Alliance Capital Management of New York has won the bid to manage, administer and market the CollegeBound Fund, the state college tuition savings program for Rhode Island. The state announced the contract last week.
This is the first state tuition savings program, also called a 529 plan, that Alliance Capital has won. Rhode Island sponsors the program and until now had been managing the assets itself. The program will be turned over to Alliance Capital this fall.
"The 529 marketplace is, in our opinion, one of those necessary add-on products that round out the defined contribution line," said John Carl, senior vice president and managing director of defined contribution at Alliance. Carl said Alliance is not currently bidding for the management contract for any other state tuition savings plan.
Unlike other state tuition savings plans that automatically invest tax deductible plan contributions into predetermined asset allocation models comprised of mutual funds, Alliance is working with Rhode Island officials to allow investors to choose where donations are made. College plan investors will be given five options that run the gamut from more aggressive growth to more conservative investments.
Alliance will market the savings plan nationally through its existing advisors, said Carl.