Sootchy provides non-discretionary investment recommendations for our clients. This means, clients are free to select investment allocations different than those recommended by Sootchy. Generally, Sootchy recommends target date fund allocations for all clients. Target date funds are a collection of mutual funds, exchange traded funds (ETFs), and other investments that are automatically reallocated by the fund manager(s) to a more conservative allocation as the target date approaches (e.g. nearing college age). This approach minimizes the potential for excessive decreases in account values as you near the time you will begin withdrawing money from the account.
As Sootchy only provides an initial investment allocation recommendation and does not monitor your allocation or performance thereafter, Sootchy believes target date recommendations are most appropriate based on the service we provide. Clients are free to change their allocations based on the 529 plans procedures. Typically, reallocation can be accomplished by visiting the specific 529 plans website.
The specific target date fund recommended by Sootchy is based on the age funds are expected to be withdrawn, how much money you have already saved for education, and your risk tolerance as based on the results of your risk tolerance questionnaire. Sootchy will from time to time inquire if your risk tolerance has changed, but clients should periodically consider their risk tolerance and make allocation changes if necessary.
All investments carry a risk of loss, including loss of principal. Please read Sootchy’s Form ADV Part 2A for additional information regarding the risks associated with target date fund investments in a 529 plan.
Sootchy recommends 529 Plans based on a review of the 529 Plans available on the Sootchy platform. 529 Plan features which may be considered include, but are not limited to:
Plan fees and expenses,
Plan investment options,
Plan program manager,
The tax treatment of contributions based on client’s state of residence
Plan technology platform, and
Plan ease of obtaining service.
Currently the only plan available on the Sootchy platform is my529 sponsored by the state of Utah. As such, all clients currently receive the same recommendation. As some state 529 plans provide tax advantages to residence who contribute to their home state plan, clients should carefully consider the option to open a different 529 Plan before beginning with Sootchy.
