Fidelity launches HSAs for financial intermediaries

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Fidelity Investments is offering HSAs to financial intermediaries through its Fidelity Clearing and Custody Solutions group, which serves brokerage firms, banks and investment advisers.

The HSAs will be managed through Fidelity and are integrated with their adviser technology platform, Weathscape. Advisers will have the ability to handle their client’s HSA accounts through Fidelity’s brokerage platform.

“Managing HSAs in Wealthscape alongside other accounts gives advisers a holistic look at the full financial picture,” says Ryan Plotner, head of brokerage and banking solutions at Fidelity.

HSAs have grown in popularity as healthcare costs have continued to rise. The number of HSAs grew 13% in the past year and will reach 30 million by 2020, according to research firm Devenir. Total annual contributions per individual were $2,800 in 2018, Employee Benefit Research Institute data shows.

“Account balances are growing over time, enabling longtime account holders to withdraw larger sums when unexpected major health expenses occur and to save and invest for retirement expenses,” says Paul Fronstin, director of EBRI’s Health Research and Education Program.

The tax-advantaged accounts are only offered through participation in a high deductible health plans. Forty-seven percent of employees are enrolled in a HDHP, according to the CDC.

The accounts are a way to ease the strain of paying for medical and healthcare costs and save for healthcare in the future, says Begonya Klumb, head of HSAs for Fidelity Health Care Group.

“Paying for healthcare is a top concern for many people, and HSAs help advisers provide peace of mind around their financial future and ability to handle healthcare costs,” Klumb says. “There is significant demand from the advisers we work with.”

According to a survey by the Nationwide Retirement Institute, 73% of future retirees said out-of control healthcare costs were their top fear in retirement, and 64% say they are “terrified” of what those costs could do to their retirement plans.

However, just 35% of HSA participants are utilizing these accounts as a retirement planning vehicle. According to Fidelity, a 65-year-old couple retiring in 2020 will spend $285,000 on medical expenses throughout their retirement.

The Fidelity offering will allow advisers to help their clients plan for all aspects of their financial future, Plotner says.

“HSAs give advisers a significant opportunity to deliver value and help clients achieve freedom from worry around caring for themselves and loved ones,” he says. “This is increasingly important as the shift toward financial planning continues by helping clients reach life goals and fulfillment.”

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HSAs Retirement planning Fidelity Clearing & Custody Solutions Financial planning Client strategies Healthcare issues Financial wellness Tax planning