At the annual meeting of the National Association of Insurance and Financial Advisors (NAIFA), held in San Diego September 6-8, LifeHealthPro senior editor Warren S. Hersch interviewed Brock Jolly, a financial advisor at Capital Financial Partners and founder of College Funding Coach LLC, a business that acquaints families with strategies to pay for their college children’s education and make higher education more affordable. The following are excerpts.
Hersch: Tell me about your business. What’s your focus?
Jolly: At the College Funding Coach, we teach seminars, “Little Known Secrets of Paying for College,” which explores college funding strategies. The seminars are targeted to parents and offered at schools, businesses and community organizations.
At the gatherings, we help parents to understand how financial aid rules work and determine whether or not their college-bound children will qualify for assistance. Thereafter, we offer a free consultation about developing a comprehensive financial plan, with a particular emphasis on paying for higher education.
Hersch: Will the college funding component focus chiefly on tax-advantaged 529 plans, a popular vehicle used to save for college?
Jolly: One of the misperceptions of both consumers and advisors is that college funding is all about 529 plans. These plans are a tool, not a strategy. For example, if a family could qualify for need-based aid, having their money inside a 529 plan is actually one of the worst things they can do because the investment counts against them for financial aid purposes.
Also, as soon as the investment vehicles get a decent amount of money in them, parents tend to start pulling the money out to pay for college. That’s another reason to do comprehensive planning.
529 plans are only a piece of the college funding puzzle; they’re not a panacea. Other parts of a plan could involve cash value life insurance, a non-qualified investment account, retirement plan and home equity in a primary residence. These assets are not counted in the expected family contribution at the overwhelming majority of colleges and universities.
Hersch: How many people typically attend the seminars and do opt for the follow-up consultation? Are the advisors engaged in consulting all affiliated with Capital Financial Partners? Jolly: We generally get from 50 to 500 parents to attend the seminars. And about 70 percent of them request a meeting with an advisor. At Capital Financial Partners, we have about a dozen advisors who do the consulting. We also have national partners outside the firm — advisors based in Miami, Philadelphia, New Jersey, and in Richmond, Virginia — who are using our college funding program in their own markets.
Hersch: What distinguishes your program from that of competitors? Do they not also offer comprehensive planning?
Jolly: Many of the competitor programs advocate that parents put all of their money into life insurance and annuities. I think it’s somewhat of a deceptive practice to encourage families to put their money into these products solely for the purpose of qualifying for need-based aid if their income would automatically preclude them from qualifying for such aid.
The overwhelming majority of clients with whom we and our national partners meet in our respective markets are fairly affluent. Between 85 and 90 percent of them will never qualify for need-based aid purely because of their income.
As a result, their expected family contribution is well above $60k or $70k. If they have one child in school, they will not qualify for need-based aid. If the parents have more than one child in school, or if one of the parents loses a job, then maybe they’ll qualify for aid.
Hersch: What are your plans for the college funding program going forward?
Jolly: We’re developing partnerships with a couple of other associations that are in the education fields. We want to be a resource for them so they can promote the program within their school districts. We’re also hosting webinars to attract and recruit advisors — either independent financial professionals or career agents — with whom we can partner in certain markets.
But to partner, we need to be able to split business at the broker-dealer level. I’m personally affiliated with MML Investor Services, a MassMutual broker-dealer and registered investment advisor. MML is unlikely to split business with, say, Merrill Lynch.
That said, the challenge is not insurmountable. To recruit more advisors, we may need to change our revenue model. For now, we’re simply looking for the best advisors — those who have a combination of experience, integrity, ethics and familiarity with this area of planning. For advisors who share our vision regarding the college funding marketplace, there are a ton of great opportunities. Hersch: What do newly recruited advisors get when they join the program?
Jolly: In addition to prospect leads, they receive The College Funding Coach marketing materials, back-office support, seminars, scripts and what I call our Recipe Book.
Hersch: Compliance is always top concern at these NAIFA annual meetings. Are there particular regulatory issues that you and the national partners need to be mindful when discussing college funding with parents?
Jolly: My broker-dealer categorizes the College Funding Coach as an outside business activity because in our seminars, we don’t pitch particular solutions. What we do is talk about college funding options, how the financial aid formula works, financial pitfalls to be aware of and strategies that parents can employ at different phases of a child’s education.
There’s a great book on the market, “1001 Ways to Pay for College.” I hold it up in class, and say, “If you have second grader, there are 1001 ways to pay for college. But if you have a 10th grader, there are no longer 1001 ways.”
If a couple then opts for a follow-up consultation, we’ll then sit down with them and discuss various strategies that may make sense. We then use the products and services and tools we have at our disposal to implement a comprehensive financial plan.
Hersch: What tips can you offer advisors who are looking to get into this space?
Jolly: This is a tough business to make $30,000 per year in — but an easy one to make $3 million per year in. Getting from $30,000 to $3 million is a matter of shifting your paradigm and creating a vision and then executing on it.
Tom Hegna, the retirement expert, author and speaker, once said, “There are riches in niches.” That’s so true. If you can find a niche market — be it college funding or something else — and focus your efforts entirely on that area, then you will have success in this business.