Survey shows advisors avoid rollovers

A new finding from Pontera shows that financial advisors prefer 401(k)s over individual retirement account (IRA) rollovers.

Pontera’s survey shows that 59% of surveyed advisors chose not to roll over a client’s 401(k) into an IRA or another account due to better plan benefits and the advisor’s ability to manage these assets in a plan via Pontera.

The survey claims that rolling over a 401(k) into an IRA could come at the expense of “better” 401(k) benefits, lower fees, institutional fund access, tax benefits to employer stock, creditor protections, and loan options. Past Pew Research has estimated that of the $516.7 billion in IRA rollovers from plan accounts in 2018, retail investors could lose $45.5 billion over the next 25 years, and solely from higher fees.

I think the biggest issue is compliance and trying to comply with whatever the Department of Labor will come up with, as what rollover advice must come up with. Advisors, like most people, hate paperwork, and compliance. Unless there is ease by the Department of Labor on fiduciary compliance, expect more of the same.

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