Some big-name financial institutions recently exited the health savings account business despite the market's steady growth. A main reason: the prospects and potential profits aren't big enough compared to their other businesses.
The latest to leave is Wells Fargo & Co., which confirmed in late May it is selling its HSA business.
U.S. Bancorp, Huntington Bancshares Inc., M&T Bank Corp. and The Bancorp Inc., as well as insurer Assurant Inc., all sold their HSA management businesses and/or their HSA accounts within the past 12 months. J.P. Morgan Chase & Co. sold its HSA business in early 2015.
As Pensions & Investments reported May 16, HSA deposit assets and the investment assets within HSAs have grown consistently — although their sizes are small compared with retirement accounts such as 401(k) plans and individual retirement accounts.
Large financial institutions with many lines of business are getting out of HSAs to concentrate on bigger and more profitable businesses, said Roy Ramthun, president of HSA Consulting Services, Silver Spring, Md.
“They have other priorities and this (HSA management) is too small a piece,” Mr. Ramthun said. HSA management requires investments in technology that executives at large institutions might decide are not worth the effort given their expected return on investment.
“The more the HSA market matures, the more consolidation you will see,” said Eric Remjeske, president of Devenir Group, a Minneapolis-based investment adviser and consultant in the HSA business.
Total HSA assets reached $30.2 billion in 2015, about triple the amount in 2009, said the latest annual survey by Devenir Group. Investments accounted for $4.2 billion, or 14% of last year's total, according to the survey based on the 100 largest HSA managers.