Here’s a rundown on the changes of keenest interest to insurance advisors...
June 2014, BOSTON. New research from global analytics firm Cerulli Associates finds that retiring Baby Boomers are impacting individual retirement accounts (IRAs) as total IRA assets reach $6.5 trillion, with rollovers last year adding $324 billion.
"IRAs remain the primary vehicle for retirement dollars as assets grew by over 17% last year," states Chris Nadai, senior analyst at Cerulli Associates. "This increase is largely due to rollovers from retiring Baby Boomers and a highly favorable stock market."
In the Evolution of the Retirement Investor 2014: Understanding 401(k) Participant Behavior and Trends in IRAs, Rollovers, and Retirement Income report, 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 and allows firms to develop strategies aimed at capturing assets earmarked for retirement.
"While asset values are climbing, so is the level of competition and noise surrounding rollovers," Nadai continues. "Firms must be creative with their marketing and adapt quickly as new sales program such as rollover cash incentives grab consumer attention."
"We anticipate that IRA asset growth will continue through the remainder of the decade as defined contribution assets continue to roll into individual accounts," explains Shaan Duggal, analyst at Cerulli.
Cerulli suggests that recordkeepers who want to retain assets of retirees amidst heavy retail competition for rollovers need to invest in technology and market research that facilitate a positive customer experience.
"Outbound communication to participants who are changing jobs or retiring should use relevant data from their account information whenever possible, because participants are more likely to respond to a personalized approach," adds Duggal. "Customer service both online and by phone is of critical importance as complex concepts such as retirement income do not resonate well with individuals as they think about their finances and lifestyles."