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529 E-ditorials

00-23: Where are the professionals?
Joe Hurley
Saturday, December 30th 2000

Both of the following discussions took place on the same day about three weeks ago.

First it was the head of a money management firm with more than a billion dollars under management …$500,000 minimum account size … long time, no see, what’ya been up to? So I explain my interest in 529 plans; writing a book; managing a Web site. Hmmm, never heard of that particular investment, he says … sounds interesting, I’ll have to check it out.

Later on, it was an experienced broker with one of the country largest stock brokerage firms. I call on behalf of a close relative, tell the broker we’re thinking about liquidating a low-performing mutual fund to move funds into a state college savings plan for the grandkids. Oh yeah? I don’t really know anything about those, she says.

Now, I know better than to expect to find a high percentage of 529 experts among professional investment advisers. There just isn’t enough time to study every new investment product that comes along. And I’m aware that someone can accuse me of not knowing about the latest derivatives product, or the recent performance of the euro.

But still these exchanges made me wonder. Never heard of 529 plans? Can’t offer ANY opinion, good or bad? Okay professionals, it’s time to take notice. Something significant is happening in your backyard, and your clients expect their financial advisers to know about it. Make it one of your New Year’s resolutions to learn at least a little about 529 plans.

529 plans have been around long enough to catch the attention of professionals, and there’s been plenty of recent media attention. We’ve seen it on television, on radio, and in magazines and newspapers, including most of the largest circulation periodicals (TIME, Newsweek, New York Times, Wall Street Journal, etc.). The states and their outside program managers are now spending big bucks to advertise their 529 plans. In my state of New York, everyone has received reminder postcards from the college savings program, and we see the governor and comptroller hawking it on television and in the newspapers.

I suspect that the level of 529 awareness among professional advisers will steadily increase as time goes on. But I now realize that it will not happen in a big way over a short period of time. This creates an interesting situation. In the world of investments we often see “push” marketing by the professional community creating the demand for new products. But in the case of 529 plans, we may see consumer demand for professional help and advice outpacing the available supply over the near term.

For the individual saver, this means you may have to go it alone in evaluating your option to use 529 plans. For the professional adviser, this means rare opportunity, at least until the supply catches up to the demand.

» 05-4: The 529 marshals have arrived - 08/30/05
» Our 5.29th-year anniversary - 06/29/05
» 05-2: 529s and the new Bankruptcy Act - 04/28/05
» 05-1: Reform or Deform? - 02/27/05
» 04-6: Perspectives on the 529 debate - 12/28/04
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