Hard Knocks: Only 10% Of Advisors Give 529 Portfolios High Marks

 

Finally, someone is saying what a lot of advisors have been thinking about 529 plans: the underlying investments just aren't great.

 

It turns out that 90% of RIAs that a group of private colleges surveyed have issues with the way these state-run plans are set up.

 

Half are unhappy with the way these plans' managers pick the investment options. There just aren't enough choices and the ones that are available tend to be less than great.

 

Meanwhile, 34% worry that a portfolio built out of the available options will be too exposed to market volatility over the relatively short 18- to 22-year lifecycle of the typical 529 account.

 

Advisors want to like these vehicles. Consumers have been conditioned to like these vehicles by over a decade of financial reporters touting them as the next big thing and the solution to out-of-control tuition inflation.

 

But if nobody can get excited about the portfolios -- much less the fees -- then the 529 marketplace will continue to drift, no matter how exotic the state-by-state marketplace is or how great the tax benefits can be.

 

 

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