PLANADVISER - May/June 2019 - 18

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Educating Is Important With 529s
Offering advice about these plans can deepen relationships with clients
GENERALLY speaking, 529 college
savings programs are either directsold
through state-sponsored investment
providers or sold by advisers
with a broker/dealer (B/D), who earn
a commission on either an A- or a
C-share, says Glenn Sulzer, senior
analyst with Wolters Kluwer Legal &
Regulatory U.S.
" The revenue opportunities for
retirement plan professionals may be
limited to broker/dealers and to institutional
providers, rather than registered
investment advisers [RIAs], "
Sulzer says.
However, a number of RIA retirement
plan advisers have added 529
plans to the services they provide,
to reinforce their relationships with
sponsors and participants. These RIAs
are compensated for advising on these
plans either through their one-on-one
advice fee or perhaps through a financial
wellness fee.
" Adding 529s can enhance retirement
plan advisers' engagement with
both the sponsor and participants, "
says Peg Creonte, senior vice president
of business development for Ascensus'
government savings division. " Saving
for college is a priority for families,
and, with their tax advantages, 529
plans can be a valuable tool. "
Still, before adding 529s to their
practice, advisers should know that
they probably will need to educate
participants about what those plans
are, says Russ Tipper, senior vice president,
Capital Group, home of American
Funds. Pointing to a survey that
Edward Jones conducted last May,
he notes that only 29% of Americans
correctly identified 529s as an education
savings tool.
" Clearly, there's a lack of awareness
among families, who don't even know
that 529s exist, " Creonte concurs. " We
have a long way to go. "
This knowledge gap prompted
Ascensus to partner with many of the
states that sponsor 529s, as well as
Clients want to keep
serving their workers
once retired
Clients should
offer retirement
income solutions
Source: PIMCO Defined Contribution Consulting Study (13th annual)
Clients should make
distributions available
on a monthly basis
25% 31%
Male
Female
Fear they will outlive
their assets
Source: LIMRA-SRI
From an Adviser's POV
What plan advisers observe about their plan sponsor clients
66%
66%
72%
27 35%%
Male
Female
Expect to face significant
health care costs
28% 31%
Male
Female
Think they will incur
long-term care costs
investment firms that offer the plans,
to launch a 529 awareness campaign
on PBS this year, Creonte says.
Richard Brothers Financial Advisors
has offered 529 plans to its retirement
plan participants for the past 20
years and has seen as many as 70%
of participants invest in them, says
Randy Richard, the firm's president.
His practice charges nothing extra to
advise about the plans, he says. " The
529 discussion is really important [to
TALKING POINTS
Future Fears, by Gender
have with parents] and is something I
feel passionate about. "
RIA firm Essex Financial got into
the 529 game eight years ago. James
Sullivan, vice president, says advising
on the plans, for which he increases his
fee by 50 basis points (bps), " is more of
a value-add than a true revenue generator.
I do it to help solidify the relationship
with the plan and the participants
rather than as opportunistic crossselling. "
-Lee Barney
18 | planadviser.com May-June 2019
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PLANADVISER - May/June 2019

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