Thursday, June 24, 2010

How do I choose an advisor for my child's 529? 529 College Savings Answers

When our readers and users of send us questions, we'll post the answers here to help anyone searching for information on the best ways to save for someone's college education.

How do I choose an advisor for my child's 529?

When it comes to college savings plans, the same criteria apply as for any other investment advisor. You still want an advisor who listens to you and understands your needs and your plans for your child’s future. You do not want someone who will simply set up the plan, put it on auto-pilot and move on to the next client. As with most investment vehicles, there are those who have more of an understanding of the ins and outs, ramifications and choices, than do others.

Some good questions to ask are:
  • How much experience does the advisor have with 529 plans?
  • What are the main benefits and drawbacks of the plan the advisor is recommending?
  • Is the advisor also selling the plan to you and, if so, is it the only plan the advisor has available to sell?
  • What commission will the advisor make for selling you this plan?
  • What are the tax ramifications of purchasing a particular plan over the plan sponsored by the state in which you reside?
  • Does the plan have an option for self-guided investment choices?
  • When are you allowed to re-allocate your investments or change your strategy?
An informed advisor should be able to answer each of these questions. Many advisors may only offer one 529 plan. In such a situation, it may be wise to explore other options before making a decision.

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