Cogent Syndicated: Millennials and Financial Advisors Key to Unlocking Rollover IRA Dollars

September 10, 2019

To win new rollover IRA dollars, financial firms should zero in on Millennials and harness the influence of advisors to capture former employer-sponsored retirement plan (ESRP) assets. Nearly eight in 10 Millennials with assets in a former plan who are likely to consider an IRA expect to roll funds in the next 12 months (79%), a significant increase from 71% in 2018. In addition, over half of rollover IRA candidates (57%) work with traditional advisors, making financial advisors another ideal target. These and other findings are from DC Participant Planscape™, an annual Cogent Syndicated study from Escalent, a top human behavior and analytics firm.

“Marketing rollover IRAs to Millennials is the easiest path to success,” said Sonia Sharigian, senior product director at Escalent and author of the report. “In addition to holding the greatest number of former plans as a result of early career exploration, Millennials are also the most receptive to learning about new products outside of their retirement accounts. The key is getting financial advisors, who have the greatest influence on rollover activity, into the mix.”

Rollover candidates cite trustworthiness as the top factor for selecting a rollover IRA provider. And fee transparency, often a key element of trustworthiness, serves as the most critical consideration driver. Interestingly, participants are placing less emphasis on investment performance this year, as this element falls out of the top 10 consideration factors.

The top 10 firms plan participants are most likely to consider when opening a rollover IRA within the next year are:

 

2019 Preferred Rollover IRA Destinations
1 Fidelity Investments
2 American Funds
3 Wells Fargo
4 Vanguard
5 Charles Schwab
6 J.P. Morgan Chase
7 Edward Jones
8 T. Rowe Price
9 Merrill Lynch
10 Ameriprise

Base: DC plan participants who are likely to open an IRA
Source: Escalent. Cogent Syndicated. DC Participant Planscape. July 2019.

“Fidelity, American Funds and Wells Fargo are the most preferred rollover IRA destinations in the aggregate market for the third consecutive year,” said Linda York, senior vice president at Escalent. “It’s a competitive market, especially as firms continue to battle ongoing inertia with former ESRP assets. Participant education and advisor engagement are now even more vital to prioritize.”

About DC Participant Planscape™

Cogent Syndicated, a division of Escalent, conducted an online survey of a representative cross section of 5,031 DC plan participants from April 30 to May 28, 2019. Survey participants were required to be 18 years or older, and contribute at least 1% to a current plan and/or have $5,000 or more in at least one former plan. Cogent uses market-sizing incidence survey findings, which are weighted to US census data, to develop quota targets followed during fieldwork and apply minimal statistical weighting post-fielding. The data have a margin of error of ±1.38% at the 95% confidence level. Escalent will supply the exact wording of any survey question upon request.

 

Click below for more information on DC Participant Planscape.

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