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Fidelity Investments has launched full-service health savings accounts for clients of broker-dealers, banks and RIAs who use Fidelity Clearing & Custody Solutions as their custodian. It says the offering is the first of its kind.
The Fidelity HSA is fully integrated with Wealthscape, the firm's advisor technology platform, and allows advisors to handle all aspects of clients' HSAs including investment management and operational oversight in one place. Advisors can choose from more than 10,000 mutual funds, stocks, bonds and ETFs for investments.
Contributions are tax-deductible, grow tax-free and can be withdrawn tax-free so long as the money is spent on qualified medical expenses, which makes HSAs more tax-friendly than traditional 401(k)s or IRAs.
"HSAs help advisors provide peace of mind for their clients around their financial futures, including the ability to handle health care costs, which are often difficult to plan for," said Begonya Klumb, head of HSA, Fidelity Health Care Group, in a statement. "We know there is significant demand from the advisors we work with, since HSAs are a way to help clients invest in their long-term well-being in a highly tax-efficient way."
Fidelity estimates that a 65-year-old couple that retired in 2019 will spend $285,000 in health care and medical expenses throughout their retirement, while single female retirees of the same age would spend an estimated $150,000 and single male retirees $135,000.
Klumb tells ThinkAdvisor that Fidelity has seen "tremendous growth" in the HSAs the firm already offers employer clients, which began in 2005, and individual investors, which started in 2018. Assets in Fidelity HSAs grew 35% last year, compared with 20% for the industry, according to Klumb. Fidelity's HSA product for the clients of financial intermediaries is the next step in the evolution of its HSA strategy.
Advisory firms who sign up for the new offering may pay "some nominal fee" or none at all, said Klumb. Their clients, however, will need to sign up for a high-deductible health care plan, which is required in order to open an HSA.
Fidelity Clearing & Custody Solutions has about 3,900 clients. How many use Wealthscape is not publicly disclosed.
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Bernice Napach
Bernice Napach is a senior writer at ThinkAdvisor covering financial markets and asset managers, robo-advisors, college planning and retirement issues. She has worked at Yahoo Finance, Bloomberg TV, CNBC, Reuters, Investor's Business Daily and The Bond Buyer and has written articles for The New York Times, TheStreet.com, The Star-Ledger, The Record, Variety and Worth magazine. Bernice has a Bachelor of Science in Social Welfare from SUNY at Stony Brook.
