Earlier this month, a joint study by BAI Research and Financial Research Corp. concluded that banks "notched big gains in asset capture." Banks gained significant traction in the rollover market with capture rates reaching 33%, up from 23% from 2008. In 2007, their share of rollovers was 18%.
During that time period, investment firms saw their capture rate for rollovers decline from 67% to 57%. Insurance companies have remained stable with a 9% capture rate in 2008 and 2009.
This competitive landscape could become even more so in years to come as banks vie with investment firms for the more than $1 trillion in so-called orphan 401(k)s held by investors. These plans, retained from a previous job, have become increasingly common.The study found that 35% of those it surveyed held at least one orphan 401(k) account in 2009; 12% of those surveyed had multiple orphaned accounts. Inertia was the top reason cited for failing to rollover these assets, although some investors said they choose to do nothing because they like the product offerings and low cost of a past plan. This is the third year that the firms have compiled the report and it draws heavily upon the results of an online survey of more than 2,500 mass affluent individuals between the ages of 35 and 70 with investable assets of at least $50,000.