It’s graduation season, which usually presents parents with a twofold reality check, but also provides an opportunity to advisors.
For parents, there’s the emotional reality check that our children grow up too fast. Then there’s the financial reality check of funding our children’s education. Many parents are optimistic about the ability to send their kids to college, despite the fact that Financial Finesse’s research finds that only 17% of employees are actually on track to retire. According to the College Savings Foundation, 69% percent of parents are still planning to help their children pay for college. The disconnect is evident—people are prioritizing college planning over their own retirement security.
On top of it, some parents are even tapping their already invested assets to pay for their kids’ college stay. A recent research poll by USA Today found that 7.4% of parents tapped their retirement savings to pay for their children’s’ college expenses, leaving their savings even more depleted in uncertain times. Though this number may seem trivial, it has more than doubled since before the recession.
Advisors working with clients in this position face the risk of clients tapping into assets in their retirement plans or not saving enough due to an obligation to pay for their children’s college. Just as anything else you do with clients, helping your clients plan accordingly can be looked at as either a burden or as an opportunity to differentiate yourself in the industry and attract or retain clients. Going the extra mile and spending more time with your clients around college planning in the context of their overall financial plan can be a differentiator for you and can plant a seed for younger generations who one day may become a valuable client base.