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.