Need more proof the IRA rollover wave is officially underway? Consider that total IRA assets will hit $11.7 trillion in less than five years, according to new research from global analytics firm Cerulli Associates.
As a result, the Boston-based Cerulli recommends record-keepers use the many DC participant data points they have on file to send targeted communications to build stronger relationships with participants.
“We expect IRA asset growth to remain steady through the end of the decade,” Shaan Duggal, a Cerulli research analyst, said in a statement. “Even with heightened FINRA rollover scrutiny, individuals, especially Baby Boomers, will continue to roll over their defined contribution (DC) assets.”
In its latest report, Evolution of the Retirement Investor 2015: Insights into Investor Segmentation and the Retirement Income Landscape, Cerulli examines retirement decisions made by individual investors throughout their retirement planning lifecycle, with particular emphasis on 401(k) plan participants, IRAs and rollovers, and retirement income. The report profiles these individuals to assist firms in developing segmentation strategies aimed at capturing assets earmarked for retirement.
“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 noted. “Creating a positive relationship early and building on it as the individual progresses towards retirement is the ideal situation for many providers. Personalized communication during opportune life moments will help ensure customer loyalty when an individual eventually decides to roll over their account.
“A greater number of Millennials are contributing to Roth 401(k)s, which will become a sizable rollover opportunity in time,” Duggal concluded.
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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.
