CHICAGO — Financial advisers play a big role in directing individual retirement account rollovers.
Fully 67% of individuals who completed a rollover during the two-year period through April did so with the help of a professional adviser, according to a study released Aug. 23 by Spectrem Group in Chicago.
The report, “The IRA Rollover Market 2007,” also found that $489.3 billion was eligible for rollovers, a 38% increase from $353.4 billion in 2004. Of that, $245 billion was actually moved into IRAs.
The number of individuals conducting IRA rollovers totaled 7.4 million, a 28% increase from $5.8 million in 2004, according to the report.
Advisers are crucial in helping participants decide where to roll over their money.
“The higher the balance and more dollars involved, the more likely there’s an adviser involved with the decision,” said Gerald M. O’Connor, a director at Spectrem.
Higher balances
The analysis showed that baby boomers, and those belonging to the World War II generation, rely more on advisers than other generations. It also found that participants with larger account balances are more likely to meet with an adviser before moving their retirement assets.
Of those with $100,000 in retirement assets, 71% met with an adviser, compared with 66% of those with $50,000 to $99,999 in assets and 58% of those with $5,000 to $49,999 in assets, according to the study.
There is no question that advisers are getting ready for an onslaught of baby boomers preparing to retire, Mr. O’Connor said.
“I think advisers are prepared. The question is, how many of them are there, versus how many baby boomers are out there?” Mr. O’Connor said.
“I think we’ll see more advisers,” he said. “It’s an attractive area where you can make a lot of money.”
Spectrem estimates that IRA rollovers will increase 10% to 12% annually over the next five years.
The research was compiled through a 12-page questionnaire completed by 763 participants in April.
Better results?
Investors realize that when they move money into an IRA themselves, they are unlikely to be happy with the long-term investment results, said Linda Gordon, a financial adviser with The
Principal Financial Group Inc. of Des Moines, Iowa.
Ms. Gordon, who works out of Chicago, is handling more IRA rollovers lately and attributes that to an increase in turnover at U.S. companies and to a growing number of employees who have realized that they need help managing retirement assets.
“I think people found out that the market doesn’t go straight up,” she said. “It goes sideways or zigzags. If you don’t know what you’re doing, you can really get in trouble,” Ms. Gordon said.
She is not the only adviser seeing a pickup in rollover business.
“We’ve got plenty of people calling us and people we’re working with,” said Kevin Skipper, president of Kevin Skipper & Associates LLC in Columbia, S.C. “There’s never been a better time to be an adviser in this business.”
Mr. Skipper is seeing more baby boomers leave one job for another. Many of those employees have $300,000 to $400,000 in retirement assets and are in need of an IRA, he said.
