Advisers plunge into providing health care

Amid uncertainty, more advisers navigate the murky waters of health care insurance

Sep 19, 2010 @ 12:01 am

By Lisa Shidler

Whether it's helping downsized clients, assisting retirees whose benefits are being chiseled away or advising small-business owners on health care options for their companies, a growing number of financial advisers find themselves navigating the murky waters of health care insurance.

“Clients have a big need for health insurance,” said James Barnash, assistant vice president at Capital Analysts Inc., a financial advisory consulting firm. “There are a lot of people who are very worried about having any type of health insurance coverage, and advisers need to have the ability to provide their clients with information regarding health benefits.”

Indeed, worries about health care have intensified in recent years as employers have shifted more of the burden of maintaining adequate coverage to their employees.

The Henry J. Kaiser Family Foundation reported Sept. 2 that workers on average are paying nearly $4,000 this year toward the cost of family health coverage — a 14% increase, or $482, above what they paid last year.

The total premiums for family coverage, including what employers themselves contribute, rose 3% to $13,770 on average in 2010 over last year, the foundation reported.

People who buy coverage on their own also are experiencing steep rate hikes, according to a separate survey of 1,038 individuals that was released in June by the foundation. In that survey, people who buy their own insurance reported premium increases averaging 20% above the rate they paid before their last renewal. After negotiating a better price or switching policies, many respondents were able to lessen the pain, with an average rate hike of 13% instead of 20%.

And in March, dramatic health care reform was signed into law by President Barack Obama, leaving individuals, employees and employers in a panic and uncertain about how the massive changes will affect them.


For some advisers, that uncertainty presents an opportunity to provide a valuable service to clients. Toward that end, some advisers are positioning themselves to be able to sell health insurance to clients. Others are simply arming themselves with knowledge about the pros and cons to make sure clients are aware of all of their options.

“It can really differentiate an adviser,” said Paul Sorbera, president of Alliance Consulting Ltd. “It's likely that more people are going to be dropped from health insurance plans.”

Diann Cassidy, an adviser with Cassidy Financial Group Inc., agrees. After watching some of her clients scramble to replace health insurance that they had lost due to downsizing, Ms. Cassidy began selling replacement insurance a few months ago.

“It actually makes the relationship stronger,” said Ms. Cassidy, whose firm manages more than $20 million in assets. “[Clients] feel free to provide me with information because they know I'm in their corner.”

Rose Greene, who runs an eponymous financial advisory firm, recently began selling health insurance as a way to help existing clients and attract new ones. Since June, the firm has generated more than $700 in monthly revenue from individual health insurance policies.

“It really takes a huge investment and commitment,” said Ms. Greene, whose firm oversees $60 million in client assets. “You need to have one person completely dedicated to this area.”

To be sure, not everyone agrees that advisers should become experts in the business of health insurance. Time spent deciphering complicated insurance contracts is time taken away from financial planning, critics contend.

“It's really so technical,” said Celia Santana, president of Personal Risk Management Solutions, an insurance firm. “You have to stick to your own knitting.”

For instance, advisers who want to sell health insurance must know about health conditions and common drugs.

By positioning themselves as the go-between for health insurers and clients, advisers are also likely to find themselves the subject of clients' wrath if they are denied coverage.

“Clients who get denied coverage could get really annoyed with you,” said Stephen Lovell, an adviser with Forsyth Heritage, which manages $30 million in assets.

To get around that, some advisory firms have forged formal, or even informal, partnerships with advisers who have ancillary health insurance businesses.

Arthur Montgomery, an adviser at Walnut Street Securities Inc., points clients in need of individual health insurance toward Hovis & Associates, a group of advisers that are under the same broker-dealer. Hovis & Associates sells individual and group health insurance policies to clients — a service that Mr. Montgomery doesn't want to get into.

“I've been doing this long enough to know the people who are successful are the ones who specialize in one area,” said Mr. Montgomery, whose branch oversees more than $1 billion in assets.

To be sure, there are downsides to forming a partnership, the main one being that the firm offering health insurance will attempt to sell other products to an adviser's clients or, even worse, attempt to steal the client.

Before Mr. Montgomery formed the partnership with Hovis & Associates, he forged a similar partnership with another advisory firm but discovered that those advisers were trying to sell his clients products that his firm offered. As a result, he nixed that partnership and instead chose to enlist Hovis because they are in the same broker-dealer.

Some advisers enjoy the luxury of turning to an in-house adviser rather than crafting an outside partnership.

At Four Seasons Wealth Management, adviser Danton Troyer said that his colleague Lena Linn recently began offering health insurance products to clients of the firm, which manages $400 million. He doesn't want to specialize in health insurance and is relieved that she offers these services.

“I have a working knowledge, but I don't feel comfortable giving specific advice on health care policies,” Mr. Troyer said.

E-mail Lisa Shidler at


What do you think?

View comments

Recommended for you

Upcoming Event

May 14


Retirement Income Summit

Join InvestmentNews at the 13th annual Retirement Income Summit—the industry’s premier retirement planning conference.Clients and investors continue to search for retirement income solutions and personalized investing advice. This... Learn more

Featured video


Why a #MeToo story about the financial advice industry was important to do

Reporter Greg Iacurci and editorial director Fred Gabriel discuss the survey behind our cover story on sexual harassment in the workplace.

Video Spotlight

We started as a boutique firm with huge ambitions. Schwab was a perfect fit.

Sponsored by Schwab Advisor Services

Recommended Video

Keys to a successful deal

Latest news & opinion

10 millennials making their mark in Washington — and beyond

These next-generation leaders are raising their voices and gaining influence over financial advice regulation and legislation.

Warburg Pincus among private equity managers interested in acquiring Kestra Financial

Sources say Kestra is being valued at between $600 million and $800 million, about eight to 10 times EBITDA.

10 highest paid professions in America today

These are the top-paying jobs in the U.S., according to Glassdoor.

Former Merrill Lynch star broker Thomas Buck sentenced to 40 months in prison

He pleaded guilty to securities fraud in 2017; charged clients excessive commissions.

Rules for claiming Social Security at 70

Some individuals' benefits will begin automatically; others have to take action.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print