Mutual Funds Could Lose `Stranglehold' on IRA Market, Study Reveals as $11 Trillion in Retirement Assets Up for Grabs

NEW YORK – As retiring Baby Boomers make complex choices about where to keep their nest-egg assets, fierce competition for a share of retirement savings assets may profoundly alter the market’s leaders and the followers, according to a recent study by Conning Research and Consulting, Inc. The study, `Winning the Coming Battle for Retirement Assets-$11 Trillion Up for Grabs,’ identifies the opportunities and issues facing retirement market participants. Attracting and retaining retirement assets continues to be a top priority across the spectrum of financial service institutions including mutual fund companies, insurers, brokerage companies, banks, and financial planners, the study found. Conning Research is an asset management firm specializing in insurance company investments and an independent research publisher for the insurance industry.’ “Institutions which service retirement plans today may not necessarily be the same players tomorrow,” said David Montgomery, vice president at Conning. “What’s fascinating about the retirement market today is that even the market leaders, the leading mutual fund companies, are not capable of meeting the entire product and advice needs of retirees-this lays the groundwork for a dramatic change in the competitive landscape.” Montgomery also said “the stakes are quite large regardless of how one views it” because the retirement market totals $11 trillion in assets, IRA assets total nearly $2.4 trillion, and assets transitioning out of qualified plans are approximately $300 billion annually. It is this transition asset market that is of greatest importance to institutions in the market place because it drives the IRA market, which is where mutual fund companies have “traditionally excelled and insurance companies and banks have not,” the study found. Mutual fund companies controlled nearly half of all IRA assets in 2001 while banks and insurers controlled 11% and 8%, respectively. “Retirees want to buy products that will meet their income, insurance and asset protection requirements throughout retirement and typically seek advice to help them with product selection and asset planning,” said Montgomery. “Companies that learn to deliver against these needs will win asset share. But for most firms, this will require improving their ability to manage client information, particularly across their organization, and developing and selling new products and services into retail versus wholesale markets.” The study also defines a new business model successful firms could exploit to attract and retain assets including required capabilities and key success factors thereby setting the stage for a new basis of competition in the battle for retirement assets, Montgomery said. -