DriveWealth is Powering the HSA of the Future With Alegeus

DriveWealth is Powering the HSA of the Future With Alegeus

Health Savings Account (HSA) adoption has continued to grow annually for the past 17 years. The HSA investment has experienced more than 41% compound annual growth during the last five years and increased by 52% in 2020 according to a study by Benefit Strategies(1). The study is projecting continued growth – estimating a 55% increase in total HSA assets from current levels to $127.5B by 2023, and a 72% rise in investment assets to $40.9B by 2023.

This increase can be attributed to few key factors:

  • Americans’ savings behavior has changed as a result of the global pandemic. When the global pandemic began in March of 2020, the personal saving rate in the U.S. hit an all time high of 33.7%, and a year later the savings rate remains elevated at 14.9%(2).
  • 32% of Americans stated in a recent survey by Northwestern Mutual that Covid-19 had improved their financial discipline, while 17% stated that it prompted them to start financial planning for the first. 33% stated they would increase investing. time(3)
  • 45% of Americans said the pandemic set back their long term financial security(3)
  • 60% of Americans feel unprepared for retirement
  • $350k average couple of 65 spends on healthcare in retirement(4)
  • Rising healthcare costs are outpacing earnings growth rate in the U.S.
  • More employers are offering high deductible HSA plans and directly contributing on behalf of employees, which also encourages participation. In January 2021, 34% of HSA accounts received an employer contribution, which equated to an average of $502(5)

HSA providers can help Americans take control of their financial future and better prepare for future medical and retirement expenses with an HSA investment account, which offers the opportunity to earn potentially greater returns over time than a cash HSA, especially in low interest rate and rising inflation conditions. According to PlanSponsor’s 2021 HSA survey, 79% of HSA account holders want access to investments other than cash, and 30% of respondents felt that investment options were an important feature when choosing an HSA provider.

Requirements for building a modern HSA platform today

  • API’s that offer a turnkey solution to build an engaging, branded HSA investing experience
  • Frictionless digital onboarding process that allows customers to open an account on their phone, get real time approval, fund the account and start investing in just minutes
  • Broad selection of investing products that are suitable for retail investors looking to save for future medical expenses and retirement
  • Advisory services to guide investors in making investment decisions to reach their investing and savings goals

DriveWealth is excited to partner with Alegeus—a market leader in consumer funding solutions, to power their innovative and engaging HSA investing experience that helps Americans save for their future. HSA deposits provide Americans with a triple tax advantaged savings option – this year the pre-tax HSA contribution limit is $3,600 per individual and $7,200 per family.  Alegeus’ HSA offering offers three distinct investing models to cater to the experience and risk tolerance of any investor to help them achieve their goals. Investors can select a managed Robo Advisor offering that automatically rebalances to meet each investor’s asset allocation and risk parameters, a self-directed offering that provides only a selection of ETFs most suitable to an individual’s risk profile, or a self-directed offering that allows the retail investor to select securities or ETFs on their own. Alegeus’ investors can invest every penny of their portfolio due to fractional shares out to 8 decimal places. “Alegeus’s vision was properly aligned with DriveWealth, which is to empower the end investor with a modern investment experience, making it intuitive and easy to invest vs. spending their pre tax HSA dollars,” said Stan Smith Managing Director of DriveHSA.

DriveWealth’s API-driven, cloud-based brokerage platform enables our partners to launch quickly and easily, so they can focus on their strategy and core business. Visit our DriveHSA solution page to learn more.