by Sean Whaley, Nevada News Bureau: Nevada parents along with their counterparts across the country will soon have a new option to save for their children’s college education.
Nevada State Treasurer Kate Marshall announced today the state has entered into a contract with Putnam Investments as a program manager to provide a new “adviser sold” plan through the college savings programs.
Putnam was selected from among 12 firms that responded to a request for proposals. The five-year contract with Putnam can be extended for a second five years. The company’s offerings through the 529 college savings plans will be detailed when the contract begins Oct. 1.
Marshall said that with an adviser sold plan, parents work with an investor to reach their college savings goals. Nevada also currently offers “direct sold” plans that do not include the services of a financial adviser.
Under the contract, Nevada parents who decide to invest with Putnam will pay no annual fees. Participants in other states will have to pay annual fees. There is a separate management fee involved for all participants for the Putnam adviser sold plans. Those fees will be clearly disclosed when the offerings are made available next month.
“This will again be a nationwide offering putting education in reach both for Nevadans and people across the country who want to try to save for college for their children,” Marshall said.
The College Savings Board of Nevada chose Putnam for its innovation, its nationwide footprint and for what the company could bring to the table for Nevada families and families nationwide, she said.
Robert Reynolds, president and chief executive officer of Putnam Investments, said the college savings plans are the most efficient and cost effective way to save for a college education.
Close to 36 million families nationwide have children in the home under age 18, he said.
“So there is a tremendous need for 529,” he said.
Reynolds said the college savings market right now nationwide is worth $125 billion, and should expand to $200 billion within four years.
Marshall said the contract makes the Putnam college savings plan exclusive to the state of Nevada. The state will collect fees for having Putnam offering its plan through Nevada, she said. The state expects to earn between $1 million to $2 million a year in fees once the plan becomes well established.
Marshall said the Putnam plan is expected to grow to $2 billion in assets within five years.
Putnam has spent more than a decade serving the 529 college savings market through advisors in a partnership with the state of Ohio.
Marshall and Reynolds indicated they expect the advisor-sold plan to place a heavy emphasis on advisor and investor understanding of savings needs and to provide innovative investment strategies and tools to help bridge to more successful outcomes.
The state of Nevada, through the Treasurer’s Office, currently offers several 529 college savings plans, including the Upromise College Fund 529 Plan, Vanguard 529 College Savings Plan and the USAA College Savings Plan.
Over 16,000 Nevada families are now participating in one of the four college savings plans now offered by the state. More than 400,000 families in other states are also participating in the plans.
State Treasurer Kate Marshall says new college savings offering will benefit Nevada parents:
Marshall says she wants more parents to save for college:
Putnam President Robert Reynolds says there is a tremendous need for college savings plans: