Strategies involving 529 college savings plans offer many opportunities for advisors to connect with a range of clients, from individuals and families to non-profit organizations.

The rapid growth of 529 plans illustrates the potential business opportunities. After retirement, education funding is widely regarded by investors as the most important savings need. Advisors who reach out to parents of students, as well as grandparents and other family members, typically have the most success in building their 529 business.

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In addition, advisors can target local non-profit organizations with a strategy that uses a 529 plan for a scholarship account. According to the College Board, more than $10 billion is awarded in scholarship funds each year for post secondary school education. In virtually every community, you can find local organizations, such as churches and civic organizations, that maintain scholarship accounts. The accounts are often held in bank accounts without access to professional money management or administration and recordkeeping services. These organizations may benefit from establishing a professionally-managed 529 plan for their scholarships.


The 529 scholarship account

  • The Account is established with the organization as the account owner.
  • The organization receives service and regular statements from the 529 plan provider.
  • When a scholarship is awarded, a separate 529 account can be established for the benefit of the scholarship recipient. This can assure the organization that the funds will be earmarked for college education purposes.
  • In many cases, much of the administrative burden can be transferred from the organization to the 529 plan provider.

For financial advisors, the business opportunity is two-fold. First, some of these scholarship accounts may maintain larger balances, resulting in growth for your 529 business. Second, networking with and servicing these organizations can help you develop important relationships with civic and business leaders in their local communities.

For more information on local non-profit organizations, visit GuideStar, or search for scholarship programs at bigfuture by The College Board.

For more information on establishing a 529 scholarship account, review Putnam’s literature piece, “Putnam 529 for America.”


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