As financial advisors, we serve as trusted guides on our clients’ journey through life. By following a goals-based approach, we can learn what’s really important to investors as we help them prioritize their objectives and create workable strategies for achieving them. A key part of this process – probably the key part – is listening to clients and understanding what they’re thinking. And sometimes we might be surprised by what we find out.
In fact, I learned a lot about individuals’ feelings and knowledge about higher education, and how to save for it, from a new survey of U.S investors by Edward Jones and Morning Consult.
Here are just a couple of the key findings:
- 36% of Americans are reconsidering their investment in education amid COVID-19.
- 80% of those currently saving for an in-person, four-year college or university cited concerns that the quality of education may suffer if universities move to online learning.
These results lead to some questions: Will the pandemic experience of online learning lead to a partial, though permanent, movement toward this platform? If so, how will that affect the cost of higher education?
We don’t know the answers yet. But although the American higher education system may eventually be altered somewhat, it seems highly like that the post-pandemic landscape will still include a robust on-campus, in-person experience. And that being the case, we will still need to help our clients save for the high costs of higher education.
Of course, there are many ways to help save and invest for college, but, as you well know, one of the most effective utilized methods is the 529 plan. However, less than half of adults (45%) accurately recognize a 529 plan as an education savings tool, according to the survey we did with Morning Consult, which also found the following:
- 60% of respondents were unaware that 529 plans can be used to pay for purposes other than college (such as K-12 expenses, trade schools and apprenticeships).
- Nearly a third of respondents said they are using, or will use, a personal savings account as part of their education savings strategy, compared to just 21% who named 529 plans as their primary savings vehicle.
- 40% of adults don’t feel that they are saving enough to reach their goal for future education expenses.
Clearly, there’s plenty of space for financial advisors to talk to investors about education savings in general and 529 plans in particular, especially in comparison to personal savings accounts.
Nonetheless, we need to show sensitivity to what’s happening in the world today. Specifically, the economic/employment stress caused by the pandemic will certainly affect individuals’ financial priorities, at least in the near term. Consequently, we should not be surprised if some investors are currently reluctant to commit to regular contributions to an 529 education savings plan.
This awareness of difficult economic circumstances should inform all our interactions with clients and prospects about education funding, 529 plans – and, in fact, all other investment-related goals. But we shouldn’t be scared away from bringing up these topics. Someday, the pandemic will be over – and when that day arrives, we want our clients to remember that we were always there for them.
Learn more about the findings of the Edward Jones and Morning Consult Education Savings Study.