As someone who has spoken with and worked alongside thousands of financial advisors, one troubling pattern continues to emerge: many advisors aren’t taking a proactive, strategic approach to forgotten 401(k) assets. And the numbers show just how big this issue has become.
The Growing Epidemic of Forgotten 401(k)s
There’s an estimated $2.1 trillion in forgotten 401(k) assets. The average American changes jobs twelve times during their career, and with each transition comes the potential to lose track of a retirement account.
In 2023 alone, 3.5 million accounts were left behind. In 2024, that number grew to 4 million, and projections for 2025 show another 4.2 million may be forgotten. This is more than a statistic—it’s an opportunity for advisors to step up and make a real difference.
What’s Your Plan of Action?
Advisors have a unique opportunity to transform this growing problem into a service that benefits both clients and their practice. Here’s how.
1. Identify Forgotten Accounts
Start by leveraging payroll and recordkeeping data to track when employees terminate employment but leave balances behind. Check IRS and Department of Labor (DOL) resources for unclaimed plans or assets.
Outdated addresses, emails, and Social Security numbers are often the culprits behind forgotten accounts—cross-referencing and updating these can help locate participants and restore their assets.
2. Educate and Engage Employees
When employees leave a job, they often don’t know what to do with their retirement savings. Advisors can help them understand their options:
- Roll over to an IRA
- Transfer to a new employer’s plan
- Leave the account where it is
- Take a cash distribution (and understand the tax implications)
Highlighting the benefits of consolidation—tax advantages, simplicity, and continued investment growth—empowers employees to make informed decisions. Make the process easy: guide them step-by-step through the “how” to support the “why.”
3. Promote Consolidation for Better Outcomes
Managing multiple retirement accounts can be cumbersome and costly. When assets are scattered, they’re more likely to be neglected. Advisors can help employees consolidate accounts into an IRA or their new employer’s plan, reducing costs and improving overall investment efficiency.
4. Revisit Investment Strategies
Forgotten assets often sit in default investments—steady, perhaps, but rarely optimal. Advisors excel at designing personalized portfolios that align with an individual’s risk tolerance and long-term goals. By reclaiming these assets, advisors can create strategies that maximize growth and provide clients with choices—adding value where it matters most.
5. Turn Engagement Into Opportunity
Reconnecting with former employees or assisting clients in recovering lost balances can turn dormant accounts into active assets under management.
Use this as a gateway to offer additional services—retirement planning, tax strategies, or financial wellness programs. Demonstrating genuine care for clients’ financial well-being builds trust, loyalty, and lifelong relationships. These positive experiences often lead to referrals and long-term business growth.
Advisors: Be the Difference
The epidemic of forgotten retirement accounts is growing—but so is the opportunity to make an impact. By taking a proactive approach, you not only help clients reclaim their hard-earned savings but also strengthen your role as a trusted advisor.
Helping clients find their lost retirement assets isn’t just about recovering funds—it’s about restoring confidence, simplifying their financial lives, and positioning yourself as the expert who truly cares about their future.
