Rollovers into individual retirement accounts will take a bigger share of the retirement market in coming years, with large record keepers such as Fidelity Investments, TIAA-CREF and The Vanguard Group Inc. reaping the benefits.
Assets in the U.S. retirement market are projected to grow to $22 trillion by 2016, from the estimated $16 trillion in the accounts last year, according to data from Cerulli Associates Inc. IRA assets make up 29.7% of all retirement market assets, but they are expected to grow to 33% of the total retirement market by 2016.
Rollover activity is behind the growth in IRA accounts, said Cerulli analyst Alessandra Hobler.
LARGE RECORD KEEPERS WIN
Because many retirement plan participants stick with the record keepers employed by their employers, the biggest record keepers stand to gather the most rollover assets. Fidelity is the largest defined-contribution record keeper, both in terms of assets and total participants, according to data from sister publication Pensions & Investments.
“These record keepers already have a strong book of DC business, and they can translate that into a conversation of IRA rollovers,” Ms. Hobler said.
Financial advisers, particularly at small to midsize plans, traditionally have been able to capture some of the rollover money as participants leave.
It is unclear whether advisers will continue to siphon off IRA rollover money, however, once the Labor Department posts a broader definition of fiduciary duty, said Kevin Chisholm, an analyst with Cerulli.
Still, at that plan size, record keepers whose products are adviser-sold have the opportunity to gather assets from rollovers.
It also remains to be seen if in-plan income distributions, which give retirees the option to receive income without exiting the plan and rolling over into an annuity, will help firms hold on to assets. Providers include Dimensional Fund Advisors LP and Financial Engines.
Large and mega-size plans have been able to participate in this market, but widespread adoption remains limited, Ms. Hobler said.
Mutual funds have the largest market share among IRA products, with 47% of account assets as of 2011's first quarter, Cerulli said. Brokerage accounts account for a bit more than a third of IRA assets.