529 plans also miss the boat when it comes to ESG

529 plans also miss the boat when it comes to ESG
You'd think a 529 college savings program would be the perfect vehicle for environmental, social and governance causes, but things appear stalled.
MAR 16, 2019

If​ ever there was a market ripe for ESG investments, it would seem to be the 529 college savings program, which turns 20 this year. Even though most contributors to college savings plans are young parents who tend to be more conscious of environmental, social and corporate governance causes, the 529 plan market has yet to adjust to what is likely a healthy appetite for ESG products and strategies. (More: ESG options scarce in 401(k) plans) Paul Curley, director of college savings research at Strategic Insight, said only 10 states, plus Washington, D.C., offer even a single ESG fund on their 529 plan investment menus. In those plans, just 2% of assets have been allocated to ESG funds. To get a sense of the growth or lack thereof to date, the current number of states offering ESG funds is up from nine in 2013, when just 1% of assets were allocated to ESG funds. But Mr. Curley believes the tide is slowly turning. He expects more states will soon make ESG options easier to access for those saving for college. "Right now, the ESG offerings tend to be stand-alone options, while about half the assets in 529 plans are allocated to age-based strategies," Mr. Curley said. "But the investment lineups are becoming more diverse, and the industry recognizes and realizes the target market and demographic is shifting." (More: Why millennial demand for ESG is falling on deaf ears) One sign of the shifting dynamics in the 529 space is a steady decline in adviser-sold plans as more savers do it themselves. According to Mr. Curley, adviser-sold assets represented 43% of total 529 plan assets in 2018, down from 62% in 2003.

Latest News

LPL takes big swing at mainstream with PGA marketing deal
LPL takes big swing at mainstream with PGA marketing deal

LPL recently has softened its antipathy to mainstream marketing.

Larry Roth joins JIFFY AI advisory board as wealth tech race heats up
Larry Roth joins JIFFY AI advisory board as wealth tech race heats up

The veteran independent broker-dealer executive brings crisis-tested leadership to the AI-powered data platform

RIA moves: Modern Wealth snaps up $1.1B Florida firm to extend Eastern footprint
RIA moves: Modern Wealth snaps up $1.1B Florida firm to extend Eastern footprint

Arax and Waverly also staged their own East Coast expansions by acquiring a family-owned practice and a Maryland-based wealth firm.

Most investors are still positioned for the old environment
Most investors are still positioned for the old environment

Portfolios are built for specific environments, but most investors are still positioned for one shaped by intervention and conditioning that may no longer exist.

How a 320-strong Morgan Stanley advisor team supports the pro bono financial planning push
How a 320-strong Morgan Stanley advisor team supports the pro bono financial planning push

Foundation for Financial Planning CEO tells InvestmentNews how the wirehouse’s wealth management division steps up to the plate for those in need.

SPONSORED Estate planning isn't a service add-on. It's your retention strategy.

As $84 trillion prepares to change hands, advisors who treat estate planning as peripheral are quietly building a sieve, not a book.

SPONSORED Why strategy matters more than performance

In volatile markets, the advisors who win aren't the ones with the best calls - they're the ones whose clients stay the course.