Cogent Research studied 4,000 affluent investors and found that while the overall ownership of retirement accounts has declined since 2006, the use of workplace-based retirement accounts — including 401(k) and 403(b) plans — have diminished at a more rapid pace. The overall use of workplace-based retirement accounts has decreased by 23% since 2006, according to the firm. IRA participation rates, however, slid by only 5%.
Cogent's analysis found that "the majority of dollars investors once allocated to employee plans have been funneled into IRA accounts and, to a lesser extent, bank accounts." Affluent Americans now hold 31% of their assets in IRAs and 25% in workplace plans.
The trend could lead to a renewed arms race among financial firms seeking to tap demand for IRAs. Last year, 19 investment firms boosted the portion of assets investors held in IRAs by 15%, Cogent's study said. Seven firms increased the average portion of primary client assets in IRAs by 20% or more: Fidelity Investments, ING (ING) , Bank of America's (BAC) Merrill Lynch, Raymond James (RJF) , USAA and Wells Fargo (WFC) .
(ING) (BAC) (RJF) (WFC) Ameriprise (AMP) , Charles Schwab (SCHW) , Edward Jones, Fidelity, LPL Financial, Merrill Lynch, Raymond James, UBS (UBS) and Vanguard were among the firms whose clients held one-third or more of their assets in IRAs.
Cogent expects ongoing "rollover momentum" to boost IRA asset gains this year. While fewer investors have assets sitting in retirement plans sponsored by former employers (24% in 2009 versus 31% in 2008), those who do may be more likely to roll over those assets into an IRA (45% in 2009 compared to 39% in 2008).