Want to convince prospects that they need your services? Talk to them about college.
About 82% of families that work with an advisor have a plan in place to reach their college savings goals, according to a new study from Fidelity Investments. But among those without an advisor, less than half -- only 47% -- have a college savings plan in place.
And more than twice as many families with advisors were using dedicated college savings accounts such as 529 plans, the survey found -- 57%, versus 24% of families without advisors.
Parents want advisors involved, says Matt Golden, vice president of college savings for Fidelity Financial Advisor Solutions. Few people are in better positions than advisors to offer a holistic view on a clients financial position.
Those statistics were among the highlights for advisors in Fidelitys annual College Savings Indicator Study, which was based on surveys of more than 2,500 U.S. parents with college-bound children of all ages.
The study also found that advisors are helping parents discuss college finance with their children. According to the survey, 43% of parents who use a financial advisor used materials provided by their planner during college discussions with their children -- with conversations starting at around age 13, Golden says.
And 11% of parents who work with financial professionals even had their advisor meet with their child when discussing college finances.
Advisory help is becoming critical as families struggle to cover rising college costs, Fidelity found. While 64% of parents said they were planning to pay for their childrens college education, only 28% are on track to meet that savings goal. (Just over a third of parents said they expect their children to help pay for college expenses.)
The average college student now faces a bill of $155,000 to attend a four-year college, says Golden -- and thats a huge number for parents to have stocked away."
"Even slightly affluent parents are looking for children to get involved, he adds.
One growing issue for parents, says Golden, is a longer-term look at their children's financial independence. Indeed, eight in 10 parents admitted to fears that their children would not be able to gain a solid financial footing post-graduation if burdened with student debt.
In my own opinion, as the cost of college continues to increase there is more concern about their children becoming financially independent when they get out of college, says Golden. They do not want them to be overwhelmed with student loans.
TIPS FOR CLIENTS
Golden offers a few tips for advisors looking to start conversations with client families.
Suggest that parents think about college savings in connection with other expenses, he recommends. When a clients child is old enough to begin school and no longer attends a day care center, for instance, advisors can suggest that parents use the money they save on day care to college savings account.
Help clients connect with grandparents, too. We did a recent survey that showed 90% of grandparents said they were willing to make gifts to college savings in lieu to traditional gifts, Golden says. Estate planning strategies may play a role here, he adds: Older couples can contribute up to $140,000 to each 529 plan per beneficiary without triggering a gift tax.
Most important, he says, encourage parents to take action as soon as possible. Parents should be planning right away, he says. Its disturbing to wait until your children are in high school. You just dont have enough time.
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