Health Care Driving New Wealth Creating Opportunities.
Erin Hall is excited about the recent expansion of fiduciary duties and its opportunity for retirement plan advisors.
The twist is that it involves healthcare. The Consolidated Appropriations Act of 2021 (CAA), signed into law at the end of December, brought significant changes for health insurance brokers. Simply put, transparency is coming to healthcare much as it did in the retirement plan industry. The CAA clearly states that the plan sponsor is a fiduciary, it removes gag clauses in carrier contracts pertaining to price and quality information and requires 408(b)(2)-style broker compensation disclosure.
“It’s the idea that the entire [healthcare] industry is going to go through the same learning curve that we went through over the last nine years,” Hall, Managing Director with Strategic Retirement Partners (SRP) said from the floor of the Wealth@wor(k) conference in Nashville on Tuesday. “We’ll have firms come in and say, ‘We can help with a fiduciary process overlay to what your health insurance brokers are doing.’”
Crediting TILT and Cafaro Greenleaf’s Jamie Greenleaf for being early to the legislation and its potential, she’s begun speaking with plan sponsors about it but is running into conflicting information provided by brokers because they’re incentivized to minimize its impact.
“I’m trying to play nice in the sandbox and reassuring them that I’m not trying to sell health insurance,” Hall added. “The health insurance industry doesn’t know what’s coming. They just can’t see the vision, although we are the blueprint for it.”
Believing there will be low adoption by retirement plan advisors initially, she feels it will be a missed opportunity.
“The only reason I think it’s going to be low is because of inertia, and people just do what they’ve always done,” Hall said. “But I think there will be some of us who are definitely forward-looking and forging a path. There’s nobody better suited to help you benchmark your fees, identify services, and document meeting minutes. I’m curious as to how many health insurance brokerage firms do meeting minutes for their clients. There are some, but not most, and that’s a huge part of what we do—the documentation of the process.”
It will take Jerry Schlichter-style lawsuits for people to realize how serious of an issue it is and that they need help.
“I think class action lawsuits are going to drive behavior amongst the rest of these plans,” she argued. “You’re going to have some plan sponsors made an example of, and then everyone’s going to go, ‘Oh, we have to do that, because if we don’t, there’s now case law.’”
Law firms like Schlichter, Bogard, and Denton who are suing retirement plan sponsors, and they only have to change the plan name from the retirement plan to the health and welfare plan, “and the brief is written.”
“The Department of Labor is going to audit plans for these standards,” she concluded. “They’ve had a nine-year run with retirement plans, and now this is low-hanging fruit, even more so. Every single plan sponsor in America under ERISA is going to have to attest, this year, that they’ve gone through the process of asking for their fees and disclosing any direct or indirect compensation. It’s going to be a form, and you’re going to have to submit it as, “Yes, I’ve done it” or, “No, I haven’t, but I will.”