How does this financial firm founder approach college financial planning with his clients?
This article features an interview with Jeff Dixson, Founder and President of Northwest Financial & Tax Solutions. Based in Vancouver, Washington, the independently owned firm was founded by Jeff in 2007 and has two additional meeting locations in Oregon for its team of five financial advisors and eleven support staff. As a team, they host live educational events for current and potential clients as they believe client education is a core element of their approach to wealth management. Additionally, Jeff Dixson is the host of the weekly Jeff Dixson Radio Show titled “The Retirement Coach” and author of the book titled “Winning the Retirement Game.” Together, Jeff and the firm provides proprietary wealth management by leveraging and integrating the four areas of investment planning, income strategies, estate planning strategies and business planning. In addition to his work within the financial service industry, Jeff is an active member of the community. You can learn more about Jeff and his firm at the website of http://nwfts.net/. Last but not least, thank you Jeff for your time, insight and support in working with me on the article. Please read the question and answers to learn about his perspective on integrating college financial planning and retirement planning into a holistic approach to financial planning, and hope that the article provides you with an opportunity to learn more from your peers.
Question 1 (Paul Curley, Editor of the 529 Dash): How and why did you first get started in helping clients with financial planning?
Answer 1 (Jeff Dixson, Founder and President of Northwest Financial & Tax Solutions): After talking to many people about financial planning (and specifically retirement planning) it was clear to me that most people really didn’t have a clue or a plan for retirement. I wanted to help them better understand how money works, how taxes work, and the need for financial planning.
Question 2: Based on the Strategic Insight 529 Industry Analysis 2017, 19% of parents intentionally save for their children’s higher education with 401(k)s, and they contributed an average of $2,826 last year with a total balance of $14,500 at the end of last year into their 401(k)s for college financial planning. Why should parents think twice before planning to use 401(k) funds to cover the cost of higher education?
Answer 2: They really are totally separate accounts with two totally different goals. Typically 529 plans can be more aggressive, depending on the age of the child. You can save more in a 529 – $14K per year up to 5 years ($70K). And you can save up to $28k per year if you’re married. You can research schools to see what they charge today and what the projected costs will be when the child goes off to college. Depending on how the accounts perform, you may have to delay retirement to pay for college. It’s much better to keep them separate.
Question 3: The Center for Retirement Research at Boston College recently reported in "The impact of raising children on retirement security" that saving for their children’s education resulted in a 14.3% reduction in retirement risk. Given the symbiotic relationship between the two goals, should retirement and college financial planning be integrated in a holistic financial plan?
Answer 3: Overall comprehensive financial planning will integrate financial goals into one holistic financial plan. Each segment of the plan should be kept separate to allow it to perform and accomplish its individual goals. Age, time horizon and risk tolerance should be taken into account for each segment of the plan. If you try to adjust risk to balance one with the other, you may not reach your goals on any of them.
Question 4: How can product partners and state agencies better support you now in your current role?
Answer 4: Working together with product partners and state agencies to establish the financial tools and tax strategies that align with the separate needs of students and parents will go a long way in building successful financial tools to accomplish the needs of the students for higher education as well as the parents in their retirement success. Done correctly, it can be a win/ win for both.
Editor’s Final Note: Thank you Jeff Dixson for your time and insight in working with me on the article, and much appreciated. Also, I would like to provide a special thank you to the readers of the article for learning from your peers, for your support and your engagement. Have the college financial planning discussion with your clients today.