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to charge an AUM fee it would likely be drawn from a taxable client account , Henley says , to maximize the HSAs ’ tax-free compounding . It ’ s the same way the firm charges for managing Roth IRA assets .
There ’ s a compelling fiduciary argument that advisors should be pointing clients to the medical-IRA strategy even if it doesn ’ t move the revenue needle much . Advisors already help clients optimize Social Security timing and navigate Medicare choices . With medical costs in retirement high and rising , advisors should give clients a leg up through education about and implementation of long-term investment strategies within HSAs , Henley says .
Stuart thinks smart advisory firms should offer free education about the strategy within workplaces , an approach that over time could yield a crop of clients with retirement assets as well as HSA assets to manage .
A final hesitation many high earners may have when it comes to funding medical IRAs has to do with unspent funds . If an account holder dies with a balance , the account is transferred to a surviving spouse tax-free . But upon the survivor ’ s death , beneficiaries receive a distribu- tion that ’ s considered taxable income . It ’ s something Stuart has thought about .
He assumes he and his wife will have more than $ 300,000 of medical expenses in retirement . He has about half that amount in his HSA , and barring a major unexpected expense , the account will be emptied during their retirement , he says . If Stuart dies early , the remaining funds will go to his spouse tax-free to spend down . If she dies with an unused balance , the couple ’ s four children will receive it as taxable income . But Stuart isn ’ t concerned . “ I don ’ t worry about that any more than I worry about dying with too much money left in my IRAs ,” he says .
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checks ,” Allen said . Instead , firms need to disrupt this mindset and retrain managers to look for and reward women advisors who hit or exceed their benchmarks and deliver extra value , she added .
The problem of queen bees , finance bros , and the old boys ’ network . All of these cultural phenomena create threats to the inclusion and retention of women in the industry , Carson found . Because finance has been male-dominated , women
who climb the ladder tend to “ kick the ladder out ” after they ’ ve risen , effectively undermining up-and-coming leaders instead of helping them grow . This is a trait the British Journal of Social Psychology dubbed the “ Queen Bee Phenomenon .”
Ragatz said the trait is a product of sexism and an extension of the old boys ’ club , which leads to male-dominant traits becoming exaggerated in women , who “ can be exclusive and undermine and discriminate against other women without being aware they ’ re doing it ,” Ragatz said .
In reality , “ the old boys ’ network is really the sponsorship network . The common identity they share is influence , and we need to shift this to include women ,” Ragatz said .
Gender inequality is still rampant . Gender biases , stereotypes and bad behavior remain prominent at wealth management firms , which leads to unequal opportunities for women . This bias is reinforced
Gender biases , stereotypes and bad behavior remain prominent at wealth management firms , which leads to unequal opportunities for women . This bias is reinforced by the all-too-common scenario where women are pigeonholed into administrative roles . by the all-too-common scenario where women are pigeonholed into administrative roles — and left there — instead of being recognized as successful advisors and leaders .
Firms should create a well-structured training program that shifts all rookie advisors into an advisory role and provides a natural progression of their roles and responsibilities without boxing them into an operational or support role , said Cerulli Associates in a recent report .
Forcing women to linger too long in support roles “ leads to forced entrepreneurship , where women feel the only escape is starting their own firm . While there can be great benefits to this , we don ’ t love it as the only option ,” Allen said .
What would women advisors tell their younger selves ? Cerulli noted that the failure rate for advisors is 72 %. Considering the advisor shortage at hand , it ’ s never been more important to grow the ranks of women in these roles , especially since female clients will control $ 30 trillion in wealth by 2030 and increasingly prefer working with women advisors .
In its survey , Carson asked female respondents what they would tell their younger selves . The respondents answered that younger advisors should learn from people who inspire them , get their licensing done , network and find the right business model for themselves … and they shouldn ’ t settle for a role that doesn ’ t give them what they need .
As one woman advisor in the survey put it : “ What I find with a lot of women is that they find a bad cultural fit of a firm and they assume that they ’ re a bad cultural fit for the industry . But that ’ s not the case . You can always shift and find something that works .”
58 | FINANCIAL ADVISOR MAGAZINE | MAY 2024 WWW . FA-MAG . COM