Retirement advisors could do well working with retirees or near-retirees by helping them transition into new retirement savings plans, according to analysis by Judy Diamond Associates.
The national retirement plan data publisher, a unit of LifeHealthPro’s parent company, Summit Professional Networks, found that one-fifth of the assets held in large 401(k) plans are held by retirees or pre-retirees who have not yet rolled out of their plans.
Judy Diamond looked the number of retirees still receiving benefits from or entitled to receive benefits from 14,508 401(k) plans with at least 100 participants.
It found 7.4 million such retirees out of a total of 62 million participants covered in the study. This group held an estimated $640 billion in assets in their 401(k) plans. That is roughly 22 percent of the $2.9 trillion in total plan assets included in the study.
The study’s sample looked at 87 percent of all participants and 85 percent of all plan assets nationwide in 2012, the most recent year for which a complete set of data was available. Its findings suggest several items for advisors to consider.
“Employers continue to incur costs when retirees remain in their plans and the retirees themselves may not be best served by the structure and mix of investments in their 401(k) plans after they exit the workforce,” said Eric Ryles, managing director of Judy Diamond Associates.
“Especially with increasing numbers of baby boomers preparing to retire, the financial advisors who know how to find them now and offer guidance on the transition to individual retirement accounts, such as Roth IRAs, will be in the best position to grow their market share.”
Judy Diamond is the leading provider of sales prospecting and plan analysis tools for benefits brokers, financial advisors, plan providers, and carriers serving the employee benefits and retirement markets. It offers access to 5,500 plan data through its Retirement Plan Prospector database.
Financial advisors who are interested in growing their 401(k) rollover business can use the database to locate plans in their area with large numbers of retirees still receiving benefits.