The IRA Opportunity Not Talked About


Financial institutions have been discussing and educating financial advisors for many years on the IRA rollover opportunities that exist among Baby Boomers.  There have been decades of discussions around the size of the rollover opportunity that exists among WWII and Baby Boomers that have retired or are going to be retiring in the next several years.  What is not often discussed is the consolidation opportunity.  This broadens the net of prospecting to include those investors that are not yet near retirement but perhaps have changed jobs two to three times, moving their defined contribution plan assets into an IRA. 

Consolidations are something that many investors do not even think about, as they look at each of the accounts as money specifically from their work at a certain job.  This can often result in one individual owning several IRA accounts.  The number of IRA accounts is only compounded for those married investors with both spouses working.  Nearly two-thirds of investors have two or more IRA accounts, according to recent Spectrem Group research.  The number of accounts increases as wealth increases.

These accounts are often managed by a financial professional for those wealthy investors who are still working.  Three-quarters of IRA balances are managed by a wealthy investors primary financial advisor.  Nearly 10 percent are managed by a secondary advisor or other financial professional, and only 15 percent of the IRA balances are managed by the wealthy investor themselves.  These numbers change when looking at a spouse’s IRA assets.

Less than two-thirds of a spouse’s IRA assets are managed by the same advisor as their spouse.  This opens up a significant opportunity for financial professionals to ask about the assets for both spouses, not just focus on their primary client.  It is important to look at your clients that are married as two equally important relationships.  Neglecting to discuss the assets, retirement and non-retirement, of the spouse opens advisors up to another financial professional to develop a relationship with their client’s spouse and risk losing the assets they manage themselves.  Consolidating from multiple institutions is where the greatest consolidation opportunity comes from.

Over half of investors have more than one institution that IRA assets are held with.  Working investors are more likely than retired investors to be working with more than one institution for their IRA assets.  For those financial professionals that are prospecting among wealthy Millennials, it is important to note that over 20 percent of wealthy Millennials hold IRA assets with four or more financial institutions.

Many investors may simply not be aware they can consolidate their IRA accounts, as only a third of investors have previously consolidated their IRA accounts.  That percentage declines among younger wealthy investors.  Objections to consolidation are primarily the desire to not put all their eggs into one basket.  This can be overcome through explaining that even if the investor is using multiple financial institutions, they may not be invested differently.  Offer to do an analysis for the client to ensure they haven’t unintentionally placed all their eggs into the same basket from an investment perspective.



Another primary reason why investors have not considered consolidation is that it is simply too much of a hassle.  Make the process easy for investors to consolidate assets.  This can be done a variety of ways and it is important to make the process as easy as possible.

Consolidation of IRA assets is an opportunity that financial professionals may not be focused on but can offer significant business growth among existing clients through consolidation.  As the old adage goes: the easiest sale is to an existing client.