"What is the advisor being paid for?" is the question investors need to consider when it comes to 529s.
For the most part, assets in 529 plans are invested in age-based portfolios that become more conservative as the child gets closer to college age, according to Morningstar.
Even fee-only and fee-based advisors whose clients go the self-directed 529 route find that many of them stick with these options.
"It's very difficult to design, implement and manage an allocation model that will outperform one of the age-based models," said Roy P. Janse, managing partner at DeHollander & Janse Financial Group in Greenville, South Carolina.
"I see it as a violation of my fiduciary responsibilities to charge someone a 5 percent or 6 percent commission simply for recommending that the investor allocate their money into the appropriate age-based model," he said.
Not all cost-conscious advisors go the self-directed route, however.
Patrick Dougherty, founder of Dougherty Wealth Management in Dallas, operates a fee-only practice and recommends advisor-sold 529s. "Often with self-directed accounts, investors listen to watercooler talk and pick what their friends recommend," he said.
Dougherty uses an institutional share class to keep costs down, and he doesn't charge a commission. "I'm helping them pick the investments, but once I do that, it's on autopilot," he said. The funds he chooses use age-based allocations.