Financial advisors situated at banks, regional brokerage firms, insurance company broker-dealers and wirehouses were less methodical about targeting individual retirement account rollers than their brethren with independent broker-dealers, according to a study by Stamford, Conn.-based Brightwork Partners.
Preliminary data from the study, which surveyed more than 300 advisors from various channels by telephone, found 56% of the independent brokerage advisors made concerted efforts to attract IRA rollovers and 64% of the bank respondents said they “take what comes in the door.” Only 45% and 38% of the wirehouse and insurance company advisors, respectively, reported actively courting IRAs.
Despite their efforts independent brokerage RIAs took a back seat to wirehouse RIAs in terms of average rollover amounts. Approximately 12% of the wirehouse RIAs commandeered rollovers between $500,000 and $1 million but only 4% of the independent RIAs achieved the same.
The discrepancies between rollover sizes at wirehouses and independents still boils down to each channel’s target market, said Ron Bush, a principal at Brightwork.
“The wirehouses in particular are focusing on the upper end of that market because their target investor is a higher-end investor whereas Edward Jones are going after middle-market individuals,” Bush said.
Most rollover investors, 60%, were already doing business with their financial advisors and nearly half of the respondents, 48%, almost never place IRA rollover business with their clients’ 401(k) providers.
The majority of respondents, 87%, always sold IRAs in conjunction with financial plans. That number dropped to 79% when the advisors were asked if IRA rollover customers always received specialized income planning. Nearly three-quarters reported making concerted efforts to consolidate defined contribution assets held in different accounts.