Career moves: Why these retirement advisers shifted to healthcare

Part 1

A decades-long erosion of wages and retirement savings in the face of significantly rising healthcare costs continues to reshape benefits advising for middle-market employers. 

It has been a seismic shift during which "forward-thinking retirement advisers recognize that healthcare has become the single biggest threat to retirement security in America," observes Dave Chase, Health Rosetta co-founder and CEO, noting that the average American household would have about $1 million more in their retirement accounts if not for healthcare's rampant overtreatment and hyperinflation.  

That growing legion of seasoned retirement pros who have shifted their focus to stop healthcare from defunding retirement for working Americans includes three high-profile leaders: Barbara Delaney, Jamie Greenleaf and Hugh O'Toole. Their respective career paths brought them all to the same realization.

Read more: How trauma changed an adviser's approach toward 'dysfunctional' healthcare system

Delaney, founder of StoneStreet Benefit Advisors, began her career as director of retirement planning for Tribus Companies, while Greenleaf, co-founder of Fiduciary in a Box, started out as a retirement plan adviser for UBS and Prudential. O'Toole, CEO of Innovu, spent his first decade in the industry as old school as one could get: Working as a partner for a firm with the word pensions in its name, which was then acquired by Principal Financial Group. 

From broker to consultant

The financial conflicts of interest that plague healthcare brokers are now absent in the retirement space where they used to be prevalent, according to Chase. However, retirement consultants were no angels when they routinely took 12b-1 fees, offsets and bonuses for moving or retaining business, Greenleaf observes. 

"We had the same conflicts. We were product sales people, which is exactly what health benefit brokers are," she says. "The industry changed, and so we had to evolve. We went from a broker to consultant to co-fiduciary status." 

When O'Toole took over Innovu in 2018, he was shocked that ERISA protocols did not apply to healthcare. "There were prohibitive transactions and conflicts of interest everywhere," he says. "There was gagging of data." 

Read more: Retirement plan analysis suggests rampant fiduciary breaches

Calling transparency "the great disinfectant," he remembers how retirement advisers were converted to registered investment advisers who weren't conflicted by their compensation, "and if you were a normal broker or hustling product, you were eliminated."

Today's retirement fiduciaries probably don't understand how complicated healthcare is, O'Toole believes. "But if you break up what it means to run a process," he says, "the retirement adviser is in much better shape than the healthcare adviser who is a gym rat that knows where all the bodies are buried. If you combine those two people, you have the right person."

Delaney recalls how she and others like her had to become fiduciaries 20 years ago, adding "we had to give up all our volume bonuses. We had to have full transparency." That meant avoiding conflicts of interest, undisclosed compensation and buy-in bonuses. 

Read more: Long-term care costs can derail retirement plans. Here's how to manage them

Breaking these patterns paid off. She notes that 401(k) plans fees are down as much as 75% over the past 15 years and 50% over the past decade. "We have driven our margin so low and it's so transparent, even if we could begin to get plan sponsors to see things [this way], it's a mind shift change that we're trying to get them to look at," she says. 

Stay tuned for part two, live next Wednesday, on the role fiduciary oversight plays in the healthcare space.