Over two-thirds of advisors (67 percent) funnel rollover money to a wrap/managed solution, according to IRA rollover data from Ann Schleck & Co. That’s followed by 8.6 percent into mutual funds, 2.5 percent into annuities and 5.4 percent into other products.
The average rollover in its database totaled $105,000, and 72 percent of advisors do not receive any up-front compensation. For advisors who do track compensation, the average is $1,255 for up-front compensation and a trail of $765.
But the trend is changing, and while simple averages might be interesting, they’re not as helpful as a comparison by the rollover’s size (according to the client’s overall assets) or by IRA rollover product type.
Fees are only one side of the equation. A best practice is to evaluate what services a client is receiving in their current solution versus the proposed IRA rollover. Leading advisors also consider client priorities and needs. Does the client have a desire to work one-on-one with an advisor, do they want to consolidate assets into a single place, have customized portfolio and investment options and ongoing personalized support?
Ann Schleck & Co. has developed a guidebook to help advisors assess fees and services, as well as questions like these. The IRA Fee/Service Reasonability Evaluator will be available second quarter 2017.
To make the data impactful, information from at least 200 advisory practices is needed. The database is currently comprised of 97 practices; 57 percent are independent or dually registered, 28 percent are fee-only RIAs and 15 percent are affiliated with a broker-dealer, bank or insurance company.
This survey is now closed.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
