Is your 529 plan one of the six that Morningstar just downgraded?

One 529 plan bumped up to gold, joining only two others with that top rating.
OCT 25, 2016
Six college savings plans moved down on Morningstar's annual rankings this year, including West Virginia's adviser-sold plan, which slipped to a negative rating, according to Morningstar's latest report issued on Tuesday. That savings plan has about $1.6 billion in it. The Chicago-based ratings firm also bumped six section 529 college savings plans up its roster, with only Virginia's direct-sold college savings plan advancing to gold this year. Two other plans currently have a gold rating, the Nevada Vanguard college savings plan and Utah educational savings plan, both direct-sold plans. “The 529 plan industry as a whole continues to improve,” said Leo Acheson, Morningstar's lead research analyst for 529 plans. “All of the plans that were upgraded cut fees in one way or another, something we've seen across the industry pretty consistently over the years.” In all, Morningstar ranks 63 plans, representing nearly all of the $240 billion invested in these tax-advantaged college savings vehicles. Other Morningstar “medalists” include 10 plans with a silver ranking and 20 with a bronze. In addition to the Hartford SMART529 plan in West Virginia, two other plans fall in the negative category, South Dakota's CollegeAccess 529 and Arizona's Ivy Funds InvestEd 529, both adviser-sold plans. (More: The 5 Ps of picking a 529 college savings plan) Some plans were downgraded because they didn't cut their fees and ended up looking less competitive compared to the industry as a whole, which did continue to trim costs, Mr. Acheson said. Other changes include plans in Alaska and Maryland dropping from the highest ranking of gold to silver, and three plans in Arkansas, Georgia and South Carolina moving from bronze to neutral.
2016 Morningstar analyst ratings for 529 college-savings plans
Source: Morningstar
Plans from Arizona, Delaware, Massachusetts, and New Hampshire, advanced this year from neutral to bronze, while the Missouri MOST 529 plan, a direct-sold plan, rose two levels from neutral to silver. (More: What grade does your state's 529 plan get) The fact that fees tend to run higher on adviser-sold plans should not disadvantage those plans because Morningstar separates adviser-sold plans and those sold direct to the public when they evaluate the plans, Mr. Acheson said.

Latest News

Farther debuts AI investment proposal tool for advisors to win clients
Farther debuts AI investment proposal tool for advisors to win clients

"Im glad to see that from a regulatory perspective, we're going to get the ability to show we're responsible [...] we'll have a little bit more freedom to innovate," Farther co-founder Brad Genser told InvestmentNews.

Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler
Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler

Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.

Are you optimally efficient?
Are you optimally efficient?

Taking a systematic approach to three key practice areas can help advisors gain confidence, get back time, and increase their opportunities.

Advisor moves: Father-son duo leaves Raymond James for LPL, RayJay adds Merrill Lynch alum in Florida
Advisor moves: Father-son duo leaves Raymond James for LPL, RayJay adds Merrill Lynch alum in Florida

Meanwhile, Osaic lures a high-net-worth advisor from Commonwealth in the Pacific Northwest.

Beacon Pointe adds six RIAs in two-month acquisition spree, boosting AUM by $2.7B
Beacon Pointe adds six RIAs in two-month acquisition spree, boosting AUM by $2.7B

The deals, which include its first stake in Ohio, push the national women-led firm up to $47 billion in assets.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.