients. According to Kevin Deckert, from Deckert Leahy, Inc. in Richmond, Virginia, advisors should concentrate on three areas when creating their market strategy:
- Developing good relationships with human resources departments at local firms
- Establishing good connections with CPAs
- Providing public marketing and public seminars on switching jobs
Simplifying the Rollover Process
A classic marketing rule is to determine the “pain” in a process and figure out how to salve it. This is particularly relevant for the rollover market. As you well know, it can be a headache to complete rollover forms, photocopy statements, and make follow-up calls to the current and new custodians to ensure that the rollover is completed. You can take that task on for clients. And you don’t have to do it alone–a potential solution may be outsourcing the rollover paperwork. For example, RolloverSystems, Inc. –a provider of technology-based 401(k) and 403 (b) rollover products–has simplified the rollover process for advisors, making it possible to cut down on rollover paperwork, reduce the back and forth between you and the plan administrator, and ensure a positive customer experience for your client. The company’s first product for investment advisors, RolloverMarket, provides a one-stop solution for you to employ with job changers who are seeking an easy way to roll over their 401(k) retirement savings into an Individual Retirement Account (IRA)–thereby helping them avoid potentially onerous tax and investment losses. Online software includes a rollover platform where top-tier financial institutions present side-by-side rollover IRA offers and plan participants can choose the investment option that’s best for them.
Rollovers represent a large portion of assets for boomers, and targeting job changers may represent a large opportunity for your business, as these assets can flow in, regardless of market conditions. It may be worth your while to investigate how to integrate a rollover offering among your product offerings. For firms interested in a more expeditious implementation, there is always the option of outsourcing. Since it is very likely that a majority of your clients will go through at least one job change in their careers, being ready and able to help those through the process may lead to not only more income for your firm, but also to happier, more engaged clients as well.
The concerns expressed by clients about retirement income and gifting provide an opening for advisors to deepen and extend their client relationships by discussing these fears with older clients and offering valid solutions to meet their wealth management and personal goals.