Financial advisors can be both an ally and a potential competitor for agent/brokers in their efforts to sell health savings accounts (HSAs).
Increasingly, many Americans are viewing HSAs as a financial product rather than a health care offering. As a result, a growing number of individuals and families are making health care insurance decisions based on the advice of financial advisors. At the same time, financial advisors are looking at HSAs as another revenue stream or, at the very least, as an effective tool in building a retirement income strategy for clients.
One indication that financial advisors are interested in HSAs is the fact that providers of HSA training programs are seeing them more often in their audiences.
Information Strategies, Inc. has seen four trends in its surveys of agent/brokers, financial advisors and HSA users:
1. An increasing number of financial advisors report that they are teaming with agent/brokers to build retirement programs that include HSAs.
2. The number of financial advisors obtaining appointments to health care insurers specifically for HSAs has grown from one percent of those surveyed in 2005 to 12 percent in first quarter 2007.
3. Five percent of HSA users responding to surveys in early 2007 said their principal source of HSA information was their financial advisor, not their agent/broker.
4. Ten percent of agent/brokers responding to ISI surveys said they were seeking or obtaining referrals from financial advisors in their HSA sales efforts.
Another trend, seen particularly among small- and medium-size companies, is that corporate leaders are turning to financial advisors to help them construct a total personal/business benefits program. Almost 14 percent of company presidents surveyed in first quarter 2007 said their personal financial advisor helps them structure both the company and personal benefits program to maximize their own holdings.
In 2007, two major financial services companies have installed training programs for their brokers, showing them how to utilize HSAs as a marketing tool to clients. At the same time, these firms have set up or negotiated commission programs with major HSA insurers. For agent/brokers this trend is a threat because it is taking away valuable commission dollars.
One way to deal with the issue is to build communications and alliances with financial advisors and to co-opt them as referral sources. Some agent/brokers in ISI's studies indicate they are doing just that.
Said one Maryland agent/broker, "Because HSAs require explanation and education, financial advisors are coming to me and asking us to make joint presentations or build a proposal to include with the yearly financial planning review."
Others are ignoring the issue and believe it will not materially affect their efforts. As one agent/broker reported, "We're not seeing any fall-off in referrals we have gotten in the past from financial advisors who don't sell insurance and don't think HSAs are going to change that."
In contrast, an agent in Ohio, where HSAs are popular, said she saw some fall-off and noted that three of her biggest financial advisor referral partners have recently obtained insurance licenses.
With HSA penetration nationwide exceeding five percent and growing, agent/brokers are faced with many new challenges.
The prospect of a change in the White House leadership is causing some to take a "wait-and-see" attitude towards HSAs. Others are moving full-bore, expecting HSAs to remain a viable program.
While health care benefits for companies have always been based on financial considerations and employee retention, the trend by state governments to mandate coverage is also helping to swing the decision-making process towards financial advisors. Increasingly, CPAs and others are becoming more involved in advising individuals and employers on what is the best approach to take both for themselves and their companies.
On an individual basis, many financial advisors in Massachusetts and elsewhere are being asked to provide input into what their clients should opt for on a total financial planning basis. Agent/brokers are involved in the mix but a survey in Massachusetts indicated that individuals with incomes above $55,000 have turned more to their accountants than agents. For companies in these states, the burden has also been made heavier by provisions of the law as it applies to employers.
In both cases, the real losers are agent/brokers who often spend more time and generate less commission. Finding ways of making more money in a changing world is always difficult, adding a new competitor doesn't make the task easier, but a new ally can help.
Increasingly, many Americans are viewing HSAs as a financial product rather than a health care offering. As a result, a growing number of individuals and families are making health care insurance decisions based on the advice of financial advisors. At the same time, financial advisors are looking at HSAs as another revenue stream or, at the very least, as an effective tool in building a retirement income strategy for clients.
One indication that financial advisors are interested in HSAs is the fact that providers of HSA training programs are seeing them more often in their audiences.
Information Strategies, Inc. has seen four trends in its surveys of agent/brokers, financial advisors and HSA users:
1. An increasing number of financial advisors report that they are teaming with agent/brokers to build retirement programs that include HSAs.
2. The number of financial advisors obtaining appointments to health care insurers specifically for HSAs has grown from one percent of those surveyed in 2005 to 12 percent in first quarter 2007.
3. Five percent of HSA users responding to surveys in early 2007 said their principal source of HSA information was their financial advisor, not their agent/broker.
4. Ten percent of agent/brokers responding to ISI surveys said they were seeking or obtaining referrals from financial advisors in their HSA sales efforts.
Another trend, seen particularly among small- and medium-size companies, is that corporate leaders are turning to financial advisors to help them construct a total personal/business benefits program. Almost 14 percent of company presidents surveyed in first quarter 2007 said their personal financial advisor helps them structure both the company and personal benefits program to maximize their own holdings.
In 2007, two major financial services companies have installed training programs for their brokers, showing them how to utilize HSAs as a marketing tool to clients. At the same time, these firms have set up or negotiated commission programs with major HSA insurers. For agent/brokers this trend is a threat because it is taking away valuable commission dollars.
One way to deal with the issue is to build communications and alliances with financial advisors and to co-opt them as referral sources. Some agent/brokers in ISI's studies indicate they are doing just that.
Said one Maryland agent/broker, "Because HSAs require explanation and education, financial advisors are coming to me and asking us to make joint presentations or build a proposal to include with the yearly financial planning review."
Others are ignoring the issue and believe it will not materially affect their efforts. As one agent/broker reported, "We're not seeing any fall-off in referrals we have gotten in the past from financial advisors who don't sell insurance and don't think HSAs are going to change that."
In contrast, an agent in Ohio, where HSAs are popular, said she saw some fall-off and noted that three of her biggest financial advisor referral partners have recently obtained insurance licenses.
With HSA penetration nationwide exceeding five percent and growing, agent/brokers are faced with many new challenges.
The prospect of a change in the White House leadership is causing some to take a "wait-and-see" attitude towards HSAs. Others are moving full-bore, expecting HSAs to remain a viable program.
While health care benefits for companies have always been based on financial considerations and employee retention, the trend by state governments to mandate coverage is also helping to swing the decision-making process towards financial advisors. Increasingly, CPAs and others are becoming more involved in advising individuals and employers on what is the best approach to take both for themselves and their companies.
On an individual basis, many financial advisors in Massachusetts and elsewhere are being asked to provide input into what their clients should opt for on a total financial planning basis. Agent/brokers are involved in the mix but a survey in Massachusetts indicated that individuals with incomes above $55,000 have turned more to their accountants than agents. For companies in these states, the burden has also been made heavier by provisions of the law as it applies to employers.
In both cases, the real losers are agent/brokers who often spend more time and generate less commission. Finding ways of making more money in a changing world is always difficult, adding a new competitor doesn't make the task easier, but a new ally can help.
