I went to a 'free' seminar tonight regarding college planning, how to get the most financial aid possible, etc. It turned out to be a financial planner who specializes in college financial planning. I'm researching how to pay for my son's college (i.e. my bank account, 529's, financial aid/grants) and I'm wondering if these financial planners are worth their fee. Does anyone have any experience with these type of advisors?
I don't have experience with financial planner specializing in college financial planning. But if it is a fee based financial planner, I look at is as follows: Take the total annual fee and divide it by the principle you plan to invest. That is effectively the percentage cut that the planner gets. Now how much benefit do you receive from the financial planner's assistance?
Let's say you invest $10k in the first year and you pay $50/month ($600/year). That's 6% of your principle. If that planner shows you how to invest it tax free and you wouldn't have otherwise, than it is easily worth it. On the other hand, if you have the time, ability and desire to do the research on your own then you may be able do without the financial planner.
As for how to pay for college, I think the best thing to do is take a multi-faceted approach:
- It is definitely worth applying for federal grants/loans (FAFSA) since you can always decline the loans even after you're approved.
- Put money into a 529 plan.
- Encourage your son to fill out scholarship applications at multiple universities. There are also several scholarships not associated with any one university.
- Encourage your son to get a job/internship during the summers if not during the school year. (If your son has to pay part of his own way it's likely to help him learn much more about how to manage his own finances in the future.)
The value of a planner depends on you. Do you use a planner for your retirement investments?
Other things to think about:
- Do you have a preference for private universities?
- Is your child's academic performance likely to yield him merit scholarships?
- Do you have the time to do whatever the planner is going to do?