Putnam Thinks Nationally With New 529 Plan

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Two weeks after announcing a new 529 college savings partnership with the state of Nevada, Putnam Investments said it plans to expand sales of the program nationally.

The Boston investment manager announced Friday it will make the Putnam 529 for America, its new advisor-sold 529 college savings plan, available nationally.

Robert Reynolds, the company's chief executive officer, said in an interview Thursday that Putnam has offered 529 plans for 10 years, but this plans will take a broader national approach.


Putnam officially became a program manager in Nevada Friday and wasted no time in looking beyond the state for sales. For the past 10 years, Putnam managed Ohio's advisor-sold 529 plan, but when Ohio decided to only have one advisor-sold plan, managed by BlackRock, Reynolds said Putnam was approached by "several" states that wanted to work with Putnam.

Reynolds said Ohio had a charter that enabled Putnam to sell 529 plans nationally, but it wanted to focus on selling plan within the state. Putnam chose Nevada because it wanted to sell through advisors nationally.

"What really attracted us to Nevada was their flexibility plus their willingness to grow on a national basis," he said.

Putnam will join USAA, Columbia Management, Vanguard and Upromise, who also run 529 plans through Nevada. Columbia also manages an advisor-sold plan. Putnam managed $3 billion in 529 assets for Ohio, but will start at "ground zero," Reynolds said, in Nevada.

"I am confident we will exceed the assets we accumulated in Ohio," he said. "We are targeting advisors at every state in the union."

Putnam's 529 plan will be the first to feature absolute return funds as an investment option. The funds are designed to target positive three-year returns above inflation, as measured by T-bills and with lower relative volatility. Most 529 plans has leaned heavily toward target-date funds, but Reynolds said he think absolute return funds are better suited for investors saving for college.

"A lot of investors don't really understand risk" he said. "Over a 10 year period, an investor can generate the same amount of return, but if they hit a difficult market closer to retirement, they might have a lower balance. These products are designed to protect principal throughout."

Putnam launched its absolute return funds 18 months ago and the funds have already accumulated $2.5 billion. "Its still a new concept," Reynolds said But already 9,000 individual advisors have started selling these products nationally."

The funds are designed to target positive three-year returns above inflation, as measured by T-bills and with lower relative volatility.

To encourage participation in the Nevada plan, Putnam will waive sales charges for participants who transfer funds over from existing 529 plans, as well as waive the annual maintenance fees until 2012.  

 

 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

© 2010 Bank Investment Consultant and SourceMedia, Inc. All Rights Reserved.


This article appears in: Financial Advisor Center , Business

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