The $7.3 trillion IRA market is the largest and fastest-growing segment of the U.S. retirement market, but the Department of Labor’s new conflict of interest rule will impose greater scrutiny and complexity on the rollover market and potentially disrupt future flows.
So concludes global analytics firm Cerulli Associates in a new survey, “U.S. Evolution of the Retirement Investor 2016: Regulation and investor addressability.” The report asses the future of the IRA rollover market following implementation of the DOL’s fiduciary rule.
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“There is general consensus in the retirement industry that more assets will remain in employer-sponsored DC plans because of the rule,” says Jessica Sclafani, associate director at Cerulli. “While Cerulli generally agrees with this statement, there are additional considerations, such as the influence of existing advisor relationships, which is the greatest driver of IRA rollover assets, in addition to DC-plan-specific considerations, such as current DC plan design and lack of in-plan retirement income solutions, that may continue to support the migration of DC plan assets to the retail IRA market.”
Using Cerulli’s proprietary IRA rollover model, this research seeks to quantify the degree to which assets traditionally pegged as headed toward the IRA market may now be “at risk” and more likely to remain in employer-sponsored DC plans.
Cerulli’s IRA-focused research also examines how IRA providers that are also retirement plan providers will negotiate this new landscape in which it will be more challenging to direct DC plan participants to move assets from a low-cost account with institutional pricing to a higher-cost retail account.