Further is a non-bank health care accounts administrator, based in Minneapolis, Minnesota. In 2004 Further introduced its first HSA product, making it one of the first companies to administer HSAs nationwide. It has earned a reputation as one of the most experienced and trusted account administrators in the country. Of note is their exceptional service model. The entire customer service team is certified as HSA experts and is continuously trained in spending account rules and regulations. They claim a 96% customer satisfaction rating.
for Further as an investment vehicle
The ideal investment health savings account (HSA) has no investment threshold, allowing the very first dollar you contribute to be invested. If you're using an HSA for investment purposes, seek an administrator that does not hold your dollars hostage in a checking account earning little to no interest.
Further has established an investment threshold of $1,000. You must always have $1,000 in the HSA deposit account. Any excess dollars over this amount can be transferred to the investment account.
The Further HSA includes an optional built in investment account that you can activate when your base balance exceeds $1,000, giving you access to a variety of mutual funds through the Charles Schwab platform. As funds grow and your balance exceeds $10,000, you have the opportunity to take more control over your funds with a self directed brokerage account.
Pre-Selected Mutual Fund Lineup (Basic Investment Account)
The Basic Investment Account, gives you access to a suite of 30 no-load and load-waived pre-selected mutual funds. 15 different fund families are represented in the Further investment lineup. 42% (14) of the funds are from the Vanguard family.
The table below displays the number of funds offered for each asset class in the Further investment lineup.
There's no secret that we here at the The HSA Report Card are big proponents of passive index investing. Thus, we looked favorably upon administrators that offered low cost index funds for each of the major asset classes. In the table above, you can see that the Further investment lineup lacks low cost index funds for 3 major asset classes (foreign developed, emerging markets, and fixed income).
How expensive are the funds in the Further investment lineup?
Further offers its participants a lot of very expensive funds. As you can see in the chart below, only HSA Bank offers its account holders more expensive funds.
Further offers a combination of actively managed and passively managed funds. There are more actively managed funds than passively managed funds, hence the high expense ratios. That said, the lineup has several fantastically priced domestic equity index funds and Target Date funds from Vanguard.
Charles Schwab Self-Directed Brokerage Account
When your Further HSA reaches a minimum base balance of $11,000, you are eligible to move $10,000 to the Charles Schwab Self-directed Brokerage Account. $1,000 must remain in your Further base savings account.
The Charles Schwab self-directed brokerage account is an online investment account through Charles Schwab & Company. Eligible investments include stocks, bonds, mutual funds, ETFs, and a variety of other investments on the Schwab trading platform.
Schwab offers 200+ commission-free ETFs. The commission-free ETF lineup is full of high quality, low cost, index funds. Schwab index fund ETFs have expense ratios as low as 0.03%. Take advantage of these exceptionally low expense ratios.
If you are not comfortable managing your own investments, you have the option of using Charles Schwab's automated investing platform. Charles Schwab Intelligent Portfolios is a free robo-advisor service, offering a wide variety of its own in-house ETFs. One knock on the Charles Schwab robo-advisor offering is the large cash allocation used in the portfolios. This can create a drag on your returns when markets zoom upward, but could also provide a buffer when markets tumble.
In our study of the top 10 investment HSAs, Further ranks as one of the lowest cost administrators. Further charges its participants fixed investment fees, which is something we at The HSA Report Card view favorably.
Under the the ThriftSaver Plan, the administrative fee is waived if the average daily balance exceeds $2,500. Before opting to leave $2,500 in the checking account, take into consideration the opportunity cost of not investing this money.
If you use the Charles Schwab Brokerage account, avoid transaction costs by investing in the commission-free ETFs available.
In this section, we have a little fun projecting fees for each administrator. Our goal was to find the path to the lowest possible fees for each administrator. Keep in mind, we are assuming the HSA is being used solely for investment purposes, therefore only certain fees will apply. Given that every HSA is different, there is no perfect way to compare the top 10 administrators in our study. Nonetheless, we gave it a shot and believe there is value in presenting our findings.
In order to compare fees, we made a few simple assumptions:
Every dollar above the investment threshold was invested.
Current and future contributions were invested in a single fund.
No transaction fee (NTF) or commission-free ETF programs were utilized to buy the index funds.
If these index funds were not available under the NTF and/or commission-free ETF programs, we turned to the open market and executed a single trade per calendar year in order to keep transaction costs down.
For SelectAccount we made the following assumptions:
All assets were invested in VFIAX (expense ratio 0.05%)
Annual investment fee: $18
Annual administrative fee: $12
The chart below illustrates the projected fees on different investment balances for SelectAccount.
The following chart illustrates where SelectAccount stands in terms of fees compared to the other top investment HSA administrators.
Further's fees are extremely low compared to its competition. Ranking as the 3rd lowest cost provider out of the top 10 investment HSAs in our study.
In our search for the very best investment HSAs, we looked for administrators that offered a hassle-free investment experience. Further gives investors all the necessary tools to easily manage their account. The website is easy to navigate, automated account transfers are available and a receipt storage tool is made available for "shoeboxers".
There is a one-way sweep from the HSA Checking account to the investment account(s). When your HSA balance exceeds a threshold you set, money will be swept into either your Schwab brokerage account or Basic Investment Account. Money flowing into the Basic Investment Account will be allocated per the elections you have set up for investments.
Further lets you set up scheduled recurring deposits from your bank checking account to the HSA checking account. Set up a recurring daily, weekly or monthly contribution.
Further does not offer an auto-rebalance feature. Investments must be manually rebalanced in the Basic Investment Account. Investments must also be manually rebalanced when using the Schwab brokerage account unless you are enrolled in their robo-advisor solution.
Dividends are automatically reinvested by each mutual fund in the Basic Investment Account. Charles Schwab also offers a free dividend reinvestment service.
Further's website is very easy to navigate. The home screen provides a summary of your entire account. It shows you a breakdown of your current account balance, contributions to date, and a tabs menu to easily navigate the website.
Receipt Storage Tool
Manage all of your receipts online using Further's My Records and Receipts electronic document storage system. Simply take a photo on your phone or upload a scanned document from your computer to store for future tax free reimbursement, submit with a new claim or match with an existing claim.
Pros & Cons
1. Transparent fee disclosures
2. Low fees
3. 200+ commission-free ETFs
4. Investments can be put on auto-pilot
1. The Basic Investment Account is mainly composed of high expense ratio funds
2. $1,000 must always be in the HSA checking account
A Further HSA may be right for you if:
You are satisfied with the investment options in the pre-selected lineup and want access to a brokerage account once the $10,000 mark is reached
You are planning on making multiple transactions per calendar year
You desire an online receipt storage tool
You are also planning on spending some of those HSA dollars. Further is on our short list of the best HSAs for spenders.
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