Investors Close Accounts in Search for Simplicity
About one in five investors who closed an account last year did so because of a desire to consolidate or simplify their accounts, according to a Cogent Research report.
Thirteen percent of affluent Americans closed at least one investment account in the last year, more than double the pace reported in the previous five years. Investors cited consolidation, rollovers, fees, or a need to access funds as the main reasons for these actions.
The Cogent Investor Brandscape report is based on a nationally representative survey of 4,000 American investors with at least $100,000 in investable assets.
Fourteen percent of respondents said they closed their accounts to move or roll over retirement assets to another provider. Twelve percent cited either fees or the fact that they needed the assets for another purpose. The proportion citing rollover activity as their reason for closing an account doubled last year compared to the previous five years, and the proportion citing a need to access account funds tripled. The net result is that the total number of accounts dropped from 3.54 per household in 2009 to 3.29 accounts in 2010.
"With boomers retirement now hitting full stride, economic conditions forcing some investors to liquidate accounts, and an all-out price war among several key distributors, investors certainly have plenty of good reasons to reevaluate their current account options," said Meredith Lloyd Rice, senior research director and author of the Cogent report.