529 Conference 2016: Distribution Strategies – View from the Independent and Regional Channels

By Paul Curley | paul.curley@strategic-i.com | November 30, 2016

What are independent and regional advisers looking for in terms of college financial planning?

The 529 Conference 2016 at the JW Marriott Grande Lakes in Orlando featured a session titled, “Distribution Strategies: View from Independent and Regional Channels.” This year’s panel was moderated by Peter Hughan, Director of 529 Sales with John Hancock Investments and included the three panelists of Pete van Dyk, CMFC, Senior Specialist with Stifel Investment Services, Susie Bauer, Senior Vice President with Robert W. Baird and Patrick Noonan, CFP, Advanced Planning with Commonwealth Financial Network. This week’s article highlights a summary of the session’s discussion including an overview of the current state and developing trends in these channels, how the distribution partners work and challenges advisers are facing with 529s today. This week’s article will provide proprietary data and insight from the panel’s discussion to help you get up to speed with the firms, the distribution channels and industry trends.

Market Sizing: Based on data gathered directly from product providers and presented at the 529 Conference 2016 by Strategic Insight, the adviser-sold product channel accounted for $107 billion of the $253 billion under management in 529 plans as of 2015. This value of $107 billion is 29% higher than three-years ago in 2012 and 49% higher than five-years ago in 2010. Capturing this asset growth in college financial planning can help you grow your book of business as well. Read the panel overview below to learn how.

Select Panel Topics of Discussion:

— Overview of the current state and developing trends in these channels. Based on the “Strategic Insight Asset Management Industry Market Sizing 2015-2020” report and confirmed by the panelists, there were roughly 129,000 financial advisers within the independent channel and 32,000 within the regional channel as of 2015. As represented on the panel, 1,500 financial adviser groups were with Commonwealth Financial Network, 2,400 advisers were with Stifel Investment Services and over 100 adviser offices on three continents were with Robert. W. Baird as of the time of the conference. All three of the firms are growing, and hence the note to as of time of conference. Collectively, the advisers at the three firms managed over $3 billion in 529 assets. Therefore, the panel provided feedback on college financial planning from a representative sample of advisers across the independent and regional channels.

— Learn how your key distribution partners work, and how to work better with them. First, Patrick Noonan of Commonwealth Financial Network noted that the firm focuses on planning, and so college financial planning is run through the firm’s advanced planning group. Building upon this, the discussion of financial planning takes place first before the product selection. Next, Susie Bauer of Robert W. Baird noted that they are a privately held employee owned global firm with Midwestern values. They have 85 experts in the research, product and services team that support advisers as their clients. Lastly but certainly not least, Pete van Dyk of Stifel Investment Services noted that they have grown through acquisitions to 2,400 advisers, and that it has provided them with the opportunity to introduce 529s to the new high net worth advisers by way of estate planning. All three firms noted their use of a dedicated intranet website for their firm’s advisers, as well as a focus on education and re-education to support the advisers. Therefore, you should note the ability to review your firm’s intranet and contact your firm’s product specialists for additional support when needed, as they would also be able to contact the product providers directly for you as needed for product training, whitepapers, two-pagers and conversation starter write-ups as needed. Additionally as noted by the panelists, your firm’s product specialists can help you review your book of business for potential sales opportunities such as those with UGMA/UTMA accounts. Have the discussion with you firm’s product specialists and your primary product providers today.

— Challenges advisers are facing with 529s today. Generally, the three firms commented on the channel-wide demand for and implementation of technology enhancements as a means to automate the operational process of account activity, and oversight of share class suitability supervision in a growing fee-based advisory business model environment. In light of these industry trends, the importance of financial advisers adding value to their clients through the integration of college financial planning with financial aid and estate planning discussions is increasing over time. In addition to advocating for technology improvements, advisers should stay up to speed on basic knowledge and advanced strategies of 529s and college financial planning through on-going product training. Ask your home office product specialists and product providers today for a refresher.

Therefore, advisers, accountants and estate planners should know their counterparts in these channels, how to work with them and the opportunities and challenges they face. Overall, product providers and your firm’s product specialists are seeking to support you in your college financial planning discussions with your clients, and have the discussion with your clients and your firm today.