For years, 529 college savings accounts have been a staple in education planning, but recent legislative changes have ignited new interest in these products. The proposals have broadened the scope of 529 accounts, allowing them to cover a wider range of education expenses and even permitting the use of funds for student loan payments or conversion into Roth IRAs. With the evolving landscape of 529 accounts, the introduction of 529s into a broker-controlled model (by holding these products omnibus) helps to streamline the investment process for both broker-dealers and their end clients.
Selecting a 529 program can be driven by multiple factors: by state (for potential tax benefits), a state’s specific fund’s investment firm, or by the expenses charged for these plans. Regardless of what drives the decision, the process has historically been to open the 529 account directly through that state’s website or the fund. For clients holding these positions outside of their brokerage account, the 529s operate separately from other investment options, creating obstacles and administrative challenges that often discourage advisors from including these products when working with end investors.
Enter the concept of omnibus 529 accounts. This innovative structure brings 529s into a broker-dealer’s existing investment framework, mirroring the experience they have with mutual funds. Broker-dealers can diversify their product offerings to attract advisors looking to offer a broader range of solutions to their clients while streamlining operations and enhancing the client experience. Investors and advisors no longer need to open multiple accounts or juggle statements from various sources. Instead, they can effortlessly integrate 529s into their existing portfolio through their trusted broker-dealer. This integration provides clients with a holistic, consolidated view of their investments, simplifying their financial planning.
SS&C's Subaccounting solution empowers broker-dealers to incorporate 529 accounts into their product lineup with ease, which also allows the opportunity for enhanced monetization of their 529 assets. We use our 25+ years of subaccounting expertise to provide the same level of service and client satisfaction for 529 products as we do for mutual funds: comprehensive reconciliation services, strong control structures and real-time connectivity with SS&C’s transfer agent for up-to-date fund rules, pricing, data and corporate actions. As the financial landscape continues to change, embracing these advancements can be a strategic move for broker-dealers and a more convenient choice for clients. Interested in learning more about the benefits of omnibus 529 accounts and how SS&C’s Subaccounting solution can help? Visit our Subaccounting product page.
