What trends does this fee-only fiduciary advisor and tax planner see in terms of college financial planning in 2018?
This article features an interview with Steve Stanganelli, CFP, CRPC, AEP, Founder of Clear View Wealth Advisors. Based in the greater Boston area of Massachusetts, Steve’s insight as a fee-only fiduciary planner is built off of providing strategic financial planning to families, business owners and pre-retirees since 1991. Over that time period, he was a registered representative with First Colony National, financial advisor with Merrill Lynch Private Client Group, Investment Advisor with Focus Capital Wealth Management, financial planner with Quest Financial Services and more recently as a fee-only financial and tax planner with Clear View Wealth Advisors. During that time, Steve was also elected to a 2-year term as Councilor-at-Large for the City of Amesbury in Massachusetts, and ran for state representative in 2014. As part of his current role, he provides a number of public education events on funding college and retirement, and on financial literacy. As a part of his goal to broaden financial literacy in the community, Steve is the Chapter President (Merrimack Valley & NH Seacoast) of the American Financial Education Alliance which is a non-profit 501c3 organization where he provides programs on financial wellness through local employers. Within his role as financial planner, Steve covers a number of client issues including retirement income, divorce, college and elder care. You can learn more about Steve Stanganelli and Clear View Wealth Advisors at http://www.clearviewwealthadvisors.com/. Last but not least, thank you Steve for your time, insight and support for working with me on the article. Please read the question and answers to learn about his perspective on college financial planning, and hope that the article provides you with an opportunity to learn more from your peers.
Question 1 (Paul Curley, Editor of the 529 Dash): What are your thoughts on changes in tax over the last year, and how has that helped you engage with clients?
Answer 1 (Steve Stanganelli, Founder of Clear View Wealth Advisors): As I am based in Massachusetts, this is the first year that my clients can receive a state tax deduction on 529s contributions, and so that ability is on my radar. As for the expansion of 529s to K-12 tuition, I have written articles on how to fund private high school education and there are not many funding sources beyond the school, personal savings and cash flow to pay for private K-12. While using 529s to pay for K-12 is now an option, the families don’t get much in the way of compound interest if used for K-12 and barely anything for K-junior high, and so the much higher cost of college should remain the primary objective of using 529s.
Question 2: Over the past year, you have become the Chapter President of the American Financial Education Alliance which is a non-profit 501c3 organization that works through employers on the topic of financial wellness. What are your thoughts on the trend of financial wellness?
Answer 2: I look at this question from a different angle in that financial literacy continues to be issue in the community. Therefore, any avenue that helps to increase financial literacy is an important endeavor. Along those lines, I believe in the importance of increasing employer centric benefits including apprenticeship programs, and so I create and provide financial wellness resources to increase accessibility. There is a gap, and I seek to fulfill it. From an employer’s perspective, there have been many studies that show that these types of programs increase productivity of employees as less stressed employees are less distracted and more productive. Therefore, I help both employers and employees through these financial wellness programs.
Question 3: There are several initiatives under way in 2018, including the Prosper Act which may reduce the impact of 529 assets on FAFSA from 5.64% to 0.0% for parents and students, and the ability to rollover 529s assets to Roth IRAs. What are your thoughts on these initiatives and others?
Answer 3: From my perspective, the discussion around corporate structure and SALT took up almost all of the focus in 2017. As we look into 2018 and with the State of The Union Address tonight by the president, both proposals appear to improve usage of 529s in terms of getting people to know that 529s are a solution. As such, the more awareness around the importance of 529s, financial literacy and college financial planning the better. Also given the time of year, I look forward to helping my clients this tax season and learning where the National Association of Tax Professionals is currently focused on as well.
Question 4: What key trends do you see impacting 2018, such as the 2.4% U.S. personal savings rate at the end of 2017?
Answer 4: People generally do not focus on something until it is on their radar. As a result, I have seen an increase in demand to manage student loan debt in comparison to saving for college. This is a sea change, as the focus was previously always on the savings side. Based on my experience in meeting with client after client, there is more interest in student loan debt repayment and the focus on cash flow provides an opportunity to get a client focused on college financial planning, and then pivot over to other goals such as retirement. Beyond the numbers, clients need to focus on finding the right school as opposed to choosing the wrong school and dealing with the debt later. Therefore, helping my clients ask the right questions at the right time helps to prevent even more difficult decisions down the road.
Editor’s Final Note: Thank you Steve Stanganelli for your time and insight for this article. Also, I would like to provide a special thank you to the readers for learning from your peers, for your support and your engagement.