Trend-watching financial advisors are now offering a home to clients' "orphan" retirement plans, and taking advantage of this often-overlooked opportunity to add to their assets under management.
These orphaned assets, which sit in 401(k) plans that get left behind and neglected when mass affluent professionals switch jobs, offer a huge opportunity to savvy advisors, according to Teresa Epperson, managing director in the Financial Services Practice at AlixPartners, a management consultant that recently conducted a study of dormant retirement plans.
Ten percent of mass affluent investors moved their money last year, to the tune of $750 billion, while 27 percent of mass affluent investors admitted to holding anywhere from $100,000 to $500,000 in dormant assets in what Epperson refers to as "orphan" 401(k) accounts. Advisors with effective client-education programs stand to add considerable sums to AUM if they hop on this trend, Epperson believes.
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