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August 17, 2015 at 11:06 AM
Individual retirement account assets are expected to approach $12 trillion by the end of the decade, according to new research from global analytics firm Cerulli Associates.
“We expect IRA asset growth to remain steady through the end of the decade,” said Shaan Duggal, a research analyst at Cerulli, in a statment.
Cerulli’s report, Evolution of the Retirement Investor 2015: Insights into Investor Segmentation and the Retirement Income Landscape, expects rollovers to be a major source of that growth.
“Even with heightened FINRA rollover scrutiny, individuals, especially Baby Boomers, will continue to roll over their defined contribution (DC) assets,” Duggal said in a statement.
In fact, the report finds that participants over age 50 represented almost 80% of the assets that rolled over in 2014.
“As the Baby Boomer generation ages, much of this rollover activity will be due to account consolidation as these individuals plan for their retirement income needs,” Duggal said in a statement. Adding, “A greater number of Millennials are contributing to Roth 401(k)s, which will become a sizable rollover opportunity in time.”
The report finds that advisors received the majority of rollover assets ($220 billion), followed closely by self-directed IRAs at $162 billion. Plan-to-plan rollovers were a distant third at $27 billion.
(Related: When an IRA Rollover Is a Bad Idea)
When it comes to capturing rollover assets, the report aims to find out what plan participants think are the most important factors from IRA providers.
Interestingly, Cerulli found that incentive programs were viewed as the least important factor in capturing rollover assets. Fidelity, who was at the top of the IRA leaderboard with 14.6% of total marketshare in 2014, announced an incentive IRA matching program in early 2015.
“Throughout the last few years, there have been many rollover incentive programs in the marketplace, mostly in the form of cash incentives,” according to the report. “Not only has Cerulli discerned that these programs are costly, but data directly from IRA providers deems them the least important factor in garnering rollover assets.”
