February 2014, Boston. New research from global analytics firm Cerulli Associates finds that on average, nearly half of an financial advisor's book of business is comprised of retail individual retirement accounts (IRAs, SEP).
"Financial advisors play a key role in asset managers' abilities to win flows from rollovers," states Bing Waldert, director at Cerulli. "However, these rollover assets are hard to acquire."
The February 2014 issue of The Cerulli Edge – U.S. Asset Management Edition is the Rollover IRA issue, covering rollover market sizing and trends, direct providers, and advisor rollover challenges.
Financial advisors, on average, capture larger rollovers than direct providers, with the largest balances going to existing advisory relationships.
"Rollover assets are a key component of an asset manager's retirement strategy," Waldert continues. "However, advisors view rollovers as just another source of funds for their practice, instead of a key market to be cultivated."
"There is evidence that retirees are better prepared for retirement by working with an advisor," Waldert. "Households are more confident about knowing how much they need to retire and whether they have sufficient investments for retirement when they have a financial plan."
Cerulli expects that advisors will continue to win rollovers. Although investors typically manage multiple advice relationships, financial advisors delivering a holistic view of a client's financial picture will benefit from integrating all assets into an overall financial plan. As a result, asset managers working closely with advisors should continue to benefit.