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Two Common Mistakes Financial Advisors Should Avoid in Education Planning

Financial advisors are in the business of investment management.

Yet, while stocks, bonds, and alternatives often get the most attention, one of life’s biggest investments is almost always left out of the conversation: college planning. 

Despite being an investment in every sense of the word, education planning is a notoriously underdeveloped area in the world of wealth management.  

That’s not the fault of financial advisors. Instead, the problem is enforced by three distinct areas. 

The first is systemic: in the financial industry, there are so few resources to help families properly prepare for college. Some advisors might get a cursory introduction to college planning (like a crash course on 529 Savings Plans), but otherwise, such training is simply not part of a modern advisor’s curriculum. 

We’re still trying to figure out exactly why that is. Considering private colleges average $54,880/year, and public out-of-state institutions average $43,280/year, it’s difficult to explain why financial advisors aren’t better equipped to manage such a hefty investment. 

Secondly, colleges and universities have succeeded in convincing families to pay whatever is asked in order to attend. While the cost of college skyrockets, overall attendance seldom flags or fails. After all, countless students still paid a pretty penny for school during a global pandemic where most classes were virtual. 

This creates a sort of fait accompli for both families and their advisors — an “it is what it is” mentality. 

Lastly, advisors are simply responding to what the market is asking. After all, 60% of clients and prospects hire advisors primarily for investment management. 

38% seek help with financial goals, 36% want general financial advice, and 28% need retirement guidance. 

Somehow, education planning doesn’t even crack the top ten reasons for hiring a financial advisor.

How can these statistics coexist with other recent polls showing the vast majority of Americans are concerned about their ability to pay for college? And the fact that 43 million graduates are in debt by an average of nearly $40,000?

Something isn’t computing. 

Fortunately, this disconnect creates opportunity for advisors. 

That’s true on two fronts: advisors can help families truly protect their financial future while also capitalizing on the anticipated “Great Wealth Transfer,” which will see Gen. X — those born between 1965 and 1979 — inherit approximately $30 to $40 trillion from their parents.

Modern advisors would be wise to prepare for this seismic shift in generational wealth by giving proper and immediate attention to education planning. While moving in this direction, however, advisors must look to avoid two common pitfalls: 

The Problem of Limited Scope 

It’s all too easy to encourage your clients to open a 529 Savings Plan and think you’ve adequately checked the college planning box. 

In reality, advisors must be as diligent in understanding their clients’ college criteria as they are in facilitating their retirement goals. 

And just as you have a broad perspective on the market, you must have an equally expansive view of the college landscape.

In particular, advisors must be able to help their clients consider a wider range of schools beyond their starting shortlist. After all, most families are only aware of a small percentage of the over  6,000 colleges and universities in the United States.

And while such families may be distracted by a school’s name brand, on-campus restaurants, and state-of-the-art facilities, it’s incumbent upon you to help them stay focused on what really matters: limiting out-of-pocket costs, prioritizing the particular field of study, and getting the best overall return on investment. 

Advisors need to view the college landscape from a 3D perspective. Without such a vantage point, college-bound families will overpay upfront and get saddled with debt for years (if not decades) to come. 

The Problem of Nearsightedness 

The second pitfall has to do with focusing only on getting into college without fully grasping what comes after it. 

Staying future-focused is paramount with education planning. 

After all, college is loudly marketed as “the best four years of your life,” when in reality, it’s an investment that should provide the foundation for the next forty.

That’s why it’s crucial to understand the outcomes of each school on your family’s shortlist. 

While it’s easy to fixate on picking schools based on up-front costs alone, advisors must dig deeper to know what kinds of salaries graduates stand to earn from each program. They also have to know what the monthly student loan payments will be after graduation.

By taking a comprehensive approach to education planning, advisors can shift the conversation from “the best four years of your life” to facilitating “the most promising future you can imagine.”

But how do you accomplish this? How can you get that aerial view of the best available colleges and universities while understanding the outcomes of each program on a granular level?

The all-new College Aid Pro™ software can help accelerate your education planning overnight. Our tools empower you to provide expert college funding advice with confidence and ease, so you can:

  • Identify the “perfect-fit” college for your client
  • Identify the one, five, and ten year salaries of graduates from each program 
  • Generate more leads with the College Money Report™ 
  • Build budgets and strategies with College Pre Approval
  • Compare the net-cost of colleges on a granular level 
  • Get access to a list of over 5,000 private scholarships 
  • And so much more

Colleges and universities are here to stay, and the Great Wealth Transfer is coming.

Find out how College Aid Pro™ can revolutionize your business by booking a free demo with us today. 

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