By JOHN HOWELL

More than 20,000 Rhode Islanders saving to pay for their kids’ and grandkids’ education with the CollegeBoundfund (CBF) will have a new investment advisor on June 23 – and that promises to be a good thing, says General Treasurer Seth Magaziner.

The state is dropping Alliance Bernstein, which has managed the fund, building it into one of the largest 529 college savings plans in the country since being founded in 1998. Invesco has been chosen to manage investments of the $7 billion fund. Magaziner has also added a new component to the program, contracting Ascensus College Savings, based in Newton, Mass., to manage the record keeping, customer service and online functionality for account management by account owners and financial advisors.

If this all works, those with CBF accounts will achieve better returns on their investment at less cost. The state will have more money to give in grants to Rhode Island students attending Rhode Island colleges, and, while not significant, the state will gain about 35 jobs.

It’s an ambitious program, and during a conference call last week Magaziner and his staff were upbeat about the prospects – although careful not to make any promises.

“We went through an incredible due diligence process,” the general treasurer said. He said his office spent several months vetting responses to requests for proposals to run the 529 plan, a process that included site visits and extensive interviews. He said firms that are top ranked for performance, including Invesco, responded. Alliance Bernstein also bid on the plan and was among those on the short list.

Magaziner felt a change was needed, however. He said while the state “is proud” of how the fund has grown under Alliance Bernstein’s management, he said the firm was “siding in national ranking investment performance.” Also, he pointed out that the number of accounts making up the $7 billion in total assets – about 300,000 – was declining.

According to a report issued in June 2015 by Morningstar, an independent provider of investment research, the 529 college saving plans it examined – 85 in all – have total assets of $218 billion. Of those, Virginia is the largest with $50 million in assets. Morningstar also ranked the plans, awarding the Alaska, Maryland, Vanguard, and Utah plans as gold. All those plans are smaller than Rhode Island with the exception of Vanguard at $14.8 billion. The Vanguard plan is managed by Ascensus. CBF was not a medallist, or listed in the negative category. Rather, it was “neutral.”

With the changes, Magaziner forecasts “better performance, lower fees, more robust customer support, and stronger performance.”

If Invesco meets expectations, it could mean a boost to students that are in no way connected to a 529 plan.

Under its contract, Alliance Bernstein paid 9.5 basis points (bps) on all assets other than Rhode Island accounts to the Rhode Island Higher Education Assistance Authority. That amounts to 9.5 cents on every $100 in assets, a total of more than $6 million in 2015. For many years, RIHEA used the funds to augment about 18,000 grants funded by the state as well as initiate and run the Way to Go RI program bringing online services to elementary and secondary schools and students. In recent years, state funding of the grants was reduced and eventually eliminated. RIHEA used reserves and CBF funds to keep the scholarship program running.

Last year the program was changed to provide grants to only Rhode Islanders attending in-state institutions. RIHEA was dissolved, and the general treasurer assumed control of the CBF.

In an interview Friday, Gov. Gina Raimondo said that student grants were increased from less than $500 to more than $1,000 and the number of grants reduced to about 6,000. She said this is part of her “last dollar scholarship” program that is need-based and aimed at filling “the financial gap” for college students. She said that of the 6,000 students, about half attend the Community College of Rhode Island.

Magaziner said the plan is to maintain the flow of CBF fees paid on out-of-state accounts into scholarships for Rhode Island students attending in-state institutions.

What flows into those scholarships could be substantially more than under the Alliance Bernstein contract.

Under the Invesco agreement, the fee paid to Rhode Island on out-of-state accounts is 11.5 basis points, an increase of more than 20 percent. A portion of those funds will be used for the costs of administering the program.

By marrying a high performing investment leader, Invesco and Ascensus, which manages plan services in 31 states, Magaziner is hopeful of growing CBF and making it the industry leader.

Magaziner is looking to Lisa Churchville, who retired in June 2011 as president and general manager of WJAR TV, to provide leadership and oversee the entire program. As director of the CBF, she will be paid $80,046.

“We’re very lucky to have Lisa to promote and grow the program,” he said.

According to Magaziner’s office, the Atlanta-based Invesco has $791.3 billion in assets under management and operates in more than 20 countries. It is routinely ranked among the highest-performing fund families in the nation.

Magaziner said Ascensus has pledged to create 35 new Rhode Island jobs and will open an office in the state by June 2016. The company, Magaziner said, will retain its Newton office while hiring marketing, customer service, and other specialists in college savings who will serve other parts of the country from Rhode Island.

The CBF website answers many questions about the transition and what account holders can expect. For the most part, says Ann Marie Fink, Treasury chief investment officer, those with accounts needn’t do anything. “It will be seamless,” she said. Also, she said, CBF account holders who have Vanguard funds, which Alliance Bernstein made available when the firm’s performance came under scrutiny, will be able to keep those funds. The CBF website answers numerous questions on the transition to Invesco/ACS.

According to a fee schedule released by Magaziner’s office, Invesco/ACS charges under the Advisor Plan are 64 bps for individual options, 64 bps for age-based, and 66 bps for target risk. These compare to 69, 70 and 82 bps, respectively, under Alliance Bernstein.

Rhode Island Direct Plan costs with Invesco/ACS are even lower. Individual options carries a 14 bps fee, age-based 10 bps, and target risk 16 bps. The Alliance Bernstein fees are 52, 19 and 82 bps, respectively.