Products December 28, 2021

HealthyHive Introduces Adviser HSA Educational Program

The program provides health savings account educational tools to help expand an adviser’s knowledge about the intersection of health, wellness and finances.

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HealthyHive, a digital education and consulting platform, has launched a new education program providing retirement-focused advisers with comprehensive health savings account (HSA) education, as well as educational content they can share with their clients.

HSAs present significant opportunities for retirement plan advisers, but they are often not being framed as specialized retirement vehicles, says HealthyHive founder and CEO Carl Hall. In reality, Hall says, HSAs can be a powerful complement to traditional 401(k) plans and individuals’ personal savings, resulting in better retirement outcomes and less stress about paying for health care later in life.

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HSA industry assets under management are estimated to reach almost $100 billion this year, with about a third of the assets being held in investments. As HSA investments continue to grow, HealtyHive’s goal is to help advisers learn more about the inner workings of HSAs, providing for increased adoption and more efficient usage.

As it stands now, advisers don’t understand enough about HSAs, and the average person knows even less about what the accounts are and what they can do, says James Tavares, HealthyHive business development director. He notes that HealthyHive provides tools that can deliver HSA education and consultation and incentivize efficient health care consumption by providing price transparency expertise to fiduciaries and retirement plan advisers.

The first step of the educational program consists of short education and training videos that explain specific topics about HSAs. Information is shared via webinars, regulatory updates, blog posts, tips and insights. The next step of the program explains how an HSA benefits from a unique and powerful triple tax advantage.  

The goal of a financial adviser, broadly speaking, is to help make sure that when people retire, they don’t run out of money, Tavares says. Having an account where the money can be put aside, grown and spent without paying taxes extends the shelf life of what’s been saved. To this end, one tool within the educational program helps to quantify and visualize the tax savings for both advisers and clients.

After entering in some basic information, such as how many years until retirement, current account value and future healthcare spending expectations, advisers can show a client how many additional years of healthcare spending can be gained by funding an HSA.

The third step of the educational program is meant to teach a client how to become a more empowered healthcare consumer when spending from an HSA, Tavares says. The tool gives a transparent look at the cost for medical and dental procedures and is designed to show the importance of shopping around to get the best price for the service. It also gives examples of how much money can be made from investing what HSA assets over a long time horizon.

Compliance December 28, 2021

SEC Charges Underscore Importance of Digital Communication Management

J.P. Morgan Securities has agreed to pay $125 million to resolve what the SEC calls ‘longstanding failures by the firm and its employees’ to maintain and preserve certain digital communications.

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Earlier this month, the Securities and Exchange Commission (SEC) announced charges against J.P. Morgan Securities LLC (JPMS), a broker/dealer subsidiary of JPMorgan Chase & Co., alleging “widespread and longstanding failures by the firm and its employees to maintain and preserve written communications.”

According to a statement from the SEC, JPMS admitted the facts set forth in the SEC’s order and acknowledged that its conduct violated federal securities laws. In turn, the company has agreed to pay a $125 million penalty and implement robust improvements to its compliance policies and procedures to settle the matter.

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Commenting on the charges, SEC Chair Gary Gensler notes that recordkeeping and books-and-records obligations have been an essential part of market integrity and a foundational component of the SEC’s ability to be “an effective cop on the beat.”

“As technology changes, it’s even more important that registrants ensure that their communications are appropriately recorded and are not conducted outside of official channels in order to avoid market oversight,” Gensler says. “Unfortunately, in the past, we’ve seen violations in the financial markets that were committed using unofficial communications channels, such as the foreign exchange scandal of 2013. Books-and-records obligations help the SEC conduct its important examinations and enforcement work. They build trust in our system.”

As described in the SEC’s order, JPMS admitted that from at least January 2018 through November 2020, its employees often communicated about securities business matters on their personal devices, using text messages, WhatsApp, and personal email accounts. According to the SEC, none of these records were preserved by the firm as required by the federal securities laws. JPMS further admitted that supervisors, including managing directors and other senior supervisors responsible for implementing and ensuring compliance with JPMS’s stated policies and procedures, also used their personal devices to communicate about the firm’s securities business.

The charges and penalty settlement come some three years after a Risk Alert publication issued by the SEC’s Office of Compliance Inspections and Examinations (OCIE) encouraged advisers to “review their risks, practices, policies and procedures regarding electronic messaging.” That guidance, in turn, followed on the heels of various advisory firms, broker/dealers and other financial services providers rolling out new text-based communication solutions to their reps. In the Risk Alert, regulators reminded financial professionals of their duties under the Advisers Act Rule 204-2, known as the “Books and Records Rule.” The alert further encouraged firms to proactively consider “improvements to their compliance programs that would help them comply with applicable regulatory requirements.”

According to the Risk Alert, OCIE examiners had noticed an increasing use of various types of electronic messaging by adviser personnel for business-related communications. Many of the solutions had been reviewed and approved by FINRA, but the SEC noted that its own Books and Records Rule is distinct from any FINRA regulations and applies to digital as well as print communications. 

In the JPMS matter, the SEC says it sent both subpoenas for documents and voluntary requests across a variety of investigations that its staff undertook during the time period mentioned above. However, in responding to these subpoenas and requests, JPMS frequently did not search for relevant records contained on the personal devices of its employees, the SEC’s order states.

Commenting on the findings and penalty, Gurbir Grewal, director of the SEC’s Division of Enforcement, says recordkeeping requirements are core to the SEC’s enforcement and examination programs—and when firms fail to comply with them, they directly undermine the regulator’s ability to protect investors and preserve market integrity.

“We encourage registrants to not only scrutinize their document preservation processes and self-report failures such as those outlined in today’s action before we identify them, but to also consider the types of policies and procedures [JPMS] implemented to redress its failures in this case,” Grewal adds.

Specifically, JPMS agreed to the entry of an order in which it admitted to the SEC’s factual findings and its conclusion that JPMS’s conduct violated Section 17(a) of the Securities Exchange Act of 1934 and Rules 17a-4(b)(4) and 17a-4(j) thereunder, and that the firm failed to reasonably supervise its employees with a view to preventing or detecting certain of its employees’ aiding and abetting violations. JPMS was ordered to cease and desist from future violations of those provisions, was censured and was ordered to pay the $125 million penalty.

Firms that believe that their record preservation practices do not comply with the securities laws are encouraged to contact the SEC at BDRecordsPreservation@sec.gov.

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