Why are 529 plans not more popular? A panel of plan reps tried to answer that question at a conference on Thursday.

“The challenge is not all advisors are as passionate about 529s as the ones in this room,” said Peter Hughan, the sales director for college savings at John Hancock Investments, addressing attendees at the College Savings Foundation 2018 annual conference in Phoenix on Thursday.

“How do we get [advisors] to dedicate more time, mind share, attention to [529s]?” he asked.

Hughan moderated a panel on advisor-sold 529 plans that included reps from such companies as Franklin Templeton Investments, BlackRock and NorthStar Financial Services.

Roger Michaud, the senior vice president for Franklin Templeton, said 529s are further down on the list of things field advisors review with their clients. That means sales teams drive many of the conversations about these vehicles.

But he said Franklin Templeton is getting more of its advisors to initiate conversations about the plans.

Some of the reasons advisors shy away from college financial planning, the panelists said, is that they often don’t understand 529 particulars and don’t see the vehicles as a way to retain a book of business.

“Part of the reason they don’t talk about it is that they’re scared to not know the answer to the question that the client is going to ask,” said Hughan. They also might see 529s as a “small ticket business” that’s just not worth the time, said Paul Curley, the director of college savings research at the data analytics firm Strategic Insight.

“The cost of college in 18 years, you know the projected cost is $400,000. So it’s not a small ticket,” said Curley in a separate interview at the conference. 

As of December 2017, 529 plans reached $319 billion in assets with a net flow of $3.1 billion, which was a $0.4 billion increase from the fourth quarter of 2016. According to Strategic Insight, that illustrates a steady demand for the plans.

In 2015, 91 percent of advisors in a Strategic Insight survey recognized college financial planning as part of a holistic financial plan. But the percentage of advisors who saw 529s as something that helped them retain clients dropped to 69 percent, and those who thought of 529s as a way to acquire new clients fell to 40 percent.

Some of the advisors are having trouble distinguishing what 529s do, Curley said. “And college financial planning is complex,” he said. “But that’s actually where you add value: helping your clients to think about the tax, the financial aid, the estate planning dynamics of college financial planning.”

Michaud said advisor teams may fare better than a stand-alone advisor when it comes to offering college financial planning because one person on the team can focus on college savings goals.

Hughan said CPAs and estate planning attorneys aren’t savvy about 529s either. “So teaching advisors how to have that conversation and educate the estate attorneys and CPAs is powerful for multiple reasons,” he said. One reason being that it creates a source of referrals for the advisors.

Hughan said John Hancock has had success using virtual meetings and CE credits to educate advisors. "We're really trying to meet them where they want to be communicated with," he said before stating that company sales were up more with virtual meeting attendees than with those advisors who did not dial in.

Other panelists at the College Savings Foundation conference included Tom Morgan, the director of U.S. wealth advisory at BlackRock, and Bill Wostoupal, the executive vice president of sales at NorthStar Financial Services.