Advisers need to go back to school

It's time for financial advisers to go back to college. Not to enroll, but to educate themselves on the costs of higher education and what it delivers in the marketplace. As InvestmentNews'Liz Skinner reported last week, parents — even relatively well-off ones — are struggling with the decision of where to send their kids to college and how to pay for it. At one time, the process was easier and the adviser's role fairly straightforward: help parents save for college, usually by making a 529 plan recommendation. Students typically chose the school based on factors such as its ranking, size and location. The tab for tuition, and room and board was usually farther down the list of considerations — if considered at all.

SOARING COSTS

The cost of a college education has soared, with tuition and fees up 1,225% since 1978, compared with a 279% increase in the Consumer Price Index. As a result, parents are being forced to factor in costs much more seriously than in the past. That's where advisers can help. As an unemotional third party, they offer a voice of reason and authority to the often-overwhelming college selection process. By weighing the costs of a particular school against the benefit the student is likely to reap from attending it, advisers can help both parents and their children make a more informed decision. For example, a two-year community college may be best for students with no idea of which course of study they want to pursue. Families can save thousands of dollars while students determine what they want to do. Students then can transfer to a four-year school that offers the best preparation for a career in their chosen field. Good advisers can go even further. Once a decision on college is made, they can help a family decide the best way to pay for it. If students or parents are borrowing money for school, advisers can help them choose the best kind of loan among the many programs available. Some advisers have even helped find scholarships for students. Advisers who devote the time and energy to helping clients with college selection are making themselves more valuable and are strengthening their relationship with the entire family. And by showing expertise in this vital area, they are putting themselves in a good position to get referrals from grateful customers.