IRA Assets Hit $5 Trillion in 1Q

The research firm expects assets to increase 60%, to $8 trillion, in 2017. As Baby Boomers enter retirement, the next few years will be critical, said Kevin Chisholm, senior analyst at Cerulli. “The lack of income options available in defined contribution [DC] plans will make IRAs the focal point for many in their retirement income planning process,” he explained.

Cerulli analyzes pre-retiree, retiree, and post-retiree transactions and investor behavior, including a close look at IRAs in a report, “Evolution of the Retirement Investor: Understanding 401(k) Participant Dynamics, and Trends in Rollover and Retirement Income.”

The aging Baby Boomers pose a significant opportunity for asset managers, advisers, direct providers, insurers, and banks to gain individual retirement accounts (IRA) assets, Chisholm said: “The industry as a whole is focused on providing retirement income planning to help ensure that individuals do not outlive their assets.”

In order to be in position to benefit from a rollover opportunity, IRA providers and advisers need to establish relationships early, Cerulli said. Most often, the rollover goes to an existing relationship. Asset managers and providers need to demonstrate their retirement income capabilities with IRAs. Advisers who are able to provide effective retirement planning education will be the ones most successful at gaining client assets.

The report also examines:

• The main considerations of 401(k) participants in determining how much to contribute for retirement;

• Which factors influence participants’ decisions about their 401(k) plan balance upon separating service;

• The time frame participants use to make decisions and act on previous 401(k) balances;

• The sources of income to fund retirement that participants approaching retirement age anticipate using; and

• The number of participants approaching retirement who believe they are adequately prepared, if forced to retire.

Investor behavior in DC plans, the desire for advice and guidance, money in motion via rollover, and retirement income product use are among other topics covered. The report also reviews IRA, SEPs, SIMPLE and Solo 401(k) plans.

Cerulli Associates is a global research firm in Boston. More information is available on Cerulli’s website.

Jill Cornfield