Pub. 4 2014-2015 Issue 2

18 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S Boomers Are Moving Dollars The culprits in this massive movement of money are Baby Boomers. 78 million strong, they began turning age 65 in January 2011 and will continue to do so at a rate of 12,000 per day for the next 15 years. As they enter retirement, their retirement savings will roll over to IRAs. Research by Cerulli & Associates shows that qualified retirement plan outflows will increase—year over year—from the $315 billion in 2013 to an estimated $450 billion in 2017. Think about that— several trillion additional dollars will be rolling into IRAs everywhere, and your bank is going to get its share. At best, this is an opportunity for your bank to attract new clients. At worst your financial organization needs a plan on how to handle the inquiries from your customers, handling the extra dollars and educating your front line staff differently than you have in the past. The mass disruption of the aging demographics, interest rates, and the stock market will combine to take your IRA busi- ness in new directions. Some of these are predictable—knowing what we now know about Baby Boomers and their retirement assets—but who can predict what interest rates and the stock market are going to do? What you can control is how ready you are to take on your share of the assets and how to align your bank’s attitude towards IRAs with your customer’s. Interest Rates & Market Performance Interest rates and market performance are two variables that are unpredictable at best, but it can be argued that neither matter as much as the aging numbers do. The number of Baby Boomers moving into retirement over the next 15 years is staggering and a certain percentage of them will have minimal or zero risk tolerance for their retirement savings. This will obviously spike even higher if stock market performance is volatile—regardless of what interest rates are. If interest rates increase, you can also reasonably expect to see more market share come to your bank. If the market performance is volatile and interest rates increase, you might want to buckle up and prepare for a veritable storm of IRA deposits. The root message here is that your IRA deposits are already beginning to increase with little to no effort on your organi- zation’s part. Aging workers retire or get out of the workforce for health reasons regardless of any changes in rates or the markets. This alone requires you to think differently about your IRA business and your customers’ needs. Add rising rates and market volatility into the mix and it’s both a challenge and opportunity for your bank. What To Do So, how does your organization deal with the rising tide of IRA dollars? Many banks have begun to review their IRA programs and find ways to reduce cost, increase customer service, and minimize compliance concerns. An increasing number of banks are outsourcing the administration of their IRA program to companies to achieve all three of those goals. In many cases, outsourcing frees up staff time and reduces the need for training and operational expertise within the bank. Those extra staff hours can then be spent on revenue-generating activity for your bank instead of operational maintenance of a product that you wish you didn’t have to offer. Ascensus is the nation’s largest independent retirement and college savings ser- vices provider, helping over 6million Americans save for the future. The firmpartners with financial institutions to provide tailored solutions for financial professionals, employers, and individuals. In total, Ascensus supports over 43,000 retirement plans and 3 million 529 college savings accounts and administers more than 1.5 million IRAs and health savings accounts. For more information call 800-346-3860 or visit irareview@ascensus.com or www.ascensus.com .  Increased IRA – continued America’s Premier Community Banking School 65th Annual School Session | July 12-24, 2015 University of Colorado | Boulder, Colorado Knowledge | Networking | Success Budget Now for GSBC www.GSBColorado.org n