The cheapest option isn't always the wisest

Published: Saturday, January 22, 2005 at 6:01 a.m.
Last Modified: Friday, January 21, 2005 at 10:57 p.m.
Regarding the Nov. 26 business article about 529 college savings plans, readers need to have the real problem clarified.
Some families do, in fact, get lost in the many choices and pick bad investments. As a financial adviser, I've seen numerous people choose unsuitable allocations for their college funding goals.
The writer says, "Many investors turn for advice to brokers, who serve as middlemen for about four in five 529 accounts and often get commissions. But the worry is that brokers are steering too much client money to high-fee, out-of-state funds, and too little to funds in the investor's home state."
Whether it is worth paying an additional fee for help setting up a plan and managing the allocation over time depends on the quality of the advice received from a financial adviser.
People need to worry more about having a proper asset allocation, whether managed by them or with help from a financial adviser, than trying to choose the "lowest cost option."
Overzealous journalism that keeps consumers focused solely on cost can lead to people making uninformed decisions, but rationalizing to themselves that they chose the "low-cost option."
If someone can manage money on their own, great.
However, the benefits most people receive from the help of a quality financial adviser far outweigh the additional fee associated with the advice.
Consumers need to remain focused on which options provide the best chance at achieving their goals, not on which options cost the least.
By the way, since Florida does not have a state income tax, the tax benefit of using Florida's plan is a moot point.
And if you do your research, you'll find that other states have investment options far superior to Florida's plan.
Brian Watson, Gainesville

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