Cogent Research: How to Spark a Rollover, When Most Former ESRPs Sit Idle for Five or More Years

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Three out of four investors (71%) with retirement money in a former employer retirement plan (ESRP) have kept those assets where they are for five or more years, a trend that increases with age according to a new report from Cogent Research. The pool of rollover assets continues to hover around $300 billion, which emphasizes the need to reevaluate current marketing strategies. These and other findings are included in Cogent’s Investor Rollover Assets in Motion™, based on a nationally representative survey of over 4,000 investors with $100,000 or more in investable assets, excluding real estate.

“After fighting inertia for so long, we found it requires several influencing factors to motivate investors to move idle assets”

“After fighting inertia for so long, we found it requires several influencing factors to motivate investors to move idle assets,” said Antonio Ferreira, Managing Director and report co-author. “We know that major life events like changing employers or entering retirement will shake things up, so it is vital for providers to tailor their messaging to capitalize on these events.” Once prompted into action, the primary reason influencing investors’ selection of a rollover provider is an existing relationship. In fact, brand familiarity trumps all other criteria including investment performance, range of investment options, ease of doing business, and even low fees and expenses.

“The best Rollover IRA target is an existing customer who is familiar, comfortable, and satisfied with their relationship,” said Sonia Sharigian, Project Director and report co-author. “Firms need to spend more time in their own backyard wooing idle or orphaned assets held by customers through better communications. It seems so simple, but customers need to be courted.”

Fidelity Investments, Vanguard, and Charles Schwab remain the top go-to firms for Rollover IRAs, however, notable fluctuations in investor preferences can be seen within the rankings. For the first time in the history of this five-year study, T. Rowe Price and USAA join the top five preferred Rollover IRA providers. “Evolving brand preferences not only speak to the competitiveness of this market, but also to the opportunity to increase share of wallet among existing clients,” adds Sharigian.

Top 10 Preferred Rollover IRA Destinations
(Investors with a former ESRP and are likely to roll assets into a Rollover IRA in next 12 months)

1.	Fidelity Investments
2.	Vanguard
3.	Charles Schwab
4.	T. Rowe Price
5.	USAA
6.	Morgan Stanley Smith Barney
7.	Edward Jones
8.	TD Ameritrade
9.	Wells Fargo Advisors
10.	TIAA-CREF

Source: Cogent Research Investor Rollover Assets in Motion™ (December 2012)

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About Cogent Research

Cogent Research helps clients gain clarity, obtain perspective, and formulate direction on critical business issues. Founded in 1996, Cogent Research provides custom research, syndicated research products, and evidence-based consulting to leading organizations in the financial services, life sciences, and consumer goods industries. Through quality research, advanced analytics, and deep industry knowledge, Cogent Research delivers data-driven solutions and strategies that enable clients to better understand customers, define products, and shape market opportunities in order to increase revenues and grow the value of their products and brands.