Lifestyle/Lifecycle Funds Best Strategy for Capturing
Rollovers
September 26, 2008 (PLANSPONSOR.com) - A new Cerulli
report suggests that between 2008 and 2013, rollovers from
401(k), 403(b), and 457 plans will account for nearly $1.9
trillion of asset flows into traditional IRAs, which will
increase to $6.1 trillion by 2013.
According to the report, "IRA Rollover and
Retention: Strategies and Positioning," real success in
capturing these assets will hinge on the right mix of
advice.
In a press release, Cerulli explains that there are
three main ways in which rollovers are being serviced and
supported: direct to the investor; limited advice with a
combination of embedded-advice solutions and limited
advisory services; and full advice served with a full
complement of investor-review programs.
"We asked asset managers and IRA providers to
identify the best opportunities for building IRA rollover
business. Firms see embedded-advice solutions as a key
component to rollover success. And, some firms identified
advisory services delivered through call-center
representatives as necessary component," said Tom
Modestino, Senior Analyst and author of the report, in
the press release. Focus on embedded advice (i.e.
lifecycle funds) was identified as a top strategy by
one-third of those surveyed.
Cerulli points out that embedded-advice programs
are showing impressive growth. Lifestyle and lifecycle
funds (at $51 billion and $38 billion respectively)
showed a combined five-year CAGR of 58.1% and are in the
early stages of adoptions. However, these funds comprise
only about 1.9% of the market share of total IRA assets,
so there is plenty of room for growth, Cerulli
says.
Managed accounts represent 22% of traditional IRA
assets as of the fourth quarter of 2007, and mutual fund
advisory programs accounted for the largest share of
traditional IRA assets at $883.8 billion.
The report examines the IRA rollover marketplace
and provides insight for asset managers, providers, and
distributors on how to best position themselves for
success. In addition to case studies, the report includes
market sizing, market share rankings, projections for
future growth, and insight into legislative trends
affecting rollovers.
To purchase a copy of the report,
contact Marketing & Business Development at
617-437-0084 or
CAmarketing@cerulli.com
.
Rebecca Moore
editors@plansponsor.com