ST. LOUIS - Financial advisors are not encountering a receptive audience when talking with millennial clients about the importance of saving for their children's college education, according to a survey at the recent spring conference of the National Association of Personal Financial Advisors (NAPFA).
Private College 529 Plan, a prepaid tuition plan owned by nearly 300 private colleges and universities, asked financial advisors which generation is the most receptive to pursing a college savings strategy - Baby Boomers, Gen X, or Gen Y. Of the 45 responses, the Gen Y millennials got just a single vote, while Boomers and Gen X evenly split the remaining 44 votes. The total response reflected about 10 percent of the conference attendees.
The experiences shared by the NAPFA advisors contrasts with larger surveys of families from institutions such as Savingforcollege.com and Sallie Mae that indicated millennials are more likely to be saving for college. This shows a potential difference between advisors and families when it comes to views on saving for college.
In other results from the Private College 529 Plan survey, 61 percent of the advisors said the rising $1.4 trillion student loan debt has impacted their clients' current interest in opening a 529 account. 30 percent indicated no impact on their clients. When this same question was asked at the NAPFA conference in 2012, only 57 percent cited an impact from the student debt crisis as affecting their clients' intentions.
In a question that allowed the selection of multiple answers, every single advisor said he or she recommended a traditional 529 savings plan to clients interested in saving for college. 16 percent also recommended use of retirement accounts and only two percent recommended prepaid tuition plans.
Similarly, when asked what advice they give clients during a volatile market like the one we are currently experiencing in 2018, 75 percent said they believed clients should "maintain their current allocation." Another 23 percent said, "adopt a more conservative allocation." Just two percent suggested rolling some of their education savings into a prepaid plan with a guaranteed benefit.
"This survey is just one more indication that prepaid tuition 529 plans are clearly being under-appreciated by both financial advisors and families," said Bob Cole, president of Private College 529 Plan. "These plans can provide the benefit of taking market risk out of saving for future college tuition, while families can use traditional 529 savings plans to save for non-tuition expenses like room and board, books, computers, etc."
Families can open Private College 529 Plan accounts throughout the year. Accounts opened on or before June 30, 2018, will purchase prepaid tuition at current tuition rates redeemable in the future at any of the nearly 300 member colleges and universities. Tuition purchased after that date will be at new rates that take effect starting July 1, 2018.
This survey took place at the NAPFA Spring Conference in Phoenix, Ariz. on May 17-18.