Nearly 90% of RIAs are concerned about traditional state-sponsored 529 college savings plans, according to a survey by Tuition Plan Consortium, a group of more than 270 private colleges and universities that own and operate the Private College 529 plan.
The top concern was over the quality and selection of investment options in traditional plans, with over half of RIAs surveyed naming this is their chief issue. But another 34% said exposure to market volatility was their main concern, and 28% weren’t happy with fees charged by the plan providers.
But RIAs did see the benefits of saving through pre-paid 529 plans, nonetheless, with 57% agreeing that the most important feature of a pre-paid 529 plan is the ability for parents to lock in present rates for future college tuition. Another 15% named tax benefits and protection from direct market exposure as the most important features of pre-paid 529 savings plans.
The ways RIAs most commonly recommend to save for college include 529 plans (95%), Uniform Gifts or Uniform Transfers to Minors accounts (45%), Roth IRAs (30%), taxable accounts (29%) and pre-paid 529 plans (28%).
“The concerns of RIAs are well-founded and underscore the importance of a diversified college savings portfolio with options that eliminate fees, market risk and the stress associated with making the right investment choice,” says Nancy Farmer, president of Tuition Plan Consortium. Private College 529 Plan is “one such solution,” she says.
Danielle Reed writes for Financial Planning.