Wachovia Corp., preparing to enter the health savings account fray, hopes to differentiate itself by presenting its version of the product as part of a broader financial services solution particularly suitable for retirees, according to the head of the business.
"We don't want to be known just as an HSA provider," said Joanne Young, a Wachovia senior vice president who is the company's health savings account product manager.
The treasury services, branch banking, and retirement services divisions of the Charlotte-based Wachovia are collaborating to create the bank's HSA product, but its development is being led by the retirement services unit.
The accounts will be available to all, but Wachovia believes there is an especially compelling case for customers to use them to pay for health-care costs during retirement, Ms. Young said.
"Baby boomers are moving into retirement, and one of the significant risks they need to mitigate is health costs — financing 20 or 30 years of health care," said Laura DiFraia, a Wachovia senior vice president for product development and marketing. "HSAs, we think, will become the primary vehicle to save for future health-care costs."
HSA industry leaders such as HSA Bank, a subsidiary of Webster Financial Corp. in Waterbury, Conn.; and Exante Bank, which is part of UnitedHealth Group Inc. in Minneapolis, are strong in that particular business, Ms. Young acknowledged. Wachovia's intention is to compete with a "robust" lineup of products it can package alongside its HSAs, she said.
"Obviously, Wachovia wants to be a leader for many financial products," Ms. Young said. "We want be a player in health savings accounts and have it match and go along with the retirement side of the bank."
The bank plans to formally introduce its health savings account on Nov. 15.
Health savings accounts were authorized late in 2003, and many banks now offer them. The leaders include such large institutions as JPMorgan Chase & Co., Wells Fargo & Co., and Bank of New York Mellon Corp.
Ms. Young rejected the notion that Wachovia has moved too late to grab a significant slice of the HSA market.
"I don't think we are behind the curve at all," she said. "The Wachovia brand will help."
JoAnn Laing, the president and chief executive officer of Information Strategies Inc., a research firm that follows the HSA business, agreed that Wachovia has plenty of time to make its mark.
"No one's totally nailed it yet," she said. "And the market is growing and attracting new accounts and new deposits."
Wachovia's primary target will be midsize and large employers, Ms. Young said.
Companies in that sphere "are focusing their efforts on how to reduce costs and provide health insurance to their employees," she said. "We want to help them with that — they are the ones who are really driving it."
The small-business market for health savings accounts and their accompanying high-deductible insurance plans is growing. But Wachovia considers larger businesses more promising because HSAs can reduce those companies' costs, whereas adding any health insurance is a cost increase for small businesses, Ms. Young said.
Ms. Laing said her firm's surveys indicate "pretty equal growth across the board in all sizes of businesses."
Going after larger ones, of course, is a faster way to build volume, she added. Even companies with existing health plans that incorporate HSAs can add Wachovia or other banks, just as they can add any number of banks for automatic payroll deductions, Ms. Laing noted.
Wachovia will offer its accounts on a retail basis in addition to its institutional sales. The accounts will be marketed through its branch network, by financial advisers, and through its treasury, retirement, and insurance services divisions, as well as by its corps of business bankers.
The company waited to enter the HSA business in order to assess market demand, see whether the products got more legislative support, and study how to build the best product, Ms. DiFraia and Ms. Young said.
Wachovia's health savings accounts will have a self-directed investing option for those with balances of $2,500 or more. The company will probably end up offering 10 to 12 mutual funds from which to choose, Ms. Young said.
The company will offer HSAs nationwide, and this will be facilitated by acquisitions that have given it bank or brokerage branches in all 50 states.
