Unlocking Real Value Blog

Winning the Rollover Game

More than $300 billion in rollover assets migrate from old DC plans every year, and a recent study by Cerulli Associates projects that annual RIA rollovers will reach $450 billion by 2017, thanks in large part to baby boomer retirements. A few thoughts on how to compete for these assets:

1) According to a recent report by Cogent Research, the most important factor is a participant’s decision of whether or not to move his/her account is brand recognition – more so than even performance and fees. Among the larger firms, Fidelity, Vanguard, Charles Schwab, T. Rowe Price and USAA have been gaining market share through increased advertising, educational information on their websites and other direct selling efforts to clients.

Fidelity has ranked first in Cogent’s report for each of the past three years. They have been successful in part because they attempt to talk to each client about all of their available options, including leaving the assets in place. This non-threatening approach – focused on client education – makes a lot of sense.

2) But let’s say you don’t have the advertising dollars available, or are a smaller firm. You can still compete for these assets. According to Cogent’s study, 71% of investors leave their assets in place for at least five years. This seeming lack of urgency in movement gives current providers a lot of time to talk to clients and get them comfortable with a move.

Any size firm can do a few things during this transition period – regardless of its length – to increase the odds that they can win the battle for the assets:

  • Offer clients consolidated reporting on all assets – including these assets that you do not hold. Even if you don’t get paid on them now, you can consult with the client on their total asset allocation and financial situation. Firms that provide this type of service tend to win when clients who utilize multiple advisors and/or keep assets in multiple locations, decide to consolidate; and
  • Make it easy for clients to move the assets when they are ready. Nothing will hurt your business more than making the transition process more cumbersome than it needs to be. Develop a system, train your staff, explain it to clients and implement it consistently.

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