MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Tuesday, January 22, 2002 529 Marketplace to Shoot to $100 Billion? Could there be $100 billion in assets in 529 plans in the next five to eight years? That is a very real possibility, according to a new report -- Section 529 Plans: The Next Big Wave of Assets for Money Managers? -- from Spectrem Group. "For affluent households, where the decision-makers are 45 or younger, financing of children's education is second only to preparing for a comfortable retirement," Scott Slater, author of the report and director at the firm, told the MutualFundWire.com. Current assets in 529 plans hover around the $5-$10 million mark. "Yet we are just beginning to see the potential for asset accumulation for financial services firms that these plans provide. We could see this marketplace reach $100 billion in five to eight years," Slater contended. "There are a number of opportunities out there. Remember, 529 plans are still in their infancy. We have seen a land-grab for states, and it looks like they are locked up. But keep in mind the trend of 401(k) plans. First, there were purely bundled arrangements, but as 401(k) plans grew, services became more specialized. The same could happen here. You could see an increase in sub-advisory activity. The states will get smarter about this as well, and they could be looking for multiple providers in a couple of years," the executive asserted. Slater also held out the possibility that employers could take 529 deductions straight from paychecks. "It's a no-brainer for them. It is essentially a free benefit," he continued. The author does not expect 529 plans to overtake 401(k) and other retirement vehicles in terms of assets because while retirement is a universal college is not. "This is a market ripe for financial advice," Slater further opined. "There is going to be a great need for education for 529 plans. There will also be a great need for marketing of the availability of 529 products." Right now, according to Slater, the marketplace is pretty fragmented. TIAA-CREF has contracts with approximately 12 states. Fidelity and Merrill Lynch are in second place with around two or three agreements each. For more information on the report or to order, visit Spectrem's website. Printed from: MFWire.com/story.asp?s=1676 Copyright 2002, InvestmentWires, Inc. All Rights Reserved |