By

The bear market may have bitten into American expectations, but it has not radically altered the American Dream.

This is especially the case for saving for college. With freshman year always around the corner, parents with higher-education aspirations for their children are seeking new ways either to boost college saving accounts, or create the most efficient one before it is too late.

And for Asian-American households, where traditionally a profound emphasis is placed on children obtaining college degrees, the pressure is particularly acute.

Sally Mak, corporate vice president in New York Lifes Cultural Markets Division, offers the translation of an old Chinese saying as evidence of Asian-American parents healthy obsession with education: “Nothing is more important than receiving education.”

Mak, who is Chinese-American, is in charge of marketing New York Life products to Asian-American clients. She attests to the increased demand for college savings plans, most especially 529 plans, in Asian-American communities.

“We printed 20,000 brochures on 529 plans in Chinese in the spring, and they are all gone,” Mak says.

Although not all financial institutions follow New York Lifes lead and translate their 529 plan brochures into Chinese, Japanese, Korean or Vietnamese, the major players are spending more of their marketing time and dollars courting Asian-American communities, and they say the 529 plan has been an ideal lead product.

According to Charles Zhang, a senior partner at Zhang and Associates, a financial advisory branch of American Express Financial Advisors, the tax advantages of 529 plans have enabled him “to gain the attention of many parents who were saving in (Uniform Gift to Minors Act) accounts, checking accounts or savings bonds.”

Zhang, who has been American Express Financial Advisorss top rated financial advisor for the past five years, offers financial planning seminars to members of the Chinese-American Association in Grand Rapids, Mich., while the children are in Chinese language class on Saturdays. Although the kids might not enjoy the extra day of schoolwork, Zhang says the parents in the approximately 1,000-family Grand Rapids Chinese-American community, many of whom are professionals, find his lectures on college savings plans invaluable.

Zhang says the advantages of the 529 Plan to other methods of savings are that its earnings are federally tax-deferred and qualified distributions are tax-free, it is flexible when it comes to contribution limits, it has multiple investment options, and unlike a Coverdell Education Savings Account, there are no income level restrictions and contributions are not limited until the account reaches $246,000.

At the request of principals of Chinese schools in Washington, George Dang, Office Manager of AXA Advisors Virginia branch, also speaks to parents while their kids are learning about their respective heritages. Dang says he uses the 529 plans “as a door opener to do a full financial plan for clients.”

And when Dang is unavailable to lecture at one of the D.C. areas 30 Chinese schools, he sends a member of his team of advisors. According to Dang, in addition to numerous Chinese speaking advisors, he works with seven advisors who speak Vietnamese, 21 who are fluent in Korean, and four who can lecture in Indian. All of them are Series 7- and 65-licensed, and perform extremely well in capturing their respective segments of the Asian-American market, he says.

Another benefit of the 529 plan is the fact that the assets dont automatically get turned over to the beneficiary when he or she reaches adulthood. Unlike a custodial account, such as an UGMA/UTMA (Uniform Transfers to Minors Act) account, the 529 plans allow the parents to control the college dollars, in order to make sure the money is spent on higher education, and not a luxury car. If the beneficiary decides not to pursue a higher education, the beneficiary can be changed to another family member without penalty.

According to Dang, however, most of his clients kids are too smart to take the money and run even if they had the opportunity.

“There is a high Ivy League enrollment amongst these kids,” he says.

On the corporate marketing side, the buck is not stopping at school seminars and lectures to parents during Boy and Cub Scout meetings. Financial heavyweights have begun sponsoring major events within Asian-American communities to cultivate goodwill. For example, New York Life will sponsor street fairs in various American cities this September to celebrate the Chinese Moon Festival, the second biggest holiday on the Chinese calendar.

Taking corporate involvement from the classroom to the street is a dramatic shift in marketing to the Asian-American community. According to Mak, Asian-American agents from the financial world are usually involved in their respective communities, so local schools and churches provide them with natural forums to lecture parents about the benefits of 529 plans.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 9, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.