Is it a mistake not to hire a financial planner?

http://www.savingforcollege.com/articles/is-it-a-mistake-not-to-hire-a-financial-planner-789

Paying for college has become the number one financial concern among parents of young children. Four years of tuition 18 years from now will likely cost more than your family’s first home. But figuring out just how much you will need to save can be a challenge. Your child’s total college costs will depend on a variety of factors, including their age, type of school, location, whether or not they will live on campus and if scholarships are in their future. When it comes to planning, some families prefer to endure the journey alone, but others are willing to pay for professional guidance.

DIY college planning may work for some, but here’s what you might be missing out on:

1. Access to more investment products
If your child is young, or perhaps not even born yet, an easy way to start preparing for their college education is to open a 529 plan. You can enroll in some 529 plans directly but others can only be purchased from a financial advisor. Although your advisor may earn a commission by selling you a certain plan, he could also recommend that you open a direct-sold plan if he thinks it’s a better fit.

According to this year’s College Savings Survey, only 28 percent of parents who currently save in a 529 plan said they used a financial advisor to shop for one. The top three reasons for not working with an advisor were that they were comfortable researching and understanding investment options on their own, they didn’t want to pay commissions and they were concerned about hidden fees or costs.

2. Help with selecting a savings vehicle
Almost every state offers a 529 plan and there are hundreds of different investment options to choose from. A financial planner who is familiar with college savings plans and the investment managers who run them will be able to help narrow down your choices. If you’re already working with an advisor who knows your investment goals and risk appetite you’ll get an even more personalized recommendation. Even if you’re working with a fee-based independent advisor he or she can still help recommend an appropriate direct-sold plan.

3. Evaluating the school’s expected ROI
Most families are comfortable with the idea of supplementing their college savings with some student loans, but no one wants their children to be crippled with excessive debt. A financial planner can help you evaluate your child’s choice of school and the expected return on investment to ensure that they’ll be able to afford the future loan repayments. This includes researching tuition costs as well as expected starting salaries for the student’s desired field of study.

4. Finding scholarships and grants
According to Sallie Mae’s How America Pays for College 2014 report, undergraduate students paid for 31 percent of their total college costs with grants and scholarships. What’s more, 38 percent of students from households with incomes over $100,000 received scholarships. So even if you are a high earning family, there’s a good chance you will be able to get some sort of scholarship. Today’s financial planners play a large role in helping families uncover opportunities to cut down tuition costs.

5. Maximizing financial aid eligibility
According to the 2011-2012 National Postsecondary Student Aid Study (NPSAS), around 2 million students missed out on receiving a Federal Pell Grant simply because they failed to complete a FAFSA. That’s right, these families gave up a chance to receive money for college that they wouldn’t have had to pay back! The FAFSA is a highly complex form. So much so that the President is taking major steps to simplify the financial aid process. Remember that federal financial aid is first come first serve, and if you make a mistake on your FAFSA you’ll have to make a correction and re-submit. For families who don’t feel comfortable filling out this complicated form alone, who better to ask for help than their financial planner, who already has a complete picture of their household finances?

6. Aligning your investments
Do you currently work with a financial planner to manage your retirement account and other investments? If so, it might make sense to involve them in your college planning process as well. You may even qualify for a discounted sales charge if your investments within the same fund family reach certain breakpoints. For example, this could happen if you have an IRA, a brokerage account and a 529 plan all in the same fund family purchased through the same financial advisor.