The industry organization that regulates securities brokers has expanded its investigation into firms selling the popular -- but much criticized -- 529 college savings plans, while issuing a new consumer alert brochure to help families better choose from among the dizzying number of options.

The National Association of Securities Dealers, or NASD's, new Investor Alert,

College Savings Plans -- School Yourself Before You Invest

, reflects continued concern that the average investor faces considerable difficulty in navigating the industry's complicated world of fees, expenses and tax incentives.

The NASD is now investigating 20 brokerage firms, whose representatives sold a high percentage of out-of-state 529 plans to clients. "We're concerned that those investors may be missing out on some important state tax benefits," said Mary Schapiro, NASD vice chairman.

As of May the NASD was investigating 15 firms. The investigation began with six firms in the summer of 2003. To date, the NASD has taken no public action, other than to issue the consumer brochure.

College savings plans, offered and run individually by all 50 states and the District of Columbia, allow families to invest in mutual-fund-style programs that provide significant federal tax breaks. Half the states offer tax incentives as well.

More than $50 billion is invested in 529 plans, which are named after a section in the federal tax code. More than three-fourths of the funds invested are placed by brokers who receive a sales commission.

The new brochure provides a comprehensive look at plans with state tax breaks offered by 25 states and the District of Columbia, as well as advice for comparing plan fees and expenses. This alert joins other NASD investor education college saving resources on the NASD's Web site, including the brochure

Smart Saving for College

and the

529 Plan Expense Analyzer


In recent months, a growing number of federal legislators, regulators and financial analysts have

criticized the plans for their high fees and commissions, absence of disclosure and needless complexity. Earlier this year the

Securities and Exchange Commission

launched an investigation into the plans as well.

"The good news is that there's no shortage of plans available -- every state offers at least one 529 plan, and there are currently more than 80 college savings plans to choose from," said Schapiro. "But no two plans are the same. Fees and expenses vary greatly, and high fees and expenses can cut significantly into your returns, so you have to choose carefully."

Before joining, Ann Perry was the personal finance columnist for The San Diego Union-Tribune. She is the author of "The Wise Inheritor: A Guide to Managing, Investing and Enjoying Your Inheritance" (Broadway Books, 2003). She has a B.A. in English and Communications from Stanford University and a master's degree from the Columbia University School of Journalism. She can be reached at