Come fall, MFS Investment Management's
advisors should be better educated about 529 plans. The Boston money manager will be sending mailings to advisors, holding conference calls with 529 experts, and distributing a grid that shows tax deductions by state, said Bruce Harrington
, director of 529 plans at MFS.
The timing of the mailing is not incidental; MFS takes advantage of the seasonality in investment channels by focusing on IRAs and retirement plans in the spring, 401(k) plans in the summer, and 529 plans in the fall, said Harrington. Harrington estimated that more than half of 529 plan assets come in during the fall season.
Advisors need help with 529 plans because the sheer quantity of plans (there are 85, according to Harrington's estimates) and varying state tax deductions. In a broker survey, MFS found that advisors need help with prospecting to clients, said Harrington.
MFS helps advisors by targeting clients differently: "[w]e...focus on marketing differently to different generations -- to parents with newborns versus grandparents versus parents with teenagers," said Harrington.
"[529 plans are of] strategic importance, we're dedicating a quarter of our year [to the effort]," added Harrington.
The move is part of the company's ongoing strategy to position itself competitively in the 529 world. That two-pronged strategy entails selling its advisor-sold plan for the state of Oregon and also being an investment manager with products on other 529 platforms, said Harrington.
Since there is not much incentive to become a full-service 529 program manager for multiple states, cnce a 529 provider lines up one state, it will likely not compete for another state, commented Harrington.
And while other providers are championing tax parity, Harrington took a more subdued point-of-view: "[w]e are for tax parity, but we are not out there proactively shouting out that message."
While he speculated that a national plan would simplify the selling process for advisors, he doubted that a national plan will happen.
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