started to develop a pattern of solutions,”
he says. “The more we worked in this
field, the more we realized the additional
opportunities families could deploy or
take advantage of, such as various finan-
cial instruments, the selection of school
to attend and certain tax strategies.”
At that time 529 plans were the only
financial tools considered as college in-
struments to help families pay for college.
Moffitt and others leading the develop-
ment of the late stage college planning
charge began finding non-traditional
designs with cash value life insurance to
more effectively and predictably pay for
college. In recent years, product redesign
and developments such as Indexed Uni-
versal Life (IUL) have resulted in addition-
al opportunities for families to be able to
pay for college as well as fund retirement.
Funding the IUL then becomes a financial planning process, with Moffitt looking
at a family’s comprehensive plan to find
inefficiencies that could be better used in
college planning. He might identify a 401(k) that’s been over-funded beyond the match from an employer. Other scenarios
include: families overpaying on their house; a debt consolidation
that frees up assets; or other efficiencies that you can find.
“Every family’s case is different,” says Moffitt. “But our role
is to find solutions.”
When he meets with clients, often there’s a great deal of
anxiety within the family as they struggle with the idea of
how they’re going to find a balance. “Frankly, many times
people come in resigned to what they believe to be their only
choice, which is taking out loans in order to pay for college,”
Moffitt says. He works to relieve them of that mindset by
walking them through the process.
“First, we show them how they are not going to overspend for
college. Second, we tell them we are not going to saddle their kids
with a massive amount of debt. And third, we let them know this
plan is not going to jeopardize their long-term financial goals.”
THE HOLISTIC APPROACH
For Moffitt, the college planning doesn’t work if it doesn’t
fit into a family’s overall plan. Why rob Peter to pay Paul?
It wouldn’t make sense to get the child through college if it
wiped out a family’s nest egg.
“It all starts with clearly marking out a family’s priorities,” he
says. After having the college talk with thousands of parents over
the past two decades, Moffitt knows all too well that many of
them will ransom their own future to see that Jimmy or Janey
get into the best university. “The challenge comes from striking
the right balance. In many cases the parents stop just short of
jeopardizing their own retirement to fund their child’s college.”
One way to protect the nest egg is by looking at ways to drive
down college costs. “In some cases it’s finding the proper col-
lege selection. In other cases it’s maximizing merit-based aid. In
others, it might be through maximizing financial aid and taking
advantage of tax issues. Whatever the case may be, we are go-
ing to drive that cost down to best protect the nest egg.”
But Moffitt never loses sight of where the majority of his
new clients begin.
“We are in the business of helping families through the major life transition of sending their children to college,” he says.
“For many, it will be the most expensive time of their lives and,
if not handled properly, could cost them their retirement.”
Daniel Williams is a freelance writer covering the financial services
industry. He is based in Denver, Colorado.
TO WHAT THEY
BELIEVE TO BE
IS TAKING OUT
LOANS IN ORDER
TO PAY FOR