April 11, 2006

1
The Future of 529 ProgramsManagement
Solicitations and Re-Bids presented by Andrea
Feirstein
April 11, 2006
2
Approach

• The 529 Landscape
• Re-Bid Experience
• Relevant Considerations for the Future
• The Upcoming Calendar

3
The Early Landscape

• 1999 through 2002
• Industry infancy a rosy future
• Variety of early vendor business models
• Multiple mandates
• Single state focus
• Morphing of state models
• Direct-sold only
• Emergence of the advisor market
• Private label opportunities

4
The Landscape Changes

• 2003 to Present
• Vendor cost structure is clearer
• Importance of investor fees and expenses
• Direct-sold market appears more price sensitive
• Some pressure on advisor-sold structures
• Opportunity for economies of scale

5
Official Re-Bid Experience

• 2003 NY TIAA to Upromise (1.8b)
• 2004 CO Citigroup to Upromise (250m)
• 2005 MD T. Rowe remains in place
• MO TIAA to Upromise (700m)
• WI Wells Fargo remains in place

6
Common Themes in Re-Bids

• State Incentives
• Deductions
• Pool of potential investors
• Program incentives
• Asset transfers
• Cost
• Marketing
• Program management

7
Relevant Considerations for States

• Satisfaction with Existing Program
• Structure (including investments and cost)
• Relationship with current manager
• Market Opportunity Potential Respondents
• Status of existing assets
• Potential for new accounts and assets
• State incentives
• State wealth and population
• Solicitation Timing
• Contract expiration
• Competing states and programs

8
Solicitation Calendar

• Current Solicitations
• California In accordance with its terms
• Iowa New advisor-sold program
• Montana Prior to contract expiration
• North Dakota Prior to contract expiration
• Pennsylvania Prior to contract expiration
• 2006 Contract Expirations
• Idaho
• Ohio
• Vermont

9
Solicitation Calendar, contd

• Significant 2007 Contract Expirations
• Illinois
• Indiana
• Kansas
• Michigan

10
529 Outlook

• State and program incentives will drive the
  market
• Market consolidation is inevitable
• Creativity and flexibility counts

11
Contact Information

• Andrea Feirstein
• Managing Member
• AKF Consulting LLC
• andrea_at_akfconsulting.com
• 212 874 2947 phone
• 212 595 1492 fax