Advisers’ Huge Opportunity

Jamie Greenleaf

On December 27, 2020, the Consolidated Appropriations Act of 2021 was signed into law. This was a massive piece of legislation, containing thousands of pages of general government spending, COVID-19 relief, economic stimulus and about 90 pages that are sending shock waves through the employer-sponsored health insurance industry. Here’s the key point you must be aware of: Employers are now fiduciaries on the health, vision and dental benefits they sponsor.

You may be thinking you know nothing about health benefits and you aren’t sure you want to. Health plans are complicated. There was a time, however, when you probably said the same thing about the retirement industry. But you learned quickly, asked questions and performed due diligence. If things didn’t make sense, you asked more questions. The good news is, because you understand the fiduciary process, you are way ahead of everyone in the health benefits industry, even if you don’t currently understand all the acronyms. Think of climbing a mountain. You are halfway up, while most don’t even know there is a mountain.

Collectively, these rules constitute the largest set of new compliance obligations for health plans since the implementation of the Affordable Care Act, and employers need help. Without a prudent process in place, they could be subject to enforcement actions, monetary penalties and class-action litigation just like the retirement industry has seen since the mid-2000s. To reiterate, the key point is: Employers must establish a fiduciary process for the management of their health and welfare benefits plans, just like they do for their retirement plans.

Your clients will be unable to meet these new requirements and duties on their own. They need guidance from valued partners, and who better to guide them through the implementation of a fiduciary process than you, their trusted fiduciary adviser? This is a huge opportunity.

Your clients will be unable to meet these new requirements and duties on their own.

If you’re ready to shoulder the challenge, here are a few ways to move forward:

• Partner with an expert in the health benefits market;
• Identify a software program that provides guidance and framework on applying a fiduciary process to health benefits plans—e.g., Fiduciary in a Box; and
• Learn the health benefits industry yourself.­ ­

Regardless of the direction you take, Hugh O’Toole, CEO of Innovu, said it best, a few years ago: “Don’t be the analog phone. Stay relevant and offer real value.”

I’m old enough to remember the retirement industry before transparency and fiduciary standards came to the market. Retirement brokers received finders’ fees from recordkeepers, and, in a fund lineup, each mutual fund paid a different amount.

Today, the standards are very different. What caused this? Employee Retirement Income Security Act Section 408(b)2 and class-action lawsuits. Transparency and fiduciary standards changed the way retirement plans are managed. All compensation was disclosed, conflicts of interest were laid bare. Old-school retirement brokers became consultants, and now most are co-fiduciaries! Employers applied a fiduciary standard to the administration of their retirement plans, and the industry changed. As a result, employees across the country are now able to save for retirement without being undermined by excessive fees and conflicts of interest.

I know talking about health benefits may be a change, and change can be scary. Studying behavioral finance has given me a better understanding of how humans react to change—we’re actually hard-wired to fear it and consider it a threat. But the opportunity to have a positive impact on employers and their employees is massive. After all, as retirement consultants, we already help employers manage their liabilities and improve the benefits they offer their employees. We wrote the playbook. You already sit on the same side of the table as your clients. Now is the time to be bold and offer help where they need it.  

Jamie Greenleaf is the co-founder of My Fiduciary Coach and senior vice president, OneDigital Retirement + Wealth. She has acted in a fiduciary capacity throughout her career, helping employers design and implement retirement programs to create better outcomes for employees.