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529 plans enjoying explosive growth among intermediaries, popular with consumers, finds Manulife study -Investment Choices, Performance and Service Most Important Features to Intermediaries- Boston - Section 529 college savings plans have achieved rapid acceptance among financial intermediaries rivaling the popularity of alternative savings vehicles, such as UGMA or UTMA accounts, according to a new study commissioned by Manulife Financial. In addition, intermediaries cited strong consumer interest in 529 plans and identified variety of investment choices offered in a 529 plan as a top feature. “The study confirms our view that 529 plans present a rare opportunity in the advice business to cement multigenerational relationships with clients,” said Matthew Schiffman, President, Alternative Wealth Management at Manulife Financial. “In addition, the study provides Manulife with a better understanding of how to bring value to advisors and planners who are incorporating 529 plans into their clients’ overall investment strategies,” he added. The study, completed in December 2001, was based on a telephone survey of 200 independent planners, regional and wirehouse financial advisors and insurance representatives. Respondents were asked to describe their selling practices for 529 plans and the typical profile of 529 investors, as well as to rate consumer interest and their own overall knowledge and comfort with 529 plans. 529s on Fast Growth Track with Intermediaries Although most 529 plans are relatively new, survey results indicate rapid acceptance of these plans as an alternative to rival investment products typically used for educational purposes. Nearly three-quarters (74%) of respondents indicated that they sell 529 plans, equaling the number of respondents who sell UGMA /UTMA accounts or taxable mutual funds that clients specifically intend to use as college savings. Investment Choices Top Priorities with Intermediaries When asked to identify the most important factors for choosing a 529 plan for their clients, overwhelmingly (99%) intermediaries named variety of investment choices the most important. This was followed closely by investment performance (99%) and service the company provides to clients (95%). Strong Consumer Interest May Be Driving Growth of 529 Market The vast majority of respondents (95%) indicated that clients are interested in discussing the potential costs of a college education and most respondents (65%) indicated that clients typically open a 529 account within two weeks of the initial conversation. Respondents said that 79% of clients are either shocked or scared when informed about the projected savings amounts that will be needed to cover college expenses, and the financial commitment appears to be a believable and widely accepted concept. Consumer Profile Respondents described their 529 clients as relatively evenly split between parents (51%) and grandparents (39%) who are saving for beneficiaries already between the ages of five and nine years old, typically. In addition, respondents reported a wide range of household income levels among existing 529 clients. However, 57% of clients have a household income of $50,000 to $100,000 compared to only 29% of households with income of $100,000 or above. “This was surprising since 529 plans may offer even better benefits to the affluent market when one understands the estate planning applications for the product,” Mr. Schiffman commented. “We feel this points to a need for greater education, not just about the basics of these plans, but especially how these plans should be incorporated into a client’s overall financial strategy.” Triggers for 529 Purchase Feedback from intermediaries who have had success selling 529 plans may provide a blueprint for peers who are interested in exploring the 529 business. Three-quarters of those surveyed reported that the birth of a child or grandchild is often an event that influences the decision to purchase a 529 plan. Also, 89% indicated that a purchase is influenced by an overall financial review, and nearly three-quarters (72%) said it often occurs in conjunction with a review of tax strategies. Intermediaries interested in obtaining more information about Manulife’s study or to discuss ideas for marketing 529 plans should call Manulife College Savings at 1-866-MANU-529 or register and log onto www.manulifecollegesavings.com. About Manulife Financial Manulife Financial is committed to offering the highest quality annuity, life insurance, pension and tax-deferred college savings products to its U.S. clients. Its family of products has been built around a powerful combination of investment options chosen with the goal of providing risk-adjusted returns and broad diversification across asset classes, investment styles, and asset managers. With its broad product lines, competitive underwriting, excellent ratings, and quality customer service, Manulife Financial is dedicated to providing premium products designed to help create and preserve wealth for its clients. Manulife Financial is a leading Canadian-based financial services group operating in 15 countries and territories worldwide. Through its extensive network of employees, agents and distribution partners, Manulife Financial offers clients a diverse range of financial protection products and wealth management services. Funds under management by Manulife Financial were US$89.3 billion (Cdn$142.2 billion) as at December 31, 2001. Manulife Financial Corporation trades as ‘MFC’ on the TSE, NYSE and PSE, and under ‘0945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com. -30- Media Contact: Catharine Bufalino U.S. Communications (617) 854-4348 catharine_bufalino@manulife.com |
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