Asset Sponsors

There was an estimated $3.2 trillion in IRA accounts at the end of 2008, despite a 22% decline in value during 2008. In addition there is another $10.8 trillion in retirement plans, many of which will continue to roll into IRAs as the “boomers” retire in the next five to seven years. The rollover rate to IRAs is in excess of $250 billion per year.

Unlike disposable income all of the IRA money can potentially be tapped by asset sponsors seeking new capital, as IRA funds are already set aside for investment purposes. Those seeking capital from sources such as disposable income have to compete with the cost of living expenses such as health, food, entertainment,education and housing. Competing with these disposable income expenditures makes fund-raising more challenging. However, suggesting to your private investor prospects that they can do more with their retirement savings than to limit it to the stock market, can be quite rewarding in today’s market.

Individuals need to diversify their portfolios to hedge against stock market risk. Generally, diversification, as supported by the Modern Portfolio Theory (MPT), is undeniably the best way to maximize your returns and to hedge against downturns. Explaining this to prospects can be fruitful for you and them.

To learn more about how to tap the rich retirement capital markets, attend one of PENSCO’s many educational events.