Advisers Urged to Enter Health Plan Advising

Panelists highlighted concerns with major insurers’ fee practices and control over care pathways.

At the PLANADVISER 360 conference in Scottsdale, Arizona, on Tuesday, health care experts discussed the growing need for financial advisers to expand into health care plan advising, emphasizing the potential economic impact and the demand for fiduciary oversight.

Panelists outlined the industry’s problematic structures, shedding light on how major players like Blue Cross Blue Shield, UnitedHealthcare, Cigna and Aetna allegedly obfuscate fees and manage care pathways in ways that could pose conflicts of interest.

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Jamie Greenleaf, co-founder of Fiduciary In A Box, pointed to what she called the “BUCA”—for health care insurers Blue Cross Blue Shield, UnitedHealthcare, Cigna and Aetna—as creating an environment such that “money is often hidden within the system.” She compared this practice to how certain investment platforms previously limited investment options to their own funds, thereby obscuring fees.

“They’re hiding things among the different pieces of the puzzle that employers are using,” Greenleaf said.

Hugh O’Toole, CEO of Innovu, echoed this sentiment, specifically singling out UnitedHealthcare.

“They are the largest owner of primary care in the country,” O’Toole said. “They own the entire value stream, which includes directing patients to specific primary care providers for their benefit.”

O’Toole suggested that the current system, which has created an industry on which almost 20% of U.S. gross domestic product is spent, requires urgent reform. “Moving this down even to 15% could have a monumental impact on the economy,” he added, highlighting bipartisan support for health care reform through the Consolidated Appropriations Act, which survived transitions between the administrations of former President Donald Trump and President Joe Biden.

Expanding Fiduciary Duty to Health Care

As advisers navigate the evolution of their roles, the question arose: Should they also provide fiduciary services for employers’ health plans? Sean Bjork, president of Bjork Asset Management, moderated the panel, prompting the speakers to consider this opportunity and asking how advisers might approach such a shift.

Greenleaf responded by outlining a natural progression for financial advisers. She reflected on the industry’s evolution from brokers to fiduciaries and emphasized that a similar model could apply to health care. “I’m more of a fiduciary consultant now,” she said, noting that advisers do not need deep expertise in health care to guide employers through a fiduciary process. Instead, they need the curiosity to “ask the hard questions.”

Greenleaf described advisers’ potential impact: “You’ve made a difference in retirement; now it’s time to make a difference in health care by running a fiduciary process and identifying red flags.”

Looking Ahead for Advisers

The panelists concluded that while the transition may be challenging, advisers are well-positioned to make an impact. Greenleaf stressed that as fiduciary advisers for health plans, advisers can help employers navigate complex fee structures and compliance issues, just as they have done for retirement plans.

“Employers are seeking help to fulfill their fiduciary duties, and advisers are uniquely equipped to sit at the table and advocate for them,” she said.

Greenleaf and O’Toole were aligned on the idea that as health care reform continues to be a bipartisan priority, advisers’ expanded roles could contribute to a more transparent and accountable system, ultimately benefiting employers and employees alike.

US Retirement Market Evolves Amid Growth, Challenges

A retirement data expert discusses the aging U.S. workforce, rising Social Security dependence and a retirement coverage gap affecting millions of Americans.

Viraaj Kumar, an associate director of retirement product strategy at ISS Market Intelligence, presented an in-depth look at the U.S. retirement market’s current trends, growth opportunities and challenges at the PLANADVISER 360 conference on Wednesday in Scottsdale, Arizona. ISS Market Intelligence, like PLANADVISER, is owned by ISS STOXX.

Retirement assets in the U.S. now comprise roughly 40% of total family wealth, a rise from 36% in 1989, as defined contribution assets, especially 401(k) plans, have become a major growth driver. In Q1 of 2024 there was just under $40 trillion in retirement market assets in the US, of which defined contribution plans currently held approximately $11.1 trillion, largely within the 401(k) and 403(b) segments.

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Providing historical insight, Kumar explained the origin of multiple types of retirement plans, from the first defined benefit plan in 1765 to the rapid expansion of 401(k) plans after the Revenue Act of 1978. Social Security, established during the Great Depression, was designed as a safety net but now represents a major income source for many Americans due to the limited access to private retirement plans.

Retirement Coverage Gap and Social Security Dependence

One of the major challenges retirement readiness, Kumar noted, is the “retirement gap” between those with significant retirement savings and those with minimal retirement savings, a disparity created in part by limited access to employer-sponsored plans. Roughly one-third of U.S. adults have no dedicated retirement savings, resulting in an over-reliance on Social Security, particularly among lower-income earners. For the bottom income quintiles, Social Security is expected to provide more than 50% of retirement income.

Kumar also discussed a significant trend of outflows from defined contribution plans, primarily driven by the retirement of Baby Boomers. This trend has resulted in net-negative cash flows from the DC market, which are expected to persist until around 2030. Despite outflows, contributions from participants and employers reached record highs in 2022, showing continued engagement with DC plans among younger generations.

SECURE 2.0 and Plan Growth

The SECURE 2.0 Act of 2022, Kumar noted, is expected to drive future growth for small businesses through tax credits and automatic enrollment. Automatic features, now present in about 37% of retirement plans, are strongly correlated with asset growth. According to ISS, incentives in SECURE 2.0—which built on the Setting Every Community Up for Retirement Enhancement Act of 2019—could impact millions of U.S. workers by encouraging smaller businesses to offer plans.

Kumar underscored the role of retirement advisers in educating the workforce, citing their influence on financial literacy and asset management. He emphasized that advisers who understand market shifts and regulatory impacts are best positioned to add value for clients, especially as 401(k) plans continue to grow. Currently, there are about 750,000 businesses offering 401(k) plans, while an estimated 6 million do not, which Kumar identified as a major opportunity for market expansion.

The U.S. retirement industry is at a pivotal point, Kumar said, with projected growth and increased plan adoption set against a backdrop of challenges like rising Social Security dependence and an aging workforce. With nearly 50,000 new retirement plans started in recent years, the market is expected to reach 1 million plans by 2030, offering strong business growth potential for advisers and asset managers.

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