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Technology > Investment Platforms > Turnkey Asset Management

IRA Rollovers & Relationships

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A report released in early September by Spectrem focuses on a survey of nearly 1,000 investors who had recently made a rollover or had the opportunity to rollover assets, and found nearly one-third chose Fidelity as their IRA provider. Vanguard was a distant second at 11 percent.

In many cases, there was a significant gap between the number of investors who considered a firm, and the number who actually selected that firm as their IRA provider. While one-quarter of investors considered Charles Schwab, just 7 percent ultimately chose to roll their assets over. Similarly, Vanguard, which was selected as the IRA provider by 11 percent of investors, was initially considered by 24 percent of investors. Fifteen percent of investors considered JPMorgan Chase, but just 4 percent finally decided to roll their assets to that firm.

Why did investors finally decide to go with a different firm? Spectrem found the primary reason for investors who changed their minds about where to roll over, was their financial advisor. “Almost 70 percent of investors turn to their financial advisor for advice concerning their rollover,” according to the report. “Not surprisingly, in many cases, the advisory firm (i.e. Morgan Stanley, Edward Jones) offers an IRA account solution of their own.”

Also important to investors are customer service and low management fees. Fully 70 percent of investors said they want “customer service from a person.” According to Spectrem, “To the extent that an individual is relying upon their advisor to choose a provider, it is not surprising that they already feel they have a person and not a system.” Almost the same percentage of investors rated low investment management fees as an important factor.

As for why Fidelity is so popular, Spectrem concludes that the firm’s brand familiarity may be the largest reason. “Once an investor is familiar with a brand name, they will go to the website and find many of the selection criteria which drive decisions,” according to the report, namely, ease of opening an account, 24/7 access, help with setting up an account and availability of multiple fund types.

Another factor in how investors choose their IRA provider is whether the client already has a relationship established. The study found nearly half of 401(k) participants who rolled assets into an IRA in the past two years chose an institution they already had an account with.

Danielle Andrus and Joyce Hanson contributed to this report.


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