Betterment offering automated investing and advice for Optum Bank HSA

The partnership connects the robo with 3 million customers and $9 billion in Optum's HSAs

Jun 12, 2019 @ 5:05 pm

By Ryan W. Neal

Health savings account customers of Optum Bank, one of the nation's largest HSA providers, can now use Betterment for help investing HSA money.

Betterment CEO Jon Stein announced the new partnership Wednesday at CB Insights' annual Future of Fintech conference in New York. Calling it a "simple, smart, automated HSA," the idea is to help unused cash sitting in an HSA grow tax-free as an additional retirement savings vehicle.

Customers who elect to invest some or all of their HSA with Betterment will go through an onboarding process to determine how much the investor plans to use funds for medical expenses versus long-term savings to determine investment allocations.

The company didn't share specific investment recommendations it would recommend, but Betterment vice president of communications and policy Joe Ziemer said it would be similar to the low-cost portfolios of ETFs recommended by Betterment's core, direct-to-consumer robo-adviser. Investors who will need funds more readily available for healthcare expenses will be given a more conservative allocation than those primarily using HSAs for retirement saving.

HSA funds invested with Betterment will take advantage of the robo's tax optimization technology, automated rebalancing and asset location strategies.

Optum, which is under the UnitedHealthcare umbrella, currently lets customers choose their own investments through a partnership with Schwab, but there are no investment recommendations as there will be with Betterment's algorithm.

The partnership provides Betterment an opportunity to reach more than 3 million customers who have $9 billion saved in Optum Bank HSA accounts.

"It's a huge milestone for us that this giant company … chose Betterment," Mr Stein said. He also sees an opportunity for Betterment to manage and tax-optimize HSAs in concert with investors' held away other accounts via data aggregation.

It is a potentially massive market for the digital advice startup to tap into. HSA assets totaled an estimated $53.8 billion at the end of 2018 and are expected to rise to $75 billion by the end of 2020, according to HSA researcher Devenir. The portion of those assets invested is expected to rise to$16.7 billion from $10.2 billion.

(More: Morningstar's first study of 10 largest HSAs reveals so-so performance)

However, some advisers feel there is a lack of investment options available for HSAs. Mr. Ziemer said advisers using Betterment for Advisors are interested in using the product to help manage HSAs they open for clients.

0
Comments

What do you think?

View comments

Most watched

INTV

Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

INTV

Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.

Latest news & opinion

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.

X

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 investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

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

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print