If your family has a financial advisor who helps you with your money and your saving and investing, you might go to that same expert to help you with college.
If you ask your advisor if they can help you with college, most will say “yes,” but be wary of this overly simplistic answer. Many advisors will tell you that they can help with college because they can help you set up a 529 college savings plan, and there’s a tab for college in their financial advising software. They’ll click on that tab, choose the college where your student is hoping to attend, and the software will tell them how much the total cost of attendance is and how much you’ll need to save each month to pay for that.
You think your advisor is helping, and they think they’re helping, but then you get to late-stage planning, and you find out that there’s way more to the college process, and your advisor doesn’t provide services to help with those needs.
In some cases, the software will estimate your future cost and how much you’ll need to save if you’ve got young children at home and it’s going to be years until they go off to college.
The problem with relying on this method is that it’s far too basic. It leaves out most of the details that you need to really plan and save for college properly. It also means you might completely miss out on opportunities to maximize your college savings and minimize your future college costs.
Be Cautious When Advisors Say They’ll Help with College.
Don’t get me wrong. There are financial professionals who really understand college. But most advisors specialize in just one field of expertise, such as saving and investing, accounting, or taxes. Very few are specialists in financial advising and college.
That’s why many financial advisors, accountants and tax attorneys reach out to me when it’s time to help their clients plan and save for college. As a financial advisor who also specializes in college planning, I operate in both worlds. I help families plan and save for their retirement and other financial goals, but I’ve also spent over 20 years helping families with college financial planning.
When other financial professionals need help with college, I provide guidance and advice to steer them in the right direction, and sometimes we even team up together to serve their clients.
In other cases, clients come to me with all of their financial planning business, because it makes more sense for them to work with one advisor who can help with college, retirement, and all their saving and investing goals.
After all, there is far more to college planning than clicking a tab in a software program and having the software do some basic math. Ultimately, the real cost of college for your student and family will depend on many factors. These include:
- Family income and assets
- Student income and assets
- Academic qualifications
- Special talents or merit
- Applications essays
- Test scores
- Need-based financial aid
- Scholarships
- Desirability to schools
- Negotiation with schools
Your advisor’s software doesn’t take into account all of these factors, which can have a huge impact on the real cost you’ll pay and how much you need to save. Also, unless your advisor is an expert in planning and saving for college, you probably won’t get advice on how to maximize opportunities for need-based and merit-based financial aid, and how to make smart moves with your income, assets and taxes to help you save more on college.
Additionally, if you’re in one of a number of key categories, there are unique challenges and opportunities when it comes to college planning. In some of these cases, there may be further opportunities to lower your college costs significantly, maximize financial aid, and make more expensive schools more affordable.
Some of these key college planning categories include:
- Divorced parents
- Blended families
- Families with multiple kids
- Business owners
- Real estate investors
- Beneficiaries of an inheritance
- High-achieving students
- Students with special needs
- Student-athletes
- Families with inheritance
- Military and ROTC students
To make the right moves for your family and capitalize on all the college financial opportunities available to you, you have to understand how the college process works—inside and out. That’s something that most financial professionals don’t know.
Key Questions to Ask Your Advisors About Their College Expertise
Before you rely on a financial professional to help you with college planning, it’s important to ask them some key questions, to understand their level of college experience and expertise.
If they don’t have much knowledge or experience in the following topics, it’s a smart idea to ask them to reach out and work together with someone who does. Or you might want to consider hiring a different advisor if they can’t meet all of your needs and you prefer to work with a single resource.
Ask About Their College Planning Services.
Q. What college planning services do you provide, and what areas do you cover?
NOTE: Look for proven knowledge and experience in the following categories:
- Financial aid
- College research
- Testing
- Applications essays
- Career and major choices
- Scholarships
Q. Do you provide advice and guidance on college-specific financial strategies?
NOTE: Look for proven knowledge and experience in the following categories:
- Saving and investing
- 529 college savings plans
- Tax planning
- Planning for college and retirement
Check Their Prior Experience.
Q. What specific experience do you have in helping families plan and save for college?
Q. How many families have you helped with the full college process over the past three years?
Q. What different types of colleges have you helped students apply to and attend?
Q. How often do you work with a family like ours?
Ask If They’ll Coach You.
Q. Will you meet with and coach our student on these topics?
Q. Will you meet with and coach us as parents on these topics?
Q. Can you explain what you would do to help us complete financial aid forms?
Test Their Knowledge.
Q. What are the different financial aid forms we might need to complete, and how are they different?
Q. In what conditions would we qualify for need-based financial aid? When wouldn’t we qualify?
Q. What are the best ways to save for college, and what are the pros and cons?
Q. What are some good ways to reduce the overall cost of college?
How to Interpret the Responses You Get
Be wary of advisors who aren’t honest in their answers or who struggle to respond to your questions.
If they try to pitch their expertise without backing it up, that’s a bad sign. When you’re entrusting your money to someone, you need to make sure you’re working with an advisor who has the right expertise, is honest, and will put your interests first.
If they’re honest, but they only offer the basics when it comes to college, they probably won’t help you get the most out of your college planning and savings. Make sure to supplement their services with guidance and expertise from a financial advisor who also specializes in college.
If you have an advisor who’s really great at college and their other areas of expertise, then congratulations! You should hopefully be in good shape.
However, if you’re not so sure, or you find out that their college services and expertise are pretty basic, then feel free to contact me and schedule a quick consultation. We’ll talk about your college planning needs, strategies that could be helpful to your family, whether my services are the right fit, and whether it would make sense for me to team up with your current advisor or work with you exclusively.
To get started, contact me now with any questions, or schedule a complementary 30-minute consultation at your convenience.
Disclosures
Always remember that investments, assets and how you manage them involve risk. Please carefully consider your investments and assets and any risks, charges and expenses.
In addition to working with a Certified Financial Planner® to help manage your assets appropriately, it’s also a good idea to consult a tax professional, to make sure you understand the state and federal tax rules around how you make withdrawals on inherited assets and how you manage them.
Brad Baldridge is a Registered Representative, Securities offered through Cambridge Investment Research, Inc. a Broker/Dealer, Member FINRA / SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Fixed insurance services offered through Baldridge Wealth Management. Cambridge’s Form CRS (Customer Relationship Summary). Taming the High Cost of College, Baldridge College Solutions, and Cambridge are not affiliated. Cambridge does not provide tax or legal advice.
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