IRA rollover contributions in the U.S. surpassed $321.3 billion at the end of 2012, an increase of 7.3% over the previous year, with a “large portion” of the contributions coming from defined contribution plans, according to Cerulli Associates.
In 2013, rollovers rose even further to $357.7 billion, an 11.3% increase, Cerulli estimates in its not-yet-finalized 2014 study.
In its Retirement Markets 2013: Data & Dynamics of Employer-Sponsored Plans report, Cerulli found that IRAs represent the largest segment within the retirement market based on assets. IRAs, Cerulli said, “benefit from years of accumulation” in DC plans. However, the report says, “the lack of retirement income component on a widespread basis in DC plans means assets will continue to roll to IRAs, which will drive future growth in that market.”
Waldert notes that because participants “do not necessarily roll over their assets immediately after leaving their employer,” instead waiting months or even years to do so, Cerulli advises plan providers to inform participants that IRA accounts are available so assets don’t leave the provider if the participant decides to roll over. “Immediately connecting with separated participants is essential in capturing assets.”
Cerulli found that nearly 8% of advisors are retirement specialists, according to Cerulli’s definition. The insurance channel has the largest percentage because their companies are also recordkeepers and “it is a natural extension of other insurance products to business owners,” Cerulli states.
Meanwhile, dually registered and registered investment advisors (RIAs) are the “next biggest channels” due to the fiduciary requirements necessary to be a top advisor, Cerulli says. The “elite specialist advisors,” the report says, are in these channels.