There are a number of clear signs that your financial advisor may not have your best interest in mind. Is your IRA invested in a variable annuity? Red flag! Do the names of your mutual funds end in “A” or “B”? Red flag!

When it comes to saving for college education expenses, it’s hard to beat 529 tuition savings plans. I regularly recommend them to my clients. Each state has its own plans and it usually makes sense to use a plan sponsored by your state. If your advisor recommended that you use another state’s plan, it’s another red flag that he or she may not be working in your best interest.

I’m advising new clients who are residents of Ohio but are using a 529 Plan from Maine. I happen to know that Ohio has a very strong 529 Plan that offers low-cost investment options and a state tax deduction for Ohio residents. It’s a no-brainer for Ohio residents to use it. So why is this couple using one of Maine’s plans? The answer is clear to me – because their former advisor can’t sell Ohio’s plan and earn a commission. Instead, he directed them to an advisor-sold plan that did pay him a commission.

Unfortunately, I see this breach of fiduciary duty on a regular basis. I’m not saying that there aren’t reasons to use another state’s 529 Plan, but when I see it, it’s usually for the wrong reasons.

How can you make sure that you are using the right 529 Plan?

• Research plans at savingforcollege.com.
• Use a Fee-Only financial advisor who is a fiduciary.

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Please note that this blog post is for educational purposes only and should not be construed as advice specific to your situation. You should get advice from a legal, accounting, or investment professional before deciding what course of action is appropriate for you.