Target Market Analysis 2021: Trend of Parents Using 529s in 2021 vs 2017-2019

What percentage of parents save for education with 529s?
Exhibit 1

Source: ISS Market Intelligence 529 Industry Analysis 2021

Exhibit 1 reports the segmentation that was used in the survey. Of the respondents polled, 63% were saving for college, while 37% were not as of 2021. The 63% saving for college includes 29% that were 529 plan users (either 529 savings plans or 529 prepaid plans) and 34% that were saving for college but were using something other than a 529 plan (for example, bank accounts). Compared to the prior annual surveys by ISS Market Intelligence in 2017, 2018 and 2019 as reported in Exhibit 2, Exhibit 3, and Exhibit 4, more families were saving with 529s. For example, 58% were saving for education with 24% saving with 529s in 2017 compared to 63% and 37% in 2021. The same trend line remains whether one compares 2017, 2018, or 2019 to 2021, and therefore more families are saving and saving efficiently with 529s in 2021 in comparison to pre-COVID time period. Therefore, advisors, accountants, and estate planners should note the growing demand and opportunity for 529s and education financial planning, and have the education financial planning discussion with their clients today to meet the growing need. To learn more about how product providers and distributors can help pivot non-savers to savers, savers to 529 users, and 529 users to 529 “powers users”, contact us to learn more about the ISS Market Intelligence 529 Industry Analysis 2021.

Exhibit 2

Source: ISS Market Intelligence 529 Industry Analysis 2018

Methodology:
The ISS Market Intelligence 529 Industry Analysis 2021 report builds on 23 prior ISS Market Intelligence college savings studies:
– 529 Distribution Analysis: 2020
– 529 Industry Analysis 2020
– 529 Distribution Analysis: 2019
– 529 Industry Analysis 2019
– 529 Distribution Analysis: 2018
– 529 Industry Analysis 2018
– 529 Distribution Analysis: 2017
– 529 Plan Industry Analysis 2017
– 529 Plan Distribution: 2016
– 529 Industry Analysis 2016
– 529 529 Distribution Study (2015)
– 529 Industry Analysis (2015)
– 529 Distribution Study (2014)
– 529 Industry Analysis (2014)
– 529 Advisor Study (2013)
– 529 Industry Analysis (2013)
– 529 Financial Advisor Support, Selection and Distribution Preferences (2012)
– 529 Industry Analysis (2012)
– 529 Plans and Distribution Analysis (2011)
– 529 Advisor Perspectives (2011)
– Evaluating the College Savings Market Opportunity (2009)
– 529 Strategies for Success (2004)
– 529 Plans: An Investment in Your Company’s Future (2002)

Consumer Survey
The primary goal of this study is to analyze the decision-making and product-selection processes of individuals who were, at the time of our survey, either 529 users, non-529 college savers or non-college savers.

For ISS Market Intelligence’s 529 Industry Analysis 2021, we partnered with a premier B2B and B2C panel provider and data-collection services company to conduct a proprietary survey of 1,038 consumers in March and April 2021. This nationally representative sample included U.S. household decision-makers between the ages of 25 and 82, with annual incomes of US$25,000 or more and who were either parents or legal guardians of a child or children under the age of 18.

The survey utilized a choice model method that mapped the target market into three categories: 529 users, non-529 college savers and non-savers. This approach provides firms with strategies on how to convert non-college savers to college savers; college savers to 529 users; and 529 users to 529 “power users”. 529 power users are defined as those savers who are fully funding the account to its annual maximum contribution limit, or those who are leveraging multiple sources of contributions, such as friends, family, employers or credit-card rewards programs. Longitudinal analyses are reported for certain data points, as ISS Market Intelligence conducted similar proprietary consumer surveys with enhancements based on feedback in 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, and 2020, and partnering with the same firm to poll consumers. While there were not any changes in the demographics of survey-takers in 2021, one change in the 2016 demographics was to include those with annual incomes of $25,000 or more, as opposed to $30,000 or more, to improve sample alignment with the U.S. Census. While this broadened out the target market of the survey-takers, we do not project material changes in results, due to the inclusion of the category. Therefore, year-over-year trend reporting will be included in charts and tables, and in the written analyses.

Other Surveys and Interviews

In addition to the consumer surveys described above, ISS Market Intelligence regularly conducts proprietary industry surveys of product providers, financial advisers, broker-dealer home offices, plan sponsors and parents to give firms a 360-degree view of the current and projected state of the education financial planning industry.

ISS Market Intelligence also regularly conducts primary research in the form of interviews and meetings with industry executives in order to understand the latest trends in legislative, product development, marketing and distribution of 529 plans and the education financial planning industry.