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ABLE Plan Take-up Among FAs Is Low Despite Benefits: Report

By Alex Padalka January 8, 2021

ABLE plans, which offer a tax-advantaged way to save for the care of individuals with disabilities, present an excellent option for financial advisors to include in their offerings for clients, but outreach initiatives and possibly federal legislation may be necessary to boost their use by consumers, a new report claims.

Achieving A Better Life Experience Act (ABLE) plans held over $538 million in assets under management in over 75,000 accounts across the nation as of the end of September 2020, according to a new report about the market from AKF Consulting, a municipal advisor to public sector administrators of consumer-facing, state-run investment programs, including 529, ABLE and state-run retirement programs.

The number of ABLE accounts has grown at around 190% on an average annual basis since their inception in June 2016 — but that represents a steady slowdown in growth rates, from 396% in 2016 to just 46.67% in 2020, AFK says.

One issue is that only 43 states and the District of Columbia currently offer 15 such plans to their residents, with all but Oregon and Virginia offering just one option — which AFK suggests is a limitation that could be overcome by federal legislation.

At the same time, Virginia is the only state to offer an ABLE plan sold through financial professionals, according to the report. And there are currently fewer than 1,000 such advisor-sold accounts, AFK writes.

“Professional advice is often an integral part of an individual’s financial plan and can incorporate an ABLE account into a broad-based plan. Multi-generational planning may be an important component of a financial plan with ABLE beneficiaries,” AFK writes. “Many advisors would use an ABLE Plan to afford clients and their family members a cost-effective, convenient means of providing financial assistance to a potential account beneficiary.”

To boost the number of advisor-sold ABLE plans, AFK says it’s necessary to improve outreach.

The ABLE Committee of the National Association of State Treasurers is also backing a proposed federal law that would raise a beneficiary’s age of disability onset from before 26 to before 46, which would increase the number of people eligible to participate in ABLE plans from 8 million to 4 million, the report notes.

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