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Survey: HSAs Still Missing from Advisor-Client Conversations

Industry Trends and Research

Registered investment advisors appear to be missing a key business opportunity by not offering health savings accounts to their clients, according to the results of a new survey.

Nearly 60% of RIAs polled by HSA provider HealthSavings Administrators are not offering HSAs to their clients, and quarter of them (26%) admit they do not discuss HSAs with their clients at all, despite the triple tax advantage and investment opportunity. 

The survey of more than 230 advisors revealed that a lack of knowledge about HSAs – how they operate and how they fit into a long-term financial strategy – is a primary driver for the disconnect.  While 36% of the advisors admitted that they do not fully understand how an HSA works, 40% claim that clients do not either. And further underscoring the need for more education, the survey found that nearly half of respondents say that clients perceive HSAs as spending accounts only.

Foregone Opportunities?

Nearly a quarter of advisors (22%) are not aware they can earn revenue by offering an HSA, according to the results. The authors emphasize that as individually owned accounts, HSAs can be invested like a 401(k) or an IRA, meaning an RIA can be compensated for managing an HSA account based on a percentage of assets or a fixed fee. 

As an example of potential missed opportunities for compensation and client satisfaction, the authors further point to recent research from Devenir showing that invested assets in HSAs are estimated to grow to $16.7 billion in the year 2020. 

When advisors do offer HSAs to clients, nearly half (47%) still position them as spending accounts. The authors emphasize that these findings reveal “a deep-seated belief among advisors and clients alike that HSAs are short-term financial vehicles, despite industry research lauding the extensive benefits of investment-focused HSAs.” 

Misunderstandings about how to leverage HSAs as long-term investment and retirement strategies are a primary factor for the mismatch, the study contends. For example, it notes that 70% of respondents say their clients are completely unaware of HSAs as a means of transferring wealth to family members. 

Despite the current disconnect among advisors, nearly 80% of respondents who offer an HSA reported that they are satisfied with their current HSA offering. When asked what they care about when working with an HSA provider, nearly all respondents (98%) cited reputation/trust and customer service as the top two factors. Low administration fees were also cited by 90% of respondents as a primary consideration.