Mutual Funds Have Highest Rollover Retention Rates
March 5, 2001
Nearly 30 percent of recent retirees and job changers who rolled their retirement plan balances into a new IRA, stayed with their original provider, according to a recent study. Those original providers, in most cases, were mutual fund companies, according to the study by Brightwork Partners of Old Greenwhich, Conn. and Greenfield Online, of Wilton, Conn.
Mutual fund companies have the best performance in retaining rollover accounts, the study found. They retain, on average, 40 percent of job changers and 35 percent of retirees, according to the study. Insurance companies retain only 13 percent of job changers and 28 percent of retirees. Securities firms and banks have retention rates of between 25 and 30 percent, according to the study.
Retention rates do not vary significantly by size of balances, the study found. Thirty percent of job changers and 25 percent of retirees with rollover balances of $125,000 or more, stay with their original providers, which is about the same as the 30 percent industry average. Finally, 41 percent of job changers had left their money in the former employer's plan up to three years after changing jobs while 10 percent transferred their balances to a retirement plan at the new employer, the study found.