Comment: Getting-And Keeping-Retirement Assets

By Roggenkamp, Cynthia J. | American Banker, July 1, 1999 | Go to article overview

Comment: Getting-And Keeping-Retirement Assets


Roggenkamp, Cynthia J., American Banker


The opportunities for banks in the retirement market are better than ever, spurred by legislative changes such as the Roth IRA and demographics such as the aging baby boomer population.

Pension portability and job market fluidity are also playing a role in making the market more attractive.

With vast amounts of money piling up in 401(k) and other retirement vehicles, there has never been a better time for banks to refocus attention on their asset acquisition and retention strategies.

However, as competition for retirement plan assets increases, banks must take a more holistic, consultative approach to meeting their customers' retirement planning needs.

This includes offering a comprehensive program of retirement savings information, options, and tools, as well as leveraging technology to simplify applications and transactions for customers.

According to a Social Security Administration report last year, the number of people older than 65 is expected to double in the next 30 years.

Realizing that the Social Security Trust Fund is in danger of depletion, baby boomers are getting a wake-up call about the need to bolster retirement saving.

As this group approaches and enters retirement, the demand for information, planning tools, and IRA products will exert a profound effect on the retirement services industry.

Americans are becoming responsible for their own retirement funding. In recent years defined-contribution plans such as 401(k) plans have soared in popularity, with more than 600,000 available today, and the more traditional defined-benefit plans have shrunk to fewer than 100,000.

This tremendous shift in the way Americans fund their retirements is especially evident since an ever-increasing percentage of lump sum distributions is giving more control over retirement funds.

From 1989 to 1994 the number of lump-sum distribution recipients grew 50%, to 9.1 million, according to Department of Labor statistics. And the trend is continuing.

The average amount of these distributions is considerable. In 1997 lump sum pension payouts averaged $22,230 for people changing jobs and $119,200 for retirees, according to Limra International.

Because IRAs are the natural heirs to these lump sum distributions, IRA providers stand to reap huge benefits.

Members of Congress from both parties are introducing legislation to help Americans save more for retirement.

Half a dozen bills are in the works, including measures that would increase annual contribution limits to $5,000, from $2,000, for individual retirement accounts and to $15,000, from $10,000, for 401(k)s. A "Roth 401(k)" has been proposed, and the administration has its own plan for helping low- and middle-income Americans increase retirement assets.

Taken together, these trends paint a picture of tremendous potential.

However, retaining retirement assets over the long term has proven challenging for banks. This is especially true in the case of assets acquired through defined-contribution plans such as 401(k) plans.

Some industry experts estimate that many financial institutions are retaining less than 20% of the assets acquired through 401(k) plans when plan participants become eligible for lump sum distributions.

Why are lump sum recipients taking their distributions elsewhere? And where is the money going?

In many cases, the retirement assets are lost simply because the customer is not aware of the bank's retail offerings or has not been asked to use them. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Comment: Getting-And Keeping-Retirement Assets
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.