Advisers giving it the old college try in plugging 529s

Advisers giving it the old college try in plugging 529s
Size of new adviser-sold accounts now considerably larger than direct-sold accounts; all part of a 'holistic financial plan'
JUL 13, 2012
New numbers suggest that advisers increasingly are helping investors save more for college. The average size of new college savings plans set up by advisers for their clients is on the rise. In contrast, the average new-account size of direct-sold Section 529 plans shrank by about a third from a year ago. According to the latest data from the College Savings Foundation, the average size of new adviser-sold plans opened during the first quarter of 2012 was $5,356. That's up about 11% from $4,829 during the first three months of 2011, the CSF said Wednesday. New direct-sold plans averaged $3,883 in the most recent quarter, compared with $5,804 a year ago. “The data indicate growth and the expansion of understanding that college savings is part of a holistic financial plan by advisers,” Financial Research Corp. analyst Paul Curley said. “Direct-sold plans are targeting a broader set of investors that have a smaller level of initial account balance.” With 529 plans, participants choose from certain investment portfolios, and the funds grow tax-free as long they are spent on higher education. Nationwide, assets in 529 plans for the most recent quarter were up 8% over a year earlier. According to FRC, which analyzes and expands on data provided by the CSF, $158 billion was held in about 10 million accounts in the first quarter of the year. Assets in adviser-sold plans totaled $78.6 billion, while direct-sold plans held $79.7 billion, FRC said. Another $21 billion was invested in the nation's prepaid college savings plans, according to FRC. Some states have closed their prepaid plans to new investors in recent years to make sure they can afford to pay for tuition for existing participants. Virginia's adviser-sold plan — managed by American Funds — remains the nation's largest 529, with $33 billion in assets, or 21% of all the money tucked away in the college savings vehicles. Assets in that plan are poised for even further growth, as clearing giant Pershing LLC recently made the popular plan available to advisers on its platform. Pershing said it will add other state 529 plans in the coming months. “Pershing's offering has the potential to greatly expand the use and sales of 529 college savings plan in the adviser-sold channel,” Mr. Curley said.

Latest News

GLP-1 users are trading retirement savings for their prescriptions
GLP-1 users are trading retirement savings for their prescriptions

A Nationwide survey finds 47% of GLP-1 users have never discussed the drugs’ financial impact with an advisor, even as many dip into savings.

Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors
Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors

The hundreds of millions of dollars from a sale of Inspired Healthcare properties does not mean an immediate windfall for investors.

Class action alleges Webull misled investors about China operations
Class action alleges Webull misled investors about China operations

Its SEC filings said one thing - a congressional probe said another.

Investors accuse Netcapital of inflating revenue through sham deals
Investors accuse Netcapital of inflating revenue through sham deals

Sham agreements allegedly padded revenue by 345%.

Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli
Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli

"Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help," said Chris Bailey of Cerulli.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor