Products December 5, 2018

Optum Enhances Data Analytics to Increase HSA Savings

Optum says the enhancement has already shown results; accountholders who were targeted with new messages increased their balances, became eligible to invest, and chose to open investment accounts.

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In order to raise health savings account (HSA) accumulation and raise awareness behind HSAs and heath care costs, Optum bank has updated its data and analytics tool, Health Finance Journey.

The model, which implements “behavioral science and advanced analytics” to gauge why consumers behave the way they do, groups clients into microsegments based on mutual characteristics and incentives. These clustered, shared interests between consumers allows employers who sponsor HSA-qualifying insurance plans to develop targeted communications for their employees, which can then grow health care savings, says Optum.

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“Employers want access to the latest data-driven analytics and tools that help their employees save for their current and future health care needs,” says Deb Culhane, president and CEO of Optum Bank. “The Health Finance Journey’s enhanced capabilities offer employers better strategies to help them communicate the right messages, to the right employees, at the right time. We are very encouraged by the initial results of applying this updated model.”

The company recently analyzed almost 200,000 de-identified accountholders and identified natural segments and cluster, says Optum. Over 2,000 attributes based on HSA contributions and distributions, account tenure and consumer behaviors were then created, leading to an end result of 20 microsegments that can be targeted with specific communications relevant to them.

Optum says the enhancement has already shown results. Overall, accountholders who were targeted with new messages based on the enhanced Health Finance Journey increased their balances, became eligible to invest, and chose to open investment accounts. Specifically, the enhanced tool resulted in a 26% increase in one-time contributions, an increase of average balances of 12%, and a 23% increase in investment account openings.

More information about Health Finance Journey can be found here.

Investing December 5, 2018

Institutional Investors Bracing for Continued Market Volatility in 2019

They also expect the bull market will end in the coming year.

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Sixty-five percent of institutional investors expect the bull market will end within the next 12 months, according to a report from Natixis Investment Managers, “Keep Calm and Invest On.” Seventy percent expect another financial crisis within the next five years.

Seventy-nine percent believe the current market favors active management, and their allocations to active strategies comprise 70% of their portfolios today, up from 64% in 2015. Sixty percent think they are prepared to handle the risks in 2019.

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“Our research shows institutional investors are already positioned for potential market turbulence on the horizon,” says David Giunta, CEO for the U.S. and Canada at Natixis Investment Managers. “For these sophisticated investors, actively managed strategies and alternative investments are their tools of choice to help optimize their portfolios for the challenges ahead.”

Institutional investors’ long-term target return is 6.7%, and 77% believe this is realistically achievable. Fifty-six percent plan to maintain this goal in 2019, although 35% plan to lower it and 9% expect to raise it.

Despite bracing for increased volatility, institutional investors are not planning major changes for their portfolios in 2019. They expect to trim their equity allocations back from 38% to 36%, while raising their fixed income exposure from 37% to 38%, and cash, from 5% to 6%. Forty-one percent expect to decrease their exposure to U.S. equities, and 36% plan to increase their exposure to infrastructure.

The sectors that institutional investors think will deliver above-market returns are information technology (cited by 40%), health care (39%), energy (36%) and financial services (36%).

Asked what they see as the biggest threats to performance, 77% said geopolitical disruptions, such as tension with North Korea and Brexit. That is followed by trade disputes (74%), the unwinding of quantitative easing (65%), asset bubbles (60%) interest rate increases (56%) and market volatility (54%).

The areas where institutional investors fear there could be market bubbles are cryptocurrency (64%), technology (45%), the stock market (41%), bonds (33%), real estate (32%) and China (24%).

Eighty-four percent of institutional investors expect greater volatility in stocks in 2019, and 70% expect the same will occur in bonds.

Seventy-six percent expect the Federal Reserve will continue to increase interest rates in 2019. Fifty-three percent are concerned about the pace of the rate hikes, but only 27% are worried about the level of the increases.

Sixty-one percent  believe that active investments outpace passive investments in the long run, and 78% are willing to pay a higher fee for outperformance.

They are also turning to private markets, with 51% saying that private equity or private debt are an important part of their portfolio. Seventy-one percent say these investments deliver higher returns, and 60% say they offer greater diversification. Sixty-six percent say that even though they command higher fees, private market investments are worth it for their potential performance.

Natixis Investment Managers’ findings are based on a survey of 500 institutional investors in 28 countries that CoreData Research conducted in October and November.

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