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Investment Advisers and Health Savings Accounts

Investment advisers say that their clients are increasingly asking about health savings accounts.  This new type of health plan provides tax savings and better control of treatment and health care providers.  HSAs seem like such a great deal, they wonder why more investment advisers do not recommend them to clients.

There are several strong reasons for the lackluster endorsement of health savings accounts:

1)    HSA administrators do not use “broker of record” or “adviser” assignments on accounts so an adviser cannot access or manage the investments in the account.

2)    HSA accounts are no-load, so there is no compensation paid to the investment adviser.

3)    Most HSA accounts are opened using online applications rather than through face-to-face financial advisers.

4)    HSAs require an applicant to drop their current health insurance and enroll in a new plan with an insurance company that might not be familiar to them.

5)    HSA plans can be expensive or unavailable to some candidates with medical issues.  HSAs do not save money for people who need ongoing medical treatments that are more efficiently covered by managed care or HMO plans.

6)    Many investment advisers are reluctant to delve into the tax and insurance issues that are integrated with HSAs where the investment adviser may not be as well-versed. 

7)    There is risk that sub-par service from the insurer or HSA account trustee (even tough not controlled by the adviser) would reflect poorly on the investment adviser.  It is presumed that Americans’ overall level of satisfaction with  health insurance companies and trust services is significantly lower than satisfaction with our personal investment advisers. 

While HSAs may continue to gain popularity with affluent individuals, it does not appear that investment advisers will play a significant role in the trend.