Plan advisors and DC recordkeepers are keenly aware of the opportunity presented by the massive movement of dollars from 401(k) plans into rollover accounts. Research firm Cerulli estimates that over $400 billion were rolled into IRAs (from 401(k) plans) with the assistance of advisors in 2021 alone.

This flow of funds is expected to continue, and advisors see it as a way to grow their wealth management businesses. While the opportunity is enormous, a key data point offers a clue to capitalizing on the trend. Cerulli’s report revealed that “of advisor-intermediated rollover assets, 86% take place through an existing advisor.”

Associate Director, Shawn O’Brien emphasized the importance of relationship-building efforts. “For wealth managers looking to capture rollovers from DC plans, this data underscores the importance of establishing and nurturing relationships with participants earlier in their careers, years before potential rollover events.”

While the implication of this research is clear, not all advisors are set up to engage with every participant. More frequently, advisors are seeking “coopetition” with recordkeepers whereby participants needing rollover assistance are segmented; plan advisors helping a select group of participants – often those with larger account balances – and the recordkeepers serving the remaining participants.

This collaborative approach ensures that each participant receives the optimal solution, transforming the dynamic between advisor and recordkeeper from competitors to partners.

Finsum: Partnering with 401(k) recordkeepers to capture rollovers helps plan advisors capitalize on this huge wealth management opportunity.