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IRA Rollovers of $303 Billion Can Be Targeted: Pershing Retirement Study

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Pershing LLC released a new report Monday that explores the advisor opportunity in the affluent investor and small business owner retirement markets. The company says “The Secret Knock: Unlocking the Retirement Opportunity” is an independent study that offers specific, “actionable insights for financial services firms on how to accelerate their retirement business in the post-crisis environment.”

Developed in conjunction with Mercatus, a strategic consulting and investment firm, the study finds that financial services firms and professionals who position themselves as the primary retirement advisors for their clients are more successful in capturing new retirement business and money in motion.

“The key driver for conducting the study was the pressure advisors are under, coming out of 2008, to find new areas of business growth,” says Robert Cirrotti, director at Pershing. “We identified anything related to the retirement space as one area of tremendous growth, and we want to make people aware of any products and enhancements that we have that can help them to become their clients primary retirement advisor.”

When viewed as the primary retirement advisor, Cirrotti says, share-of-wallet of the client’s business the advisor receives increases by 50%, something that surprised him about the survey results.

“The sheer size of the crossover opportunity for advisors was another surprise,” he adds. “The way in which the client views his personal planning needs, as well as those for his business, are very similar. And it goes both ways; you’ll be just as likely to get an opportunity to help with his business planning needs if your already helping with his personal planning needs, and vice versa.”

Cirrotti says this marks the beginning of a commitment on behalf of Pershing to assist advisors in aggressively growing their presence in the retirement market.

Key findings of the study include:

  • There is a $303 billion retirement money-in-motion opportunity—The movement of retirement funds each year in the form of IRA rollovers, IRA transfers and transfers of taxable money earmarked for retirement is significant.
  • Becoming the retirement solutions provider drives significant asset gains—The retirement solutions provider relationship is central to capturing retirement money-in-motion among the affluent, as share of wallet increases from 50% to 76% when a financial professional has established the retirement solutions provider relationship.
  • Significant crossover opportunities exist with small business owners—Small business owners present a unique opportunity for financial professionals who have made retirement a core part of their business. According to the study, 61% of small business owners have the same financial professional advising them on their personal finances and business retirement plan assets; among those working with different professionals, 38% would consolidate with one professional.
  • Investors remain cautious of risk—The decline in assets during the financial crisis left many skeptical of the financial services industry and investors have shifted their focus from accumulation and generating alpha to managing risk and building downside protection into their retirement plans. For example, financial professionals who provided downside scenarios to their clients experienced a 19% increase in net assets relative to their peers.

“One thing we’ve seen is that clients are much more wary, which isn’t surprising,” Cirrotti says. “Therefore, they are scrutinizing the advisor’s partners and service providers much more so than in the past. They want to know that the organizations behind the advisor are sound. That’s why having a large and well-established firm like Pershing, and its parent corporation BNY Mellon, behind them helps quite a bit.”


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