Principal Financial Group Inc · NASDAQ:PFG
Principal Financial — Investor Presentation (November 2023)
53 slides from Principal Financial's investor presentation, November 2023
Slide 1: Scholar's Edge 529 Plan: Dream. Learn. Save.
Scholar’s Edge 529 Plan Dream. Learn. Save. Investment management by: 1 •Scholar’s Scholar’sEdge Edge is 529 plan by The Education Trust Board of New Mexico offered
Slide 2: Agenda
Agenda Dream. Learn. Save. How do you make college Save for possibilities with education dreams come Dream bigger when you an experienced asset true? start with a plan manager 2 • Scholar’s Edge 529 plan
Slide 3: Dream.
Dream. How do you make education dreams come true? 3 • Scholar’s Edge 529 plan
Slide 4: The benefits of education
The benefits of education Studies show the higher the level of education achieved, the higher the median salary earned and lower the unemployment rate. Education correlated with lower unemployment, higher salary Median salary 15.0% 15.0% Unemployment rate $108,316 $108,160 12.5%12.5% $86,372 Unemplo
Slide 5: A rising bar: Education costs continue to increase
A rising bar: Education costs continue to increase Average annual undergraduate college cost* (past 10 years): public vs. private All Institutions Public Private $50,000 $45,920 $40,000 $30,000 $25,910 $20,000 $19,374 $10,000 $0 09/10. 10/11. 11/12. 12/13. 13/14. 14/15. 15/16. 16/17. 17/18. 18/19. 1
Slide 6: A larger share of your wallet
A larger share of your wallet Education costs and inflation Higher Education Price Index (HEPI) vs. U.S. inflation HEPI U.S. inflation 9.0% 8.0% 8.0% 7.0% 6.0% 5.2% 5.0% 4.7% 4.0% 3.0% 3.0% 3.0% 3.0% 2.6%2.4% 2.7% 2.0% 2.1% 1.6% 1.8% 1.9% 2.0% 1.6% 1.5% 1.5% 1.3% 1.2% 1.0% 0.1% 0.0% 2013 2014 2015 2
Slide 7: How do tuition costs stack up?
How do tuition costs stack up? Tuition costs are rising at a faster rate than common household expenses Tuition costs have spiked versus other expenses Cumulative price change (%) College cost inflation, what's driving it? • Competition for resources and faculty 800% • Less support at the state leve
Slide 8: The education savings gap
The education savings gap People tend to underestimate how much they need to save for higher education expenses What parents expect they've covered: What parents actually cover: 30% of total future college costs 10% of actual college costs saved* Source: Educationdata.org college savings statistics
Slide 9: Tuition is just the tip of the iceberg
Don’t forget, tuition is just the tip of the iceberg Books and supplies: $1,240 Tuition and fees: $28,240 Room and board: $12,310 Transportation: $1,250 Other expenses: $2,200 Total: $45,240 Source: CollegeBoard, Trends in College Pricing 2022. Based on public four-year, out-of-state, on-campus post
Slide 10: Access to financial aid is getting harder to come by
Access to financial aid is getting harder to come by The pool of available financial aid is decreasing Total financial aid awarded nationwide (Undergraduate students) 1.2 250 $223B $217B $215B $211B $186B $204B $203 $198 1 $195 $184 200 $174 0.8 150 0.6 100 0.4 50 0.2 0 0 2011-2012 2012-2013 2013-20
Slide 11: Average four-year scholarship amounts
Average four-year scholarship amounts Scholarships help, but they only cover a fraction of education costs AVERAGE AVERAGE AVERAGE ATHLETIC MERIT-BASED NEED-BASED SCHOLARSHIP SCHOLARSHIP SCHOLARSHIP $18,368 1 $11,287 2 $3,520 3 • Remember, if a child earns a scholarship, the account owner can always
Slide 12: Learn.
Learn. You can help a child change the world when you start with a plan 12 • Scholar’s Edge 529 plan
Slide 13: What is a 529 plan?
What is a 529 plan? A 529 plan is a tax-advantaged savings vehicle within the United States designed to save for future higher education expenses for a specified beneficiary. 13 • Scholar’s Edge 529 plan
Slide 14: What savings options are available to you?
What savings options are available to you? Comparing education savings plans Coverdell Education Savings Account Taxable Rules 529 plans (CESA) UGMA/UTMA savings account Federal Contributions made with after-tax dollars. Contributions made with after-tax dollars. Earnings and capital gains Fully tax
Slide 15: What savings options are available to you? (continued)
What savings options are available to you? (continued) Comparing education savings plans Coverdell Education Savings Account Taxable Rules 529 plans (CESA) UGMA/UTMA savings account Qualified expenses Tuition, fees, books, computers and Tuition, fees, books, equipment, No restrictions No limit relat
Slide 16: Saving for education can help in saving for retirement
Saving for education can help in saving for retirement How education savings can help with bigger goals By graduating with less debt, the child in your life can begin investing and planning for life’s other milestones earlier. Saver A has accumulated $879,753 Saver B had more loans to pay, which del
Slide 17: A truly flexible savings vehicle
A truly flexible savings vehicle Features of a 529 plan Tax benefits Gifting and Withdrawals Availability Earnings grow tax- estate planning Proceeds can be used Anyone can open, deferred and qualified Contribute up to $17,000 at eligible institutions regardless of income withdrawals are tax-free pe
Slide 18: Learn how your savings can potentially grow
Learn how your savings can potentially grow The compounding effect of 529 tax benefits Taxable savings account vs. 529 savings EXAMPLE: Two families invested differently. Family A Taxable savings account 529 savings plan opened a taxable savings account while Family B invested in a 529 plan. $63,495
Slide 19: Getting the most out of your state benefit
Getting the most out of your state benefit Tax benefits by state New Mexico Tax parity Tax neutral In-state tax benefit Home of Scholar’s Edge These states offer tax deductions for These states do not offer tax These states offer tax deductions or contributions to any 529 plan, deductions for 529 cr
Slide 20: Flexibility for planning now and in the future
Flexibility for planning now and in the future Beyond education savings, 529 plans can help families leave a legacy When considering whether to use a 529 plan in your estate plan, keep in mind the following key points: Contributions Accelerated gifting Tax planning Tax-free withdrawals Control An in
Slide 21: Even more flexibility – no longer just for college
Even more flexibility – no longer just for college Families can now use their 529 plans to: • Repay up to $10,000 (lifetime) in qualified student loans, under the Secure Act of 2019. • Cover up to $10,000 per student per year for K-12 tuition, under the Tax Cuts and Jobs Act of 2018. • Move assets t
Slide 22: The journey from kindergarten to college
The journey from kindergarten to college Planning ahead is the key Some tips for using 529 savings for K-12 expenses Know your Some states have not adopted the Tax Cuts and state’s tax Jobs Act updates. Withdrawing funds for K-12 handling tuition payments in a state that doesn’t follow the Federal S
Slide 23: No matter your educational path, a 529 Plan can help
No matter your educational path, a 529 Plan can help 529 plan withdrawals can help cover a wide range of education-related expenses: COLLEGE TUITION K-12 VOCATIONAL/ STUDENT TRADE LOAN DEBT POST-COLLEGE ROOM AND OFF-CAMPUS BOOKS, EQUIPMENT, EDUCATION BOARD HOUSING TECHNOLOGY, INTERNET, ETC. Withdraw
Slide 24: A financial professional can help you save for education
A financial professional can help you save for education … and beyond A financial professional can help with: Box header Box header Box header Comprehensive Robust asset Investing Text is 12pt regular Text is 12pt regular Text is 12pt regular financial planning allocation choices discipline Bullet p
Slide 25: Myth #1: 529s will affect my child's eligibility for financial aid
Myth #1: 529s will affect my child’s eligibility for financial aid 25 • Scholar’s Edge 529 plan
Slide 26: Saving now means potentially borrowing less later
Saving now means potentially borrowing less later Savings-focused strategy Loan-focused Increased strategy savings-focused Sophie’s family: strategy Savings-focused education funding strategy. 25% Financial 20% aid only Financial Aid Financial Aid decreased by 5% Assume Sophie’s education costs $100
Slide 27: 529s versus student loans
529s versus student loans A 529 strategy reduces out of pocket costs and student loans A college education costs, on average, approximately $104,000 for a four-year, in-state school for tuition and fees, room and board, books and supplies, as well as transportation. 50% through a 529 and 100% throug
Slide 28: Financial aid
Financial aid Financial aid is needs based and is determined by: COST OF ATTENDANCE EXPECTED FAMILY CONTRIBUTION (EFC) FINANCIAL NEED OWNERSHIP STUDENTS PARENTS GRANDPARENTS Income included 50% of adjusted student 22%-47% of If providing financial in calculation gross income available income support
Slide 29: A closer look at applying for financial aid
A closer look at applying for financial aid Key dates and considerations Free Application for Federal Student Financial Aid (FAFSA®) needs to be applied for every year in college. FAFSA forms must be submitted by 11:59 p.m. Central time (CT), June 30, 2023 Each state also has YEAR YEAR YEAR YEAR its
Slide 30: Grandparents and generational wealth transfer
Grandparents and generational wealth transfer Lessen your estate tax burden and empower future generations Potentially minimize some tax consequences with 529s Move assets out of your estate into a grandchild/beneficiary’s name Create a source of education funding that can go from generation to gene
Slide 31: Idea: Using RMDs to fund a 529 plan
Idea: Using RMDs to fund a 529 plan At age 72 you have to begin taking money annually out of your tax qualified retirement accounts (such as a traditional IRA) in the form of required minimum distributions (RMDs). These are taxable. Option A Option B Invest the RMD in Fund a 529 plan, minimizing a t
Slide 32: Myth #2: I have to open a 529 plan in my home state
Myth #2: I have to open a 529 plan in my home state 32••Scholar’s 32 Scholar’sEdge Edge529 529plan plan
Slide 33: You can choose a 529 plan that is out of state
You can choose a 529 plan that is out of state 529 plans are state-sponsored, but that doesn’t always mean you have to use your in-state 529 plan to save for college. Any 529 plan can be used to pay for college in any state. You can use almost any state’s 529 plan, with very few exceptions where a r
Slide 34: Myth #3: I can just use my retirement savings
Myth #3: I can just use my retirement savings for my child’s education savings 34 • Scholar’s Edge 529 plan
Slide 35: The danger of using retirement funds for education
The danger of using retirement funds for education You lose the power of compounding College withdrawals can jeopardize retirement security Amount withdrawn Retirement account for college reduced by $50,000 $25,000 $10,000 -$44,650 -$111,624 -$223,248 Assume 6% interest, compounded monthly over 25 y
Slide 36: Save.
Save. Investment returns make a difference 36 • Scholar’s Edge 529 plan
Slide 37: Actively invested. Principal Asset Management
Actively invested. Principal Asset Management As a global leader in asset management, we are focused on harnessing the potential of every opportunity to secure an advantage for our clients. ABOUT PRINCIPAL ASSET MANAGEMENT $525.2B AUM 23rd largest manager of worldwide institutional assets.1 11-year
Slide 38: Why Scholar's Edge?
Why Scholar’s Edge? Making brighter tomorrows a reality through smarter choices for education savings Legacy of Smarter outcomes Committed creating brighter through choice, value, and dedicated tomorrows and peace of mind partner • Deep asset allocation • Comprehensive range of • An ideal opportunit
Slide 39: Smarter outcomes through portfolio options
Smarter outcomes through portfolio options Multi-asset, multi-manager strategies combining the advantages of active management and the cost savings of passive management 11 4 15 Year of enrollment portfolios Target risk portfolios Individual portfolios Designed for those beneficiaries who are Provid
Slide 40: Year of enrollment portfolios
11 Year of enrollment portfolios Designed for beneficiaries who are expected to enroll in qualified education programs during the target years of the portfolio, seek to achieve long-term growth of capital, while preserving capital as they approach their target year of enrollment. Scholar’s 2042-2043
Slide 41: Target risk portfolios
4 Target risk portfolios Maintaining static weights to the listed asset classes and underlying strategies with the allocations gradually becoming more focused toward capital preservation and volatility control as the risk target becomes more conservative. Aggressive Portfolio Moderate Portfolio Cons
Slide 42: Individual portfolios
15 Individual portfolios Choose from a wide variety of investment options to create a personalized investment plan. Estimated Underlying Fund Total Annual Asset-Based Total Annual Asset-Based Total Annual Asset-Based Underlying Fund/ETF Ticker Investment Expenses Fees for Class A Fees for Class C Fe
Slide 43: Glide path innovation
Glide path innovation Creating an asset class mix designed to help manage investment risk at every time frame up to the expected year of enrollment • Non-linear glidepath designed to minimize volatility in the Year of Enrollment Portfolios before education funds are needed • Utilizes a number of inv
Slide 44: Benefits of Scholar's Edge 529 Plan
Benefits of Scholar’s Edge 529 Plan Accessibility Flexibility We provide online resources and tools to easily We’ve improved Scholar’s Edge to make life’s manage your account across a range of topics: important choices even easier. • Additional contributions • Comprehensive range of investment optio
Slide 45: The power of compounding
The power of compounding Time is on your side Any contribution can potentially grow into a significant amount for education. Monthly Contribution: $50 $100 $200 $500 $193,677 $81,940 $38,735 $77,471 $32,776 $19,368 $16,388 $34,885 $8,194 $13,954 $6,977 $3,489 5 years 10 years 18 years Assume 6% inte
Slide 46: Coffee break vs. tax break
Coffee break vs. tax break Every little bit can make a difference to help a child realize their dreams To put it in perspective, allocating the money you would normally spend on a cup of coffee or eating out can add up to significant education savings over the course of 18 years. Based on an average
Slide 47: Convenient contribution options
Convenient contribution options Automatic Investment Programs (AIPs), like payroll direct deposit, allow you to ‘set it and forget it’ 47 • Scholar’s Edge 529 plan
Slide 48: It's easy to give the gift of education with Scholar's Edge
It’s easy to give the gift of education with Scholar’s Edge Opportunities for contribution and gifting Ugift® Upromise® Direct deposit Estate planning Gift contributions with Ugift®, Join Upromise for free and You can arrange for Work with your financial an easy, free-to-use feature of then buy groc
Slide 49: Scholar's Edge: a smarter choice for education savings
Scholar's Edge: a smarter choice for education savings Scholar's Edge can help a child make the world a better place through smarter choices for education savings. Dream Learn Save A better education can help achieve a better tomorrow. We can help you plan for that. 49 • Scholar’s Edge 529 plan
Slide 50: We can help you do your research
We can help you do your research Additional 529 resources www.savingforcollege.com www.collegeboard.org www.nmetb.org www.sec.gov/reportspubs/investor-publications/investorpubsintro529htm.html www.investopedia.com/terms/1/529plan.asp www.collegesavings.org/529-plan-data/ www.nasaa.org/2518/understan
Slide 51: Dream. Learn. Save. Start today.
Dream. Learn. Save. Start today. Any questions? Investment management by: 51 • Scholar’s Edge 529 plan
Slide 52: Disclosures
Disclosures Scholar's Edge® (“Scholar’s Edge” or the “Plan”) is operated as a qualified tuition program offered and sponsored by The Education Trust Board of New Mexico (the “Board”) and is available to all U.S. residents. Ascensus College Savings Recordkeeping Services, LLC is the Program Manager f
Slide 53: Disclosures
Disclosures Principal Global Investors leads global asset management at Principal® and includes the asset management operations of the following members of Principal®: Principal Global Investors, LLC; Principal Real Estate Investors, LLC; Principal Real Estate Europe Limited and its affiliates; Spec
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