Knowledge First Financial

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As Canada’s labour market grows increasingly more competitive, the value of post-secondary education is greater than ever before. However, high tuition costs and lack of financial resources can be a barrier for students and families. Some place their educational aspirations on hold due to financial circumstances.

The sales force and employees at Knowledge First Financial believe every person should have the chance to pursue post-secondary education. Since 1965, the education savings plan provider has been helping Canadian students and families reach their education savings goals. Through offering a range of RESPs (Registered Education Savings Plans) and providing ongoing support and services, Knowledge First Financial gives every student the opportunity to reach their full potential.

A New Educational Landscape

Post-secondary education isn’t what it used to be.  Students want more choice in where, when, and how they study. Families must save more to meet rising tuition fees. These factors require a savings plan that offers families flexible payment methods while allowing students to access their savings in the way that’s best for them.

According to a 2013 study, 34 per cent of parents claimed affordability as the top deciding factor when it came to choosing a post-secondary institution for their child. This was followed by selecting the best program (29 per cent) and the quality of the teaching staff (17 per cent). Yet nearly half (43 per cent) of students believed entering the best program was the most important aspect when selecting where to study, with only 13 per cent claiming affordability. Eleven per cent rated campus experience as most important when choosing a post-secondary institution; parents ranked campus experience as the least important factor in the decision making process.

These statistics illustrate how the financial responsibility wears on the shoulders of parents more than the students, which is why an RESP is an important solution in today’s education savings landscape. 

“Historically, the parents have been responsible for financing their child’s post-secondary education,” Knowledge First Financial President and CEO George Hopkinson explains in an August 2014 CBJ interview. “Yet now with higher costs and less government funding, they’re the ones managing more financial strain.”

“Some parents have to retrieve funds from their retirement savings or take out a loan just to afford their child’s higher education,” adds Suzanne Martyn-Jones, Vice-President, Marketing and Customer Service. “Families want to send their children to the best schools with the best programs, yet it is becoming increasingly more difficult to fund it.”

The way students learn has also shifted over the past few decades. In the same 2013 survey, 60 per cent of parents, 56 per cent of post-secondary students, and 53 per cent of high school students agreed that the key benefit of having personal educational savings or an RESP was that the added funds allowed them to study full-time, instead of part-time. Part-time study often results in more years of study needed to attain a degree or diploma, an inability to join in the full campus experience, and in some instances, costs the student more in the long-term.

Many high school students are now considering their post-secondary options at earlier ages. This, coupled with the increasingly diversified subject fields academia offers, results in more students deciding to change programs part-way through their tenure.

“Traditionally, group RESPs were designed for four-year university or college programs,” continues Suzanne. . “This isn’t as practical as it was in the past, as fewer students are following such a linear path.  RESPs need to be more flexible for how students study in today’s environment.”

The financial obligations associated with modern post-secondary education programs require families to start saving early. Parents and relatives seek RESPs with flexible payments and a variety of potential applications for their child. Yet 55 per cent of eligible Canadians do not have RESPs. Knowledge First Financial seeks to change people’s hesitant views on RESPs, and show that with the right amount of flexibility and personal choice, nearly everyone can benefit from investing in further education.

The Knowledge First Response

Knowledge First Financial recognizes the many changes occurring in the post-secondary landscape, and offers several innovative products to support students as they pursue their educational goals. The company provides individual and group RESPs – the Family Group Plan and Flex First Plan. Both offer families the opportunity to effectively save for their child’s education, yet through offering two plans, families can choose the best option for their needs.

In the Family Group Plan, the income earned on plan contributions is pooled with the income from other Family Group Plans with the same year of eligibility. Through pooling plans, all contributors become eligible to receive additional income from the Knowledge First Foundation. At plan maturity, the principle amount of the contributions is returned to the family to help pay for the child’s first year of post-secondary studies. The student continues to receive education assistance payments throughout their university or college program, as well as discretionary income from the shared pool, income account, and Knowledge First Foundation (1).

The Family Group Plan is best suited for those who value the structure and consistency found in traditional RESPs, and expect their child to attend university or college for a duration of four years. However, Knowledge First Financial recognizes that today’s students may require more flexibility in their RESP.

In November 2012, Knowledge First Financial introduced Flex First, a product that again gave families greater flexibility in their education savings plan. The single beneficiary plan allows contributors to adjust how and when they add money to their account in order to reach their savings goals at any time. Flex First makes it easy to involve additional contributors such as grandparents and extended family members, allows contributors to adjust, stop, and restart their contributions on their own terms. Students, once attending post-secondary school, can decide how they divide their funds. Unused income in the Flex First fund can be applied to an RRSP.

“The Flex First Plan offers an innovative loyalty bonus not found in most other RESPs,” says Hopkinson. “The longer you contribute to the plan, the larger the top-up bonus grows to be paid off at plan maturity.”

The Family Group Plan has also changed to meet the evolving student landscape.  Earlier in 2014, Knowledge First customers were given an opportunity to vote on proposed changes to the Family Group Plan.  The fact that the vote had a positive outcome will make it easier for customers and students to receive benefits from the Plan in the future.  The most notable changes were the new rules that allow part-time and shorter programs to be included in the qualifications for EAPs.  The need for academic success between years has also been removed, which allows students to make program changes and still receive all their benefits. 

Suzanne adds that “we were very pleased that customers voted for these changes to the Family Group plan.  The study patterns are different today and it is important that both our group and individual plans can support these changing needs.”

Knowledge First Financial allows families to select the plan that works best for their education savings goals, find a flexible RESP payment plan suited for their financial abilities, and receive the CESG and provincial grants available from the government. With over 350 specialized sales representatives across the country, families can be rest assured that they’ll receive the best advice to maximize their education investment.

In the fiscal year ending April 30, 2014, Knowledge First Financial had $3.3 billion in assets under management and obtained $61 million in education grants on behalf of its customers. Since 1965, Knowledge First has paid $3.0 billion and today manages plans for more than 250,000 customers.

New Products to Help You Save Better

Knowledge First Financial is a company that consistently looks for way to advance their deliverables and operations. Not only does the leadership team revisit existing products and seek ways to improve their value propositions, they focus efforts on creating new products that give families more flexibility and support in reaching their education savings goals.

As over half of eligible Canadians do not have an RESP, Knowledge First Financial’s primary goal is connecting with and educating potential customers on the perks of their services. The company is in the final stages of developing a calculator tool that can be used shows families how they can maximize grants and contributions to maximize their educational savings benefits. Hopkinson and, Martyn-Jones hope to eventually introduce this product for general consumer use.

Knowledge First Financial is also in the early stages of developing the next generation of their Flex First savings program. The original Flex First experienced significant success and currently represents about 50 per cent of total sales. This new product is expected to enter the market in 2015, which is also the year that marks the 50th anniversary for Knowledge First Financial.

“Our focus is always on the consumer,” Hopkinson concludes, “Every product we create is designed with the consumer in mind.”

(1)Discretionary payments are not guaranteed. You should not count on receiving a discretionary payment. The Foundation decides if they will make a payment in any year and how much the payment will be.

For more information on Knowledge First Financial and to learn how you can start investing in your child’s future, please visit

www.knowledgefirstfinancial.ca.

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