Almost half of 401k plan participants who left their job in 2017 let their money lie, opting against rollovers, cashouts and the like. This year, almost as many intend to do the same.
No doubt, plan providers looking to retain assets are pleased, but what’s going on with retirement savers?
Laziness? Fear-based paralysis? With so many accounts left behind―not to mention missing participants―either seems plausible. But the real reason is nothing of the sort, according to the latest Cogent Reports study by Market Strategies International-Morpace.
Instead ex-employees simply say they’re happy with how things are going. They choose to stay in-plan because their investments are performing well and their investment options are ideal. What’s more, many have no intention of moving their assets unless it’s absolutely necessary.
In fact, among first-wave Baby Boomers and Gen Xers who switched jobs or retired, an increasing number have left their assets with former employers for five years or more.
The report suggests the extended bull market could have something to do with participants remaining so content, and warn plan providers to brace themselves for a change of attitude that may accompany an impending market downswing.
“It’s tempting for plan providers to lean on market returns for help with participant satisfaction,” Julia Johnston-Ketterer, product director at Market Strategies-Morpace and author of the report, said in a statement. “But the day will come when market action works against plan providers. Firms that demonstrate success in other key drivers of participant satisfaction―website and online capabilities and retirement planning tools―will be better equipped to weather future market volatility.”
The report, titled DC Participant Planscape, goes on to highlight the top firms earning high marks from participants that are thus most likely to retain assets in-plan:
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Vanguard
Fidelity Investments
Voya
Charles Schwab
TIAA
T. Rowe Price
Merrill Lynch/Merrill Edge
Prudential Retirement
Nationwide Financial
MassMutual
Jessa Claeys is a writer, editor and graphic designer.
