Survey: 529 industry feeling the heat of financial furnace

Even the normally upbeat Section 529 college savings plan industry is in the dumps as it grapples with the financial crisis, according to a survey released this morning by the College Savings Foundation at its annual conference in Miami Beach, Fla. Just 28% of respondents said that they thought that the level of financial advisers’ commitment to selling 529 plans in the field was increasing, compared with a year ago, when 51% said they thought that. Also, while 57% of respondents in January 2008 thought that the overall commitment of program managers to 529 plans was increasing, that fell to 44% this year. Just under half of respondents last year thought the overall commitment of states to 529 programs was increasing, but this year just 44% of respondents did. Not surprisingly, respondents cited the economic environment as the biggest factor holding back 529s’ growth, followed by “lack of interest and/or funds” and “perception of poor performance.” What’s more, just 12% of survey respondents said that they are very optimistic about the growth of 529 assets and accounts in the short term, though nearly half said they are very optimistic about growth in the long term. “The industry remains optimistic but is also more cautious in these uncertain times. There’s a need to refocus and have financial advisers get the message out to families on the importance of saving for college,” said Kevin McMullen, chairman of the foundation’s executive committee and counsel for State Farm Mutual Automobile Insurance Co. in Bloomington, Ill. “I think everyone is having a difficult time dealing with the stock market,” said 529 veteran Joe Hurley, vice president of Bankrate Inc. of North Palm Beach, Fla., and founder of Savingforcollege.com LLC. “States and program managers want to make sure they have programs set up that are appropriate for this environment and make it as easy as possible for people to understand.” Forty-three association members participated in the survey. The Washington-based association is an industry advocacy organization whose members include program managers, state officials and distributors of financial service products for 529 plans.