Rollover Central: Safe, Secure, and Efficient Participant IRA Rollovers (11:07)
Traditional rollover processes are manual, error-prone and can take over 40 days to complete
Broadcast Retirement Network’s Jeffrey Snyder discusses making the IRA rollover process from a retirement plan more efficient with SS&C Technologies’ Jonathan Wolff.
Jeffrey Snyder, Broadcast Retirement Network
This morning, rollover central, safe, secure, and efficient participant IRA rollovers. And joining me now to discuss this and a lot more is Jonathan Wolfe of SS&C Technologies. Jon, so great to see you.
Thanks for joining us on the program this morning. Thank you, Jeff. Great to see you.
And you know, I always love talking about rollovers. I know this is a topic that you cover on a regular basis, so we’re very privileged to have you on the program. Let’s start with, I guess, a baseline question.
And you know, we’ve talked in the past about the great wealth transfer. There’s going to be like $84 trillion changing hands. Part of that, I would assume, are rollovers.
How important are rollovers to today’s record keepers and advisors?
Jonathan Wolff, SS&C Technologies
So short answer, very important. I saw a study recently that by 2030, the rollover market will be over $1.1 trillion in assets. So it’s a very big market for record keepers, plan advisors, IRA providers, all alike.
So record keepers actually, they have a unique, I guess, starting point because the assets are starting from the record keeper. So they’re going to be in competition with those assets, and record keepers are going to want to keep them, as much of those assets, on campus as possible. Ultimately, though, they’re not going to be able to retain all $1.1 trillion worth of assets. So having an enhanced rollover experience, record keepers are actually going to be able to realize some additional benefits from that. For example, that’s significantly less amount of checks they’re going to have to write. That’s going to be less postage that they’ll be sending out.
This will be less administrative work that their reps are going to have to do to facilitate the transfer of that $1.1 trillion into IRA providers. From an IRA provider experience, whether it’s a plan advisor or a retail IRA, in 2022, 97% of IRA inflows came from retirement plans from the DC market. So it is a major source of funding for IRA providers.
So having an efficient roll-in process for an IRA provider, that’s going to help them capture those assets faster and more efficiently. Being in the forefront of a plan participant when they’re ready to make that rollover decision to market themselves for those assets, again, that’s going to position an IRA provider significantly better, whether it’s a retail or plan advisor, to capture those assets more efficiently. So I think the name of the game as the rollover market expands is to have a very efficient modern process to send out rollovers, but also to receive rollovers.
Jeffrey Snyder, Broadcast Retirement Network
So it sounds like, John, that flexibility is very important. Being able to chase those returns, consolidation, all very important aspects of the IRA rollover process from the participant’s perspective. What about choice?
Being able to choose whatever IRA they want, an IRA provider that they want.
Jonathan Wolff, SS&C Technologies
That’s very important. Just because someone is making a rolled decision out of 401k doesn’t mean that they have a pre-existing IRA. So having a choice of providers, reputable providers, that they have the ability to roll their assets into is definitely very important, because they’re going to want to do their homework, they’re going to maybe want to talk to their friends, do independent research or family members that may have an IRA at a different institution, and get a sense of what the landscape looks like and where they’ll feel the most comfortable putting their money. It’s a big decision. So having the ability to have a choice of reputable, high quality IRA provider options, that’s just going to really help them make the proper decision for their rollover destination.
Jeffrey Snyder, Broadcast Retirement Network
I want to go back to something you mentioned earlier in my first question, and you talked about efficiency. I want to ask you about efficiency in three categories. Let’s start with record keepers.
What does an efficient rollover process mean to the record keeper, to the administrator of the retirement plan?
Jonathan Wolff, SS&C Technologies
It means that there’s a ton of benefits for it. Back to the record keeper, number one, having an efficient rollover process where you’re reducing or eliminating checks. You reduce those checks, you’re reducing postage that’s going out with those checks.
Those are two line items that are coming right off or being significantly reduced. We’re also going to be able to free up administrative work. So call center reps aren’t going to have to deal with a long 30-minute rollover call with a plan participant.
If the record keeper is able to offer a participant self-rollover service, that’s going to free up their employees to do other tasks and not be bogged down from a rollover standpoint. And also, too, an efficient rollover process can create an expense recapture model back to the record keeper. So it’s a way to monetize participants that are rolling out their assets regardless of asset retention efforts.
So I think there’s a lot of benefits for record keepers to embrace an enhanced rollover strategy.
Jeffrey Snyder, Broadcast Retirement Network
And the same question, but from the perspective of the plan sponsor, the employer, what’s in it for them? I would imagine one thing would be less phone calls to them like, oh, my rollover didn’t go well. But you tell me.
Exactly. No, that’s definitely part of it.
Jonathan Wolff, SS&C Technologies
They’re going to have to deal with less terminating employees calling back into this saying, where’s my rollover? What’s going on with it? How do I get it out?
Having a more efficient rollover process from a plan sponsor standpoint is going to go a long ways in helping fulfill fiduciary responsibilities. And also, the more participants that are going to roll out that are terminated, in some cases that’s going to help lower the cost of the plan back to the plan sponsor. So there’s a lot of benefits for a plan sponsor, too, to adopt this because it’s going to be one less headache for an employee that’s separated service.
So not even a current employee that they have to deal with today. It’s an employee that may have been out of the firm for five years and now is calling back with a rollover problem. So I think that for a plan participant, from a plan sponsor standpoint, again, there’s some realized benefits of an enhanced rollover strategy.
Jeffrey Snyder, Broadcast Retirement Network
Well, John, you and I both remember the days of waiting for the letter of determination, all the appropriate paperwork, and then receiving a check. How can these transfers be done faster and without the wait? Sure.
Jonathan Wolff, SS&C Technologies
The best way to do it is to partner with a middleware platform like Rollover Central, where we connect IRA providers to 401k record keepers. We facilitate that rollover to happen via ACH directly into a participant’s IRA account. Our marketplace also has the ability to have IRA providers market themselves to attract new customers.
So if a new participant that doesn’t have an IRA wants to open up an IRA, if one of our partner providers were able to facilitate that account opening one session and then facilitate that rollover via ACH directly into that account. So our platform creates those efficiencies that we’ve been talking about. We’re going to eliminate checks.
We’re going to eliminate mailings. We’re going to eliminate fraud. And we’re also going to drastically reduce time on the market for the plan participant.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. And you bring up fraud. Let’s talk about cybersecurity, fraud, and overall safety.
Is the process you’re talking about more safe and secure? Because in the old days, in the olden days, back when I was a record keeper, you waited we got mail. We had to wait for the mail to come in.
And even though those forms had barcodes, anything, those checks could be intercepted. They could not make it. They could be deposited into the wrong account.
I’ve seen it happen a lot of times. So is today’s process, the one that you’re talking about, much more safe and eliminates the fraud concerns?
Jonathan Wolff, SS&C Technologies
Oh, absolutely. You can’t steal an ACH from a mailbox. So, I mean, there’s just a report not too long ago where a $114,000 rollover check was taken by fees and cash.
So that participant, unfortunately, had to deal with a lot from a fraud standpoint. And to your point, not only just from a fraud, but how many checks you lost in the mail that the participant has to then go back and reinitiate the rollover process. And that rollover process has been fun because a lot of times those phone calls could be 30 plus minutes and you’re on hold for half the time.
And then when you get that check in the mail, again, it could take a couple of weeks for it to get to you. It’s going to arrive snail mail in a nondescript envelope that looks like junk mail. That’s going to be a big chunk of your retirement savings in most cases.
Once you have that check and deal with that stress of waiting for it, the onus is now on you as the participant to make sure that check gets to the right destination. So in some cases, that check’s going right back into the mail. It’s only going to exasperate the chances for an issue with the mail.
But also, too, it’s lengthening that time you’re out of the market. So the rollover process today is extremely inefficient. It’s ripe for fraud.
It’s ripe for participants to have a stressful experience. And Rollover Central and our malware platform really reduces and eliminates that in most cases. So I think the current process is significantly outdated.
I don’t think it’s efficient, whereas our process brings it to 2025 and creates a much more efficient process for plan participants, for IRA providers, and then for record keepers.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, absolutely. Well, John, very interesting discussion. $1.1 trillion is a lot of money sitting out there. Creates a lot of opportunity for advisors, record keepers. We appreciate you joining us, and we look forward to having you back on the program again very soon. Thank you.
Appreciate it. That’s all for this morning’s episode. We’re back again tomorrow.
Until then, I’m Jeff Snyder. Stay safe, keep on saving, and don’t forget, roll with the changes.