In my previous BLOG I described the employee benefits broker for the 21st century. In this BLOG I’ll describe in detail what you should look for and expect from a broker, your employee benefits Adviser.
You’re hiring an Adviser –So Ask the Hard Questions
You’re not purchasing insurance. You’re hiring an employee benefits adviser, not a salesperson. When you make that shift in perception your perspective will change. I recently signed a new client, Marc, the CFO of a budding medical technology company. During the company’s last renewal, the previous broker put all of Marc’s employees into individual health insurance policies because the premiums were less expensive than a group health plan. It seemed logical to Marc until he learned the IRS would not allow either the company or its employees to pay for these individual policies pre-tax as they could with a group health plan.
“My broker didn’t tell me that. I wouldn’t have allowed this if I had known there was a risk. I just assumed that the person we were dealing with knew what he was doing. You expect that when you hire someone,” Marc lamented to me. Marc’s expectation was correct but his assumption was wrong. Let’s start there.
The broker was focused solely on price. He believed his job was just to recommend the least costly option. The broker didn’t focus on the whole picture either because he had no concept or he simply operated in this limited role. He didn’t advise Marc about the risks, most likely because he did not understand them or relied on the inaccurate advice of a third party. It’s a sad fact that Marc’s experience is not unusual. The vast majority of brokers have the same very narrow perspective.
Jack of All Trades or Specialist
Almost all insurance agencies, and, therefore, most brokers operate under an antiquated 20th century model. That model has the insurance companies at the center, not you. The current regulatory structure also serves this old insurance model. This means your interests are secondary to those of the insurance companies. In contrast, the 21st century employee benefits broker’s business has you at the center.
If they’re a general agency they’re not focused on your needs. A general agency sells to all comers, including individuals, Medicare eligibles, small, medium and large groups, and offers an array of insurance “products.” They think they’re focused on your “insurance needs,” but what that really means is they’re in the business of selling insurance. They’re a jack of all trades but a master of nothing. They might have different “specialists” within their company but these “specialists” are product focused, specializing in different lines of business. The general agent is simply an extension of the insurance company. Unfortunately, for you, these brokers currently represent about 98% of the marketplace.
In contrast, the 21st century employee benefits Adviser specializes in employee benefits, nothing else. No other line of insurance is as heavily regulated as employee benefits. Tax and compliance complexity necessitates specialization. The Affordable Care Act (ACA) added fuel to the fire. Your Adviser doesn’t have to be a CPA or an attorney, though it wouldn’t hurt if they were. They just need to contextualize the insurance in this environment. There is an added benefit to this specialization. By focusing solely on employee benefits, the employee benefits Adviser gains valuable expertise, and you, not the insurance companies, are the greatest benefactor of this expertise.
How do you know if a broker specializes in employee benefits and has the necessary skills? The information you need is readily available on-line. Check out their web-site. A broker’s web-site will tell you if they are focused on selling insurance product or focused on your needs. Is their content focused on the different lines of business or on providing you with useful knowledge and information? Do they offer ACA and compliance advice? Do they offer webinars on relevant topics?
There are no education requirements for becoming a licensed insurance agent. You don’t need a high school degree, let alone a college degree, so there is a great range of ability and expertise in the marketplace.
Check out their profile on LinkedIn. Focus on a couple of key areas: client testimonials and published content. Are testimonials from business clients? Client testimonials, and references, are the best indicator of performance. Do they publish their own relevant content? Someone who publishes their own content, even just on LinkedIn, demonstrates a much deeper understanding of their subject matter than someone who simply shares an article or another post. It takes a lot of thought and hard work to write your own content. This tells you a lot about your potential employee benefits Adviser.
Breadth of Services
You should focus on those employee benefits brokers that provide extensive services, including payroll, third party administration and technology tools that help with onboarding and compliance. There are a vast array of technology tools that can simplify managing human resources and employee benefits. Your trusted employee benefits Adviser needs to not only have extensive knowledge of these tools, but optimally should be offering them to you as part of their services.
An employee benefits Adviser’s decision to offer these tools and services is important. It demonstrates a broader understanding of the employee benefits management process. It also shows a willingness to address concerns that may have little or nothing to do with the insurance products.
As equally important is how their services are delivered and managed. . Do they have a system and well-established service levels for responding to client inquiries and service requests? Do they use a customer relationship management tool to track open issues and communications with their clients? It is important to note, however, that technology should enhance and improve their services, and not be used as a cheap replacement for them.
Beware of Technology without the Advice
Not everything can be automated. Have you ever called a company for assistance with what you thought was a simple question only to be greeted by a seemingly endless automated phone system, and when you finally do get to someone they don’t know the answer or they refer you to a different department? We’ve all experienced this model of customer service. I’ve never known anyone who likes it.
A number of heavily financed startups have recently entered the employee benefits marketplace. The model of these companies is the same: employ technology to automate as much of the employee benefits management process, just like payroll companies have automated payroll. They think that if they throw technology at it and put a sexy startup name on it they’ll attract clients. Sure they’ll get business, but you’ll get an inferior product.
Doing this makes these companies more “profitable” but at your expense. One insurance carrier executive flat out told me they were considering cutting the compensation they pay one of these companies because the carrier has to do so much more work for their clients; work that is usually done by a broker. “They don’t know what they’re doing,” said the executive.
This model doesn’t add any value to your business, and, on the contrary, it may cost you. By substituting a combination of technology and lower paid inexperienced workers for highly skilled employee benefits professionals, they’re taking value from you and giving it to their shareholders. What they don’t tell you is that not every interaction can be replaced by technology. You’ll eventually have to pay someone for the advice and guidance you’re giving up.
The technology of these companies is also not unique. We offer the exact same tools, automation and convenience to our clients without sacrificing the advice on matters the technology can’t address. That last part is most important to you. Technology can’t help you when you need specific advice. You don’t simply want access to a library of relevant forms and information because you don’t have time to do extensive research. You want access to an expert who can provide advice tailored to your specific situation.
Wouldn’t it be better if you could have both? The 21st century employee benefits Adviser flies in the face of companies that are trying to commoditize the employee benefits management experience. Yes, there are things that can be automated, but wouldn’t you rather have your cake and eat it too?
Get Some Cake
Does all of this sound good to you? If you want to learn more about the trusted employee benefits Adviser call me at (952) 237-6956 or e-mail me at mdmowski@comprehensivebenefitservices.com.