PLANADVISER - January/February 2018 - 8

practice development
Giving
529 Plans
A Try
The first in a series on
other revenue streams
I
n an industry becoming increasingly
" siloed, " as one retirement
plan adviser observes, he and many
others have discovered the value of
going against the grain. They have
found that adding one or more tangentially
related plans or services, even if
not lucrative at first, can solidify their
client relationships, and their firm's
competitiveness.
For years, Brett Shofner, president
of Work Plan Retire in Delray, Florida,
had been hearing participants ask how
to save for both retirement and their
children's schooling. " I thought, 'That's
not my area of expertise.' " But eventually
he realized the extent of people's
need. His firm began offering 529 plans
six years ago, upping their efforts over
the last few, he says.
Shofner sees 529s as just one piece
in a holistic greater-than-the-sumof-its-parts
approach whereby he can
add value for the sponsor and help
participants save more for their retirement
life. How to pay for their children's
college, their own health care
and day-to-day living- " they're all
related for these people and becoming
increasingly intertwined, " he says.
The take-up for 529 plans has been
strong. Paul Curley, director of college
savings research at Strategic Insight
in Boston, parent of PLANADVISER,
reports that 13.2 million people had
invested over $300 billion in 529s as of
last year's third quarter. His research
finds that " 41% of college-saving
parents would certainly or very likely
open a 529 plan if only their employer
were to offer one. " Employee interest
aside, in 2016, just 10.3% of plan sponsors
provided a 529, creating " a low-lift
Sixty-eight percent report that selling
529s helps them retain clients.
opportunity " for advisers, Curley notes.
For a plan sponsor, adding a 529 is
easy and inexpensive, says Shofner.
Participant contributions can be payroll
deducted, further simplifying sponsor
involvement. Another plus: Offering
such benefits shows the sponsor cares
for its employees-and takes its fiduciary
role seriously, he says.
The adviser's benefits are less direct.
The work can be substantial-mainly
educating participants, meeting with
them one on one; Shofner advises
sending a simple explanation of the
plan before any meetings. Further, the
chance for immediate profitability is
slim, he admits.
For these reasons, many advisers
shy away from 529s, as he once did.
" It seemed like a lot of work for very
little benefit, " he says. But " the profit is
more 'big picture.' " Offering expertise
with 529 plans could be the difference
between keeping or losing a good plan
sponsor client, or winning or losing a
new one, he stresses.
Strategic Insight's adviser surveys
concur. Sixty-eight percent of retirement
plan advisers report that selling
529s helps them retain clients, and
42% that the plans help them attract
clients. Advisers also called the assets
" extremely sticky " and said compensation
aligns with other products.
Sticky assets or not, balances are
low-Shofner and Curley both cite
around $20,000.
Shofner
attributes
that average to the relative newness
of the plans. " I would expect those
balances to grow a lot more, " he says.
In sum, he says, " Advisers who want
to remain siloed are missing an opportunity.
[529s are] not that hard to figure
out. Do your due diligence, add them on
as a service. Your clients will feel very
rewarded by it. " -Karen Wittwer
8 | planadviser.com january-february 2018
Art by Yinfan Huang
http://www.planadviser.com
PLANADVISER - January/February 2018

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