Seventy-six percent of 780 producers surveyed for John Hancock College Savings said that 529s represent only 1% to 4% of their business. But in a survey of investors, more than two-thirds of parents and one-half of grandparents planned to contribute to 529 plans.
“With clear interest on the part of consumers, we feel there’s a real opportunity for producers,” said Diana Scott, senior vice president and general manager of John Hancock College Savings. “There are many benefits of using 529 savings plans versus other vehicles for college funds, and now with the tax-free status of qualified distributions being permanent, we hope producers take another look at offering 529s.”
When asked what time of year they make the most 529 sales, 42% said the fourth quarter, followed by 24% saying first quarter, 17% second quarter and 16% third quarter. But they may be missing the boat, since 46.2% of investors said making a gift for college needed no special occasion.
“While a 529 sale may not be a large ticket, the relief parents feel in starting to tackle this financial issue is so great, it pays off by strengthening relationships and many times leading to sales of other products.”
As to what producers feel are the advantages of 529s, 84% cited tax advantages as extremely or very important, 82% cited the flexibility to change beneficiaries, and 77% noted investment options.
In terms of selling 529s, 79% said performance is key, 67% pointed to a multi-managed platform, 58% cited selling tools such as calculators, 49% noted brand recognition and 45% mentioned wholesaling support.