Author Topic: Grandparents's financial advisor wants them to start a separate 529  (Read 1978 times)

sideways

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Hi all,

My wife and I have 529s set up for our children (ages 2 and 3). After careful research, we settled on a Nevada plan through Vanguard, invested in passive index funds. My parents have contributed to these plans in the past at Christmas, etc. Naturally I am very grateful and appreciative that my parents want to contribute to our childrens' education.

This year, they have a new financial advisor who wants to "set up separate 529s that he could monitor," which I interpret to mean "extract fees from." I expect the amounts of money in these accounts to be modest (at most 4 figures), and I'm skeptical that his "monitoring" is in the best interest of anyone except him.

My parents are financially secure by virtue of their good spending habits, but their finances are all over the place. They have a history of creating lots and lots of accounts with small amounts of money in each, based on the advice of past advisors.

I want to show my parents the statistics about actively vs passively managed funds, show them how simple strategies beat the experts. Show them they're being taken for a ride. Show them that this advisor guy isn't acting in the best interest of my parents or my kids. Tell them to kick him to the curb.

But they're my parents. The last thing I want to do is argue with them about how they should give my kids money!

What do, MMM?
« Last Edit: November 05, 2014, 01:36:29 PM by sideways »

Gin1984

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Re: Grandparents's financial advisor wants them to start a separate 529
« Reply #1 on: November 05, 2014, 01:28:27 PM »
First of all, if they fund less then the cost of a year of school, it would be useful for the 529 to be in a separate account (not accounted under the FAFSA), but why not just say "good idea but you don't need the advisor, we opened one up through the Nevada plan, it is the best option".  Here let me help you open one up here too?

MandyM

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Re: Grandparents's financial advisor wants them to start a separate 529
« Reply #2 on: November 05, 2014, 01:31:25 PM »
I say leave it alone. From what you posted, this is standard operating behavior from your parents. So I highly doubt you will unravel a lifetime of habits while discussing their gifts to their grandchildren. Anything other than a "thank you" will likely be a waste of breath in which you seem less than grateful. 

mrs sideways

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Re: Grandparents's financial advisor wants them to start a separate 529
« Reply #3 on: November 05, 2014, 02:57:55 PM »
MandyM - You're probably right. You're certainly right that it's standard operating behavior; they have the mindset that finances and investing are things you need an "expert" for, and not surprisingly their "experts" have steered them into dozens of complicated high-fee accounts scattered all over the place. (They need a dedicated file cabinet just to store all the paperwork.)

Fortunately, they have enough that they're safe and comfortable, but damn do I want to smack this new "advisor" in the face for convincing two senior citizens that they should pay for "monitoring" some smallish 529 plans when we already have better accounts set up.
« Last Edit: November 05, 2014, 03:08:05 PM by mrs sideways »

BigRed

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Re: Grandparents's financial advisor wants them to start a separate 529
« Reply #4 on: November 05, 2014, 05:55:32 PM »
Depending on what state they live in (if it's not the same as yours) they may be able to get a state tax deduction for contributions, but only if they contribute to the 529 plan set up by their state.  So, it is possible that there may be an advantage to them in doing it this way.  Now, there's still no reason for an adviser as the middle man, but there may be a reason to contribute to their own 529.

surfhb

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Re: Grandparents's financial advisor wants them to start a separate 529
« Reply #5 on: November 05, 2014, 06:51:03 PM »
Keep your trap shut.  :)  Its none of your business plus it takes a substantial burden off you as parents. 

Im sure there are some things you do / or have done that your parents don't look fondly on
« Last Edit: November 05, 2014, 06:53:10 PM by surfhb »