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.
Those statistics were among the highlights for advisors in
Fidelity’s 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.
FAMILY DISCUSSIONS
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. 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 children’s 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.)
One growing issue for parents 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.
TIPS FOR CLIENTS
Suggest that parents think about college savings in
connection with other expenses. When a client’s 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. Estate planning
strategies may play a role here. Older couples can contribute up to
$140,000 to each 529 plan per beneficiary without triggering a gift tax.
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