Thanks to the new rules from the Department of Labor, anyone offering retirement advice now has fiduciary responsibilities to the client. This may sound clear and straightforward but the details of how to implement this rule are far from simple, according to Kevin Robertson, senior vice president, director of sales at HSA Bank.
“Bottom line, they have attempted to protect investors and what constitutes investment advice and what type of playbook advisers can utilize,” Robertson said last week at EBN's Benefits Forum & Expo.
“It sounds like common sense and, on face value, it is. However, in reality and with how broadly written it is, for the first time employers are going to be held responsible for quantitative judgement in the delivery of their vendors and the selection of their vendors,” he said.
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Robertson added that certain CDH products that one would not think fall under a retirement plan are also covered by the new DOL fiduciary rule.
“401(k)s and IRAs are retirement plans, and now MSA and HSAs are considered to be because of the long-term savings and the potential of [money under management]. With the DOL casting a broad net, this has become a problem for the employer because it casts a broad net on their responsibilities,” he said.
“You have to understand what could be construed as advice and recommendation — those concepts were clear but maybe now they are not so clear,” he said.
“In the 600 pages of the new guidance law it says you must comply, but it doesn't tell you how to comply,” explained Robertson.
“I am sure the folks in this room are diligently working with their inside and outside counsel. And there are certainly more unknowns and more questions than there are answers at this point,” he said.
But, Robertson warned against panicking. “For all employers and adviser groups out there: The sky is not falling,” he said.
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“There are things you need to be sure of: That vendors are supplying information and as vendors we must make sure that we are supplying them to you and that we are acting in best interest of clients,” he said.
The new political landscape
How will the upcoming presidential elections impact this space? It depends on who takes the White House and if the Senate stays under the control of the GOP.
According to Roy Ramthun, president & founder of HSA Consulting Services, and another speaker at the event, it remains a very tight race.
“If you thought Hillary was the superior candidate, you would think this would be a slam dunk,” he said. “But this is a much tighter race than we could imagine.”
He added, “No matter what happens in the White House, I think we are going to have divided government. The House [of Representatives] is not likely going to change to Democratic control, but the Senate could.”
Ramthun predicts there will most likely produce a stalemate in the Senate where 60 votes are needed to approve a measure. “If we have a Democrat in the White House, congress will take the lead in moving HSA enhancements and this will have to be signed by the president. So, it [comes down to] whether or not they can work out deal with what they White House wants,” he said.
If Donald Trump wins the White House and the Senate stays Republican, this is absolutely the best scenario for HSAs to be modified in favorable ways,” said Ramthun, but added, “But this is least likely to happen.”
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