New study from Cogent Syndicated reveals rollover and consolidation activities have accelerated over the past year and the outlook for future assets in motion looks promising
LIVONIA, Mich., Sept. 04, 2024 – Nearly nine in ten (89%) former defined contribution (DC) plan participants who are likely to consider an IRA intend to initiate a rollover this year, a notable uptick from 82% last year. Millennials are leading the charge, citing significantly higher intent at 94% versus 82% in 2023. First and Second Wave Boomers are the most lucrative cohorts to target, respectively holding $445K and $133K in former employer-sponsored retirement plans (ESRPs). That is according to the latest DC Participant Planscape™ report from Cogent Syndicated by Escalent, which is designed to help DC plan providers maximize participant contributions, enhance engagement, leverage cross-sell opportunities and attract rollover dollars.
Findings from the study further reveal former plan assets are becoming more fluid. Fewer participants report holding former ESRP assets in-plan for six or more years (61% vs. 67% in 2023), stemming from declines among First Wave Boomers and participants who have investable assets of at least $100K.
“That said, we are also observing a trend in which participants are content leaving their assets in former employer plans. In fact, investment performance, range of investment options and advisor recommendations have become even bigger motivators for keeping plan assets parked,” said Sonia Davis, lead report author and senior product director in Escalent’s Cogent Syndicated division. “In addition, mentions of participant inertia are declining, reflecting a more intentional management of retirement funds.”
Meanwhile, rollover candidates are more likely to be working with traditional advisors and are trending wealthier. Nearly six in ten likely rollover candidates are working with traditional advisors, up from 44% last year. The average investable assets within this cohort is up from $620K in 2023 to $950K this year.
“We’re seeing increased engagement and a lot more reliance on financial advisors from younger generations especially. Gen Zers, Millennials and Gen Xers are generally more receptive to advisor outreach and eager for knowledge and guidance,” continued Davis.
Participants are increasingly citing job changes, the desire to consolidate, lower fees and former plan provider outreach as key catalysts for initiating rollover activity. In addition, financial advisors play a significant role in influencing decisions across all generational cohorts, highlighting their involvement in the rollover education and consideration process.
“Financial advisors are participants’ go-to resource for rollover guidance and play an instrumental role in the decision-making process,” added Davis. “In the years ahead, there is a clear opportunity for advisors and providers to capitalize on participants’ heightened interest and engagement levels.”
To learn more about DC Participant Planscape findings, visit Escalent.co.
