Why Does Wall Street Love 529 Plans and We Don't?
Because We Know Better.  And Because No One PAYS US to Like Them.
Why Does Wall Street - and Your State - LOVE 529 Plans?  F-E-E-S.   

Most Wall Street firms began marketing 529 Plans - which are really just mutual fund investments in new suits of clothes - in earnest between 2001 and 2002 (why?).  It was, and has been, a marketing bonanza!  Assets in 529 Plans (excluding pre-paid plans) now total about $158 Billion; the largest 529 Plan has $33 Billion is assets!
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Annual asset management fees for the largest 529 vendor average about 0.60% which nets this mutual fund company about $198 MILLION a year (the 529 industry as a whole takes in over $1 Billion in annual fees)!  So we know why mutual fund companies like them. 

The selling brokerage firm for the largest plan usually (~80% of the time) charges a front-load sales commission of 5.75%.  That amounts to about $1 BILLION in commissions every year, just for that one 529 Plan.*  So we know why brokers love 529s. 

How about the states?  In the case of the largest plan, the sponsoring state skims - excuse us, "charges for administration" - 0.10%, netting it $33 Million per year.  So we know why states love 529s.

What's YOUR excuse?
Sorry, that was probably a bit too direct.  If everyone who gets paid to love (and push) 529 plans loves them, shouldn't parents? 

They're an opportunity to offset colleges' outrageous price increases with stock market increases, right? 


And - bonus! - as Wall Street has stated, ad nauseam: "Withdrawals for qualified higher education expenses are free from federal tax."  Except, oops:

That's Wrong, too.

Contact us for better ideas.

* Getting good information on 529 Plans and 529 sales is not easy. The largest Plan's five most popular funds' new A-share (5.75% commission) sales figures were gleaned from 2010 and 2011 results and then added to arrive at an approximate annual rate of sales.  The top-selling fund was $6.14Billion (B) in 2010 and the next four funds are as follows, with the year for which we have sales figures in parentheses: $6.11B (2011), $5.59B (2011), $3.02B (2010) and $2.87B (2011).
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