Connecticut taps The Hartford for state’s first adviser-sold 529
Insurer's second state pickup, following selection by West Virgina; ETFs on the menu
Connecticut financial advisers now have another Section 529 college savings plan option for clients.
The state has tapped The Hartford Financial Services Group Inc. to launch an adviser-sold 529 plan, the first one for the state. The CHET Advisor plan will be only available to in-state residents.
TIAA-CREF will continue to manage Connecticut’s direct-sold 529 plan, the Connecticut Higher Education Trust, which has $1.3 billion in assets.
The deal with Connecticut marks The Hartford’s second win in the 529 arena. The firm also manages West Virginia’s adviser-sold 529 plan, which is available nationally and has $1.2 billion in assets, according to Morningstar Inc.
The Hartford will support a $100,000 annual scholarship program for Connecticut children.
“Starting up a new plan has its challenges, so I think the fact that Connecticut is doing it with an in-state company shows commitment to local business and shows a lot of confidence in Hartford,” said Andrea Feirstein, a 529 plan consultant.
The new plan offers The Hartford’s age-based and target risk funds as well as a number of fixed-income and equity funds. The plan also will include exchange-traded funds as part of its asset allocation funds and target date funds: the PowerShares Emerging Markets Sovereign Debt ETF Ticker:(PCY)and State Street Corp.’s Dow Jones Wilshire U.S. REIT ETF Ticker:(RWR)and Dow Jones International REIT ETF. Ticker:(RWX). “We use those ETFs as part of our target retirement funds and our asset allocation funds, so we are just carrying over some of those investment products into this 529 plan,” said Jeff Coghan, director of 529 plans. “We are also in talks with West Virginia to do the same.”
Annual expenses for the plan range from 1.11% to 2.32%, depending on the share class and funds, but The Hartford has an agreement with Connecticut to lower those expenses once the plan meets certain asset breakpoints, Mr. Coghan said. He declined to say the amounts of the breakpoints.
Connecticut joins Arkansas, Indiana, Iowa and Missouri as states that offer ETFs in their 529 plans.
“Given all of the industrywide attention on fees, I’m not surprised to see ETFs used in these plans,” said Laura Lutton, an analyst at Morningstar. “We may see more plans go that route, too.”
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