ABSTRACT
Individual retirement account (IRA)/Keogh assets have grown to more than five times the level they had reached when the Economic Recovery Act of 1981 attempted to encourage retirement savings by permitting households to invest in IRAs with pre-tax dollars. Virtually all IRA owners made their IRA contribution to the same institution each year. Certificates of deposit have been the investment of choice of the IRA contributor. The existence of large growing asset balances in competitors’ IRA plans constitutes a major opportunity in the IRA market. Financial institutions have neglected a sound strategy for attracting these accounts: cross-selling IRA transfers and new IRA accounts to their customers who have their IRA assets invested at competitor institutions. Efficiently cross-selling to competitors’ IRA customers among an institution’s customer base requires identifying who they are. Certificates of deposit clearly have the highest target efficiency in cross-selling IRAs in banks and thrifts.
