No one can doubt that 529s are the talk of the mutual fund business with discussions abounding as whether or not the college-savings product will be the salvation of the industry. But beyond the grand vision, what is the nitty gritty? Can 529 plans work in the details?

One important station on the 529 assembly line is the financial advisor. How is the financial advisor being compensated for selling college-savings plans? Is there an industry-wide standard? The MutualFundWire.com spoke with Joe Hurley, ceo for savingforcollege.com, about these issues.

"The distributors are paying along the lines of ABCD share class distribution structures," Hurley reported. "Obviously, each distributor has its own compensation arrangements."

"But typically, for A shares, the range is generally around 3 to 3 1/2 percent but could be as high as 5 percent. And there could be a trail there as well. And that trail generally would be around 25 basis points," the executive explained.

"Now, for C shares, there could be a 1 percent annual. And sometimes the distributor will pay the broker/dealer a 1 percent load off of that," he added.

"But, as of yet, there is no industry standard. The firms all want to be competitive with one another, so there is a pretty wide range out there. The industry is still figuring out what numbers work and what don't. So there is a lot of change. There will be a lot of change as they hone in on the numbers that will bring them the most success. The 529 business will follow in the footsteps of the mutual fund industry," Hurley contended.

He also noted that distributors were going through a big push for wholesalers at the moment.

He also discussed what the distributors provide financial advisors to assist with sales. "A lot of distributors have come up with very helpful materials, especially special calculators to help determine state tax benefits. But education is key. So educational materials are extremely important, and not just for the client but for the advisor as well," the executive continued.

"There are a lot of opportunities out there. There has been a lot more focus on 529s during 2002. And the states are becoming increasingly interested in multi-manager approaches," Hurley concluded. 

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