Some advisors are advocating that investors should stop worrying about paying for their children’s college educations and focus more on their own retirements. The propensity of parents to feel they have an obligation to pay for college education is typical of the Boomer generation these advisors say.
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The warning is that by paying for their children’s educations, they may not be able to have the kind of retirement they planned on. Boomer kids are apparently too entitled and giving them a college education makes them even more so.
There's certainly everything right with teaching children financial responsibility and expecting them to pull their own weight when they are able. But forcing such responsibility on them at a time and in a way that could cripple their lifelong earning ability seems irresponsible.
We seem to forget that the Boomer generation is the original Me generation and more entitled than any generation before it.
This seems especially true when good tools for college planning are readily available.
A study recently published by Fidelity says that college planning tools such as 529 plans are rarely discussed or even brought to the attention of parents wishing to save for college education funding.
One reason may be that 529 plans start with small amounts. Assets in the plans can grow substantially over time and using this type of advice as a way to build trust in client relationships can yield unexpected positive results.
These could include gaining other assets from the client or the client becoming an advocate for the advisor’s services.
The retirement-over-paying for college argument certainly brings attention to the fact that Boomers have failed to adequately prepare for retirement. But with proper planning (and, perhaps, gifts from relatives) along with tools like 529 plans, it may be possible to do both.
There's also the perspective that today's college students are tomorrow's investors. Hampering them now with significant debt will affect their earnings--and their ability to invest--for the long term.
Making it an either-or choice may fall short of the holistic, integrated planning
clients need so much. It's short-sited and does not appropriately consider the client's personal goals.
It might not be a bad idea to take advantage of any opportunity to rebuild trust in today’s industry environment where trust between client and advisor has resulted in so many disappointing situations.