The survey of parents and grandparents who work with a financial adviser found that 65% of investors purchased their 529 plan through their adviser rather than directly from the plan issuer. Furthermore, more than half of investors started saving for college only after discussing it with their adviser.

“The trend we’ve seen across the industry has been an increase in the popularity of adviser-sold plans,” said Jeff Coghan, assistant vice president and director of 529 programs at The Hartford, in the study. “We think advisers are becoming more aware of the importance of the 529 plan as a college savings tool and are talking to their clients about it.”

Adviser recommendation is also an important part of evaluating a plan. When evaluating a 529 plan, 88% of surveyed investors ranked fund performance as “very” or “extremely” important, followed by the ability to contribute regularly (78%), and adviser recommendation (66%).

More College Savers

The Hartford survey also indicated that more people are saving for college, and more people are using a 529 college savings plan to do it. The overwhelming majority (80%) of survey respondents with children or grandchildren under the age of 15 are saving for college (up from 73% in 2007), and the majority (60%) of those savers are using a 529 college savings plan (up from 30% in 2007).

Despite the financial hardship of the last year, most investors “stayed the course” with saving for college—but some did get thrown off course.  Nearly three-quarters (71%) of respondents continued to contribute money to a 529 college savings plan on a regular basis through the financial crisis. Fourteen percent stopped investing regularly but continued to contribute from time to time. Smaller percentages reported that they have stopped investing but since restarted, stopped investing altogether, or stopped with plans to restart (5% each).

“It’s very encouraging that so many Americans are preparing financially to send their children to college and many families are using a 529 plan as part of that process,” said Coghan. “On the other hand, it’s a bit alarming that 20% haven’t started saving for college yet.”

Those 20% cite saving for their own retirement as the number one reason they haven’t started saving for their offspring’s college.
Room for Improvement

Even though more people seem to be saving for college, The Hartford said its survey suggests there is some room for improvement in helping investors understand their investments. While 68% of those surveyed described themselves as a “very savvy” (13%) or “somewhat savvy” (55%) investor, nearly a third (32%) called themselves “not at all savvy.” Most (80%) investors reported having a good grasp of how their 529 plan is invested, but more than half (58%) don’t know what percentage of their 529 portfolio is allocated to equities, according to the survey.

Although most survey respondents (71%) have discussed college savings with their adviser, one-third haven’t discussed it (or weren’t sure). Most of those who have discussed it said their adviser initiated a discussion about tools and strategies for saving for college (68%).

“The industry in general has made huge strides in getting advisers to talk about college savings with their clients and help them construct a plan to meet their goals,” said Coghan. “But, we continue to urge advisers to have the college savings conversation. Any adviser who does not incorporate education savings into the overall financial plan is doing the client a disservice.”

The Hartford conducted its College Savings Survey online in October among 520 parents and grandparents who work with a financial adviser.