Three out of four investors or 71% with retirement money in a former employer’s plan have kept those assets there for five or more years.
That’s according to new data from Cogent Research, which found that keeping retirement funds parked at former employers is a trend that increases with the age of the employee.
Based on a nationally representative survey of over 4,000 investors with $100,000 or more in investable assets, excluding real estate, the Cambridge, Mass.-based Cogent found that the pool of rollover assets continues to hover around $300 billion.
“After fighting inertia for so long, we found it requires several influencing factors to motivate investors to move idle assets,” said Antonio Ferreira, Cogent managing director and co-author of the report, Investor Rollover Assets in Motion.
“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,” Ferreira added.
Once prompted into action, Cogent found that the primary reason influencing investors’ selection of a rollover provider is an existing relationship. The firm said brand familiarity trumps all other criteria including investment performance, range of investment options, ease of doing business, and low fees and expenses.
The best rollover individual retirement account target is an existing customer who is familiar, comfortable, and satisfied with their relationship said Sonia Sharigian, Cogent project director and co-author of the report.
“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,” Sharigian said.