Total IRA assets will likely reach $11.7 trillion by the year 2020, according to new research from Cerulli Associates.

The report, “Evolution of the Retirement Investor 2015,” looked at the following:

IRA rollovers (traditional, Roth, employer-sponsored)
retirement income (payout funds, variable annuities with guaranteed withdrawal benefits, target-date funds)
defined contribution (DC) plan participants
retail investors (preretiree and retiree)

It also looked at strategies for segmenting and influencing participant behavior.

Among findings detailed in the report is the fact that cash-outs and loan defaults were responsible for $81 billion in lost retirement assets in 2014 as participants sought to find better retirement-related options.

Read: Loans up, stock allocations too high in retirement plans

The report suggested that recordkeepers could limit the amount of that outflow by offering better retirement-related options to participants.

In addition, as participants age, the likelihood of rollovers rises; participants over age 50 represent the vast majority of assets that were rolled over in 2014 (80 percent).

Read: IRAs underutilized, poorly understood

The report also pointed out that advisors received the majority of rollover assets ($220 billion), with another $162 billion going into self-directed IRAs. Plan-to-plan rollovers didn’t even come close, placing a distant third at $27 billion.

While there’s a possibility that the proposed Department of Labor fiduciary rule could start to stem long-term outflows, since the DOL position is that a defined contribution plan is often the best place to leave assets, that’s by no means a sure thing—particularly since in-plan options for retirement income are not widespread or flexible—two traits that in their absence will continue to nudge retiring participants to roll over their funds into an IRA.

And that’s not good news, since participants are still paying more attention to overall performance metrics and account balances than they are to projections of retirement income.

Until participants wise up and focus more on what they will receive during retirement, many will continue to manage their DC account balances poorly.

Instant Insights /

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