Legg Mason Launches New Scholars Choice Web Feature to Educate Advisors, Parents and Grandparents about 529s

-Update Features New Grandparents' Study Highlighting College Funding and Legacy Issues-

Aug 06, 2014, 11:00 ET from Legg Mason, Inc.

NEW YORK, Aug. 6, 2014 /PRNewswire/ -- Legg Mason, Inc. today announced enhancements to its Scholars Choice website with improved tools and content to help advisors better serve grandparents (scholars-choice.com/grandparents). In addition, the site aims to help investors make informed decisions about paying for college based on findings from its new report, 2013 Grandparents and 529 Plans Survey: Knowledge, Attitudes and Legacies.

Besides Investment Options, Savings Tools and Calculators, the site features:

  • Streamlined navigation and an enhanced look and feel
  • Frequently Asked Questions
  • Industry insight and value-added resources such as research reports, brochures, webcasts, white papers, sales collateral and interactive demos

"The enriched Scholar's Choice website gives advisors a more robust online experience while helping educate investors about college saving issues," says James Norman, President of QS Investors. QS is responsible for the investment management and distribution of Scholars Choice — an advisor-sold 529 plan. "Our recent study affirms that grandparents are taking a more active financial role in the lives of their grandchildren. We're empowering them with information and tools packaged in a new online experience that enables them to take the next step with their financial advisor." 

2013 Grandparents and 529 Plans Survey: Knowledge, Attitudes and Legacies

The survey, which was sponsored by Legg Mason and its Scholars Choice 529 plan in partnership with GRAND Magazine, included responses from over 1,000 grandparents. "Pitching in" emerged as a major theme: Over two-thirds of those with college-bound grandchildren are saving or planning to save for grandchildren's future education. Among this group, 40% are planning to use 529s — a figure that is clearly growing from one generation of grandparents to the next.

"When we asked whether grandparents used 529s to save for their own children's needs, only 10% said yes. But a generation later, as today's grandparents become more investment-savvy and 529s are more established, we are seeing an increased reliance on them," explained Norman. 

Based on the findings, the most appealing 529 plan features included:

  • The ability to contribute on a tax-deferred basis (54%)
  • The flexibility to use the funds for a variety of college expenses (48%)
  • The latitude to pay for tuition, fees, room, board, books and supplies (45%)
  • The discretion to make small contributions that fit within grandparents' budgets (33%)
  • The freedom to use the funds at any college deemed an "eligible institution" (32%)
  • The ability to retain control of the assets (30%)

Grandparents are largely saving for their grandchildren's college education for purely selfless reasons. They are deeply committed to family — and if they have the ability — are hoping to pave the way toward a better life, while instilling the value of hard work.

And, it appears the desire to help is here to stay. Of those with grandchildren already in college, 39% are helping financially — a figure that leaps to 66% for grandparents who have grandchildren planning to attend college in the future.

529s: A Missed Opportunity? 
Despite the best intentions, grandparents are still not making the most efficient use of their funds to help pay for college. A majority of those with grandchildren in college or planning to go to college are drawing on cash as needed (52%), as well as investment accounts (45%) and savings accounts and CDs (30%). It's a practice that could have a devastating effect on grandparents' retirement lifestyle.

Awareness vs. Understanding of 529 Plans
Grandparents appear to lack a true understanding of key 529 benefits. This knowledge gap may explain why more fail to incorporate them into their overall wealth management plan.

Only 16% of survey respondents claimed to be "knowledgeable or very knowledgeable" when it came to 529s. Yet, even among this group, a majority didn't recognize some of 529s' most compelling benefits:

  • 72% were not aware that 529 accounts can be invested in plans outside their home state
  • 82% were not aware that unused funds could be rolled over for their own continuing education
  • 76% were not aware they could establish 529 plans for their own lifelong learning

Grandparents Still Need Help
A significant percentage of grandparents continue to go it alone, with 47% saying they never sought advice on saving for their grandchildren's college expenses. What's more, when asked who initially suggested a 529 plan, only 20% had a financial advisor broach the topic.

"There's more room for grandparents and financial advisors to collaboratively ensure grandparents understand how 529 plans fit in," said Norman. "That means making sure grandparents grasp how a 529 plan could enhance their personal wealth management strategy."

Concerns and Legacies
Only a small segment of grandparents seemed concerned with passing on their wealth to future generations (only 16%) and minimizing taxes (only 24%). Notably, these findings are predominantly among respondents with a household income of $200K and above.

Instead, by a wide margin, most grandparents' concerns center on outliving their savings (58%). In short, grandparents' primary motivation appears to be making the most of their money while they are still alive and can still actively participate in the lives of their grandchildren.

For more information, or for a full copy of the Legg Mason Scholars Choice 2013 Grandparents and 529 Plans Survey: Knowledge, Attitudes and Legacies, please click here.

The online survey was conducted from November 11 to November 15, 2013 using the Research Now panel (the largest research panel in the U.S.). To qualify, respondents were screened to meet the following criteria: Age 50 to 80 with a household income of greater than $50,000; have grandchildren under the age of 19 or are expecting a grandchild in the next nine months; or have grandchildren currently enrolled in a 4-year college or university or in a post-graduate program. A total of 1,006 respondents completed the survey. Respondents were evenly split between male and female (50% each). About 46% of respondents reported household income of greater than $100,000.

About GRAND Magazine
GRAND Media is the portal to today's grandparent market. With a digital magazine at its center, GRAND provides a multimedia platform for active grandparents and their families, including a website (www.grandmagazine.com), a social media platform, and a research division created to help companies build lasting and profitable relationships with the grandparent market. Since 2004, GRAND has provided new and veteran grandparents with relevant content, resources and inspiration to help them successfully navigate the joys and challenges of this important life stage.

About Legg Mason

  • A leading global investment company, with $704 billion* in assets invested worldwide, focused on long-term, actively managed strategies
  • A diverse family of specialized investment managers, each with its own independent approach to research and analysis
  • Over a century of experience in identifying opportunities and delivering astute investment solutions to clients in equities, fixed income and alternatives

About Scholars Choice 
The Scholars Choice College Savings Program is the advisor-sold College Savings Program for the State of Colorado and is also used by investors and financial advisors throughout the U.S. It is one of the largest advisor-sold 529 college savings plans1, with assets of over $3.4 billion*. Scholars Choice is managed by QS Legg Mason Global Asset Allocation, LLC and primarily distributed by Legg Mason Investors Services, LLC. It is one of the lowest-cost advisor-sold 529 college savings plans2.

Scholars Choice offers seven Age-Based Portfolios, five Years-to-Enrollment portfolios, and six Static Portfolios. Investment options encompass a wide range of carefully constructed portfolios consisting of funds managed by Legg Mason affiliates including QS Batterymarch Financial Management, Brandywine Global Investment Management, ClearBridge Investments, Royce & Associates and Western Asset Management; and one unaffiliated fund managed by Thornburg Investment Management.

Important Information
An investor should consider the Program's investment objectives, risks, charges and expenses before investing. The Program Disclosure Statement at scholars-choice.com, which contains more information, should be read carefully before investing. If an investor and/or an investor's beneficiary are not Colorado taxpayers, they should consider before investing whether their home states offer 529 plans that provide state tax and other benefits only available to state taxpayers investing in such plans.

Investments in the Scholars Choice College Savings Program are not insured by the FDIC or any other government agency and are not deposits or other obligations of any depository institution. Investments are not guaranteed by the State of Colorado; CollegeInvest, QS Legg Mason Global Asset Allocation, LLC; Legg Mason Investor Services, LLC; or Legg Mason, Inc. or its affiliates, and are subject to investment risks, including loss of principal amount invested.

Legg Mason, Inc., its affiliates, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the "promotion or marketing" of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.

Scholars Choice is a registered service mark of CollegeInvest. CollegeInvest and the CollegeInvest logo are registered trademarks. Administered and issued by CollegeInvest, State of Colorado. QS Legg Mason Global Asset Allocation, LLC is the Investment Manager and Legg Mason Investor Services, LLC is the primary distributor of interests in the Program; together they serve as Manager of the Program. QS Legg Mason Global Asset Allocation, LLC, ClearBridge Investments, LLC, Brandywine Global Investment Management, LLC, QS Batterymarch Financial Management, Inc., Royce & Associates, LLC, Western Asset Management Company and Western Asset Management Company Limited, and Legg Mason Investor Services, LLC are Legg Mason, Inc. affiliates. Thornburg Investment Management, Inc. is not affiliated with Legg Mason, Inc. and its affiliates.

Legg Mason Investor Services, LLC is not affiliated with Research Now or GRAND Magazine.            

QS Legg Mason Global Asset Allocation (QS LMGAA) is part of the combined QS Investors investment platform, which is comprised of QS Investors, LLC, QS Batterymarch Financial Management, Inc. and QS LMGAA.

*As of June 30, 2014. 
1 Source: Strategic Insight, "1Q14 College Savings Quarterly Update." 
2 Source: Strategic Insight, "529 College Savings Quarterly Fee Analysis, First Quarter 2014."

©2014 Legg Mason Investor Services, LLC. Member FINRA, SIPC. Legg Mason Investor Services, LLC is a subsidiary of Legg Mason, Inc.

SOURCE Legg Mason, Inc.