Auda, senior director, Marketing and Strategy, at ADP Retirement Services, told
attendees at the 2016 PLANADVISER National Conference that the movement of
using health savings accounts (HSAs) to save for retirement is a natural
Metzger, regional vice president, DCIO Mutual Fund Sales, at Nationwide Funds,
says HSAs are for advisers because the ‘S’ stands for ‘savings.’ He points out
that HSAs have triple tax advantages for employees—savings are put in on a tax-deferred
basis, earnings on the accounts are tax-free and distributions from the
accounts are tax-free. Metzger added that after retirement age, non-medical-related
expenses can be paid from HSAs, but those payments are subject to income tax.
are being taught by employers that HSAs are spending plans, but to the extent
employees can keep from using the savings for current costs and can invest their
HSA assets, there is tremendous opportunity for retirement savings,” he said.
Advisers can educate employees about the diversification of retirement savings
and the tax benefits of HSAs.
J. Wilson, investment director and co-founder of HighTower Fiduciary Plan
Advisors, who moderated the panel discussion, noted that plan sponsors have to
have a high-deductible health plan (HDHP) in order to offer HSAs. He added that
HSAs are valuable for highly compensated employees who need a way to save more
on a tax-deferred basis than statutory limits on retirement plans will allow.
Steele, SVP and head of Retirement Field Distribution at BNY Mellon Retirement,
believes the use of HDHPs will grow. “It is similar to the move from defined
benefit plans to defined contribution plans,” he said. “Employers want to lower
their health care budget, so more will move to HDHPs and HSAs.”
said it is a new idea, but he believes it will take off as more focus is being
given to total financial wellness. “Advisers need to get into the market and
offer education before competitors do. Get in the game now,” he told attendees.
position yourself as a retirement expert, and you agree that health care
expenses will be employees’ biggest cost in retirement. Do you have a solution
to address this?” Steele queried. NEXT: Getting into the health care advising game
said advisers can partner with an HSA provider to incorporate HSAs into their
practice or just refer clients to an HSA provider. Steele added that if
advisers incorporate HSAs into their practice, they need to start with vetting
providers. He said Access Point HSA is a good site for vetting providers.
to Metzger, there are some providers out there that will white label a product
for advisers. He added that until the market evolves, fee-based advisers are
best to get into the market now. They can provide consultation, advice and
noted that HSAs are the single-best tax-advantaged solution to saving for
retirement health care expense, and they are growing 23%, with zero
intermediary distribution. “Advisers are in the best position to market HSAs.
It can be an adviser’s ‘hook,’” he said.
added that advisers can incorporate health care advising into their value
proposition. It’s as simple as asking a company if they have an HDHP, and if
so, telling the company you can help with HSAs, he told attendees.
warned that the new Department of Labor fiduciary rule comes into play if an
adviser is advising employees about HSA investments, and if 12b-1 fees are
related to the investments. However, advisers do not have to get down to the investment
advice level to offer a value-add to clients, he added.
As for pricing,
Wilson suggested advisers view HSA consulting as project work and price