529 College Savings Plans are a popular investment vehicle for parents and others to use to save money for college. When making the decision to set-up a 529 plan, a parent or other investor can choose to start a plan directly through the plan administrator or through the use of a financial advisor. Both methods can be useful, but investors should understand the pros and cons of each choice in order to make the right decision.
It is important to understand that there are often significant differences between 529 plans that are direct sold and those that are advisor sold. For example, advisor sold plans are often more complex than plans sold directly. Advisor sold plans often have lower plan fees and provide investors with more investment choices. This means that a plan owner can put the money being saved for college to use in a wider variety of ways while paying out less in plan fees. Of course, an advisor will charge a percentage fee or a flat fee for his or her services. While this will reduce the amount of money placed into the 529 plan, this amount may be made up by the purchaser profiting from the advisor’s knowledge and expertise and from saving money from the lower fees in the advisor sold plan.
In addition to differences between direct sold and advisor sold plans, there are also significant differences between plans being offered from one state to another. This is another way that an investor can profit from using an advisor to choose a 529 plan. The advisor will be familiar with all of the plans that are available and can help the investor to choose the plan that is best for his or her personal situation. As with any investment, a person can research the different plans available in order to make an informed decision, but there is nothing wrong with paying a small amount for the personal services of an advisor to assist in the decision.
Regardless of whether a person chooses to buy into a 529 plan directly or through an advisor, the important thing is to start the plan. Getting the plan started and beginning to save money for college as soon as possible will result in more money being available when the child is ready to go off to college.