You need to fire your employee benefits broker now. There’s no time to waste. There are imminent changes in the employee benefits industry that will impact your business, both negatively and positively, and your current broker is most likely not on top of, let alone aware of, these changes.
Your broker will not be able to assist you. Your broker doesn’t understand the changes and he or she doesn’t understand the opportunity. Your broker doesn’t think it’s their responsibility, and even if they did, they don’t have the resources to help you. You need an employee benefits advisor that understands these changes, has taken steps to mitigate the negative and leverage the positive, and has developed the tools and resources to help you. Here is what you need to know.
Ducks in a Row
The compliance burden for companies has increased dramatically in the 21st century. The number of required human resources and benefits notices and the required reporting has increased, especially in the last 5 years. Most companies are using paper forms for everything, and most companies are not compliant. There isn’t a company that I’ve met with that wasn’t out of compliance in some respect, and often in many ways.
I recently met with the president of a company that still uses a paper process and physical storage for collecting and storing federal I-9 forms which are required for verifying the identity and employment authorization of all individuals hired for employment in the United States. This information is kept in unsecure file cabinets in each of this company’s 18 locations. As time goes on these documents get discarded or become susceptible to damage.
“That’s not a problem for us. We don’t hire many foreign-born workers,” remarked the president when I asked him about the company’s process for I-9s. What he didn’t know was that a company that cannot produce the required I-9 documentation on audit may be fined up to $2,160 per I-9 for failure to comply with the requirements. It doesn’t matter if the employee ultimately was eligible. If you don’t have the required paperwork you’ll face a fine, so if you get audited you better have your ducks in a row.
Companies are increasingly facing documentation requirements like these and they need help to make sure they have their documentation in order, but what does this have to do with my employee benefits broker you might ask?
Help! I Need Somebody
Technology can ease the compliance burden and assist with the organization and storage of required documentation. In the last several years, there has been a dramatic increase in the number of online tools that simplify onboarding tasks, employee benefits enrollment and management, and compliance and reporting.
Some of these tools are proprietary, offered only by insurance carriers and payroll companies. There are, however, several independent platforms that emphasize an open architecture that some brokers are including as part of their services to their clients.
Technology is also helping in ways that may not be as obvious. For example, technology is easing the burdens for me and my staff, allowing us to focus on more complex issues that impact our clients. As late as 5 years ago, we focused a large part our time on quoting, processing applications, and resolving billing issues. Forms were faxed or sent through the US Mail. Our file cabinets were stuffed with old applications and insurance carrier brochures. Technology has automated or streamlined these processes.
The bulk of our time is now spent focused on our clients’ processes: compliance, human resources, employee benefits management. We’re focused on learning how the technology can streamline these processes, and we’re assisting our clients in the implementation of these tools. Do you have a plan to implement these tools, and, if so, who’s helping you?
DIY v. Professional
We’ve all taken on a do-it-yourself project only to discover that it was a lot more complicated than we initially thought. Most companies are do-it-yourselfers, but they don’t realize they’re navigating the world of employee benefits, human resources and compliance on their own.
This is borne out of circumstance and not by design. Companies believe their vendors have “it” covered, but payroll companies largely stick to payroll, insurance carriers and brokers are focused on product, and technology vendors focus on their tools. None of them are fiduciaries and none of them takes responsibility for putting it all together. This leaves companies responsible for developing the required expertise to navigate an ever more complex environment, and they often fall short. “If it was important I would have thought that someone would have told us about it,” presumed one company owner I spoke to recently. Don’t bet on it.
Now more than ever, companies need a strategic advisor whose sole purpose is to help companies navigate and simplify this complex environment. Who better than the employee benefits broker to step into this void to render the required advice and expertise? The employee benefits advisor has the benefit of experience across multiple companies and multiple industries. The employee benefits advisor can offer insight and best practices because of this experience, however not any old employee benefits broker will do.
Trouble with the Curve
Remember stockbrokers? They don’t exist anymore because the market and the needs of individual investors changed in the last 50 years. Mutual funds’ diversity minimized the risk to investors and technology provided investors with information so they no longer needed to depend on someone to tell them in which stocks they should invest. Technology also reduced the cost of trading, wiping out broker commissions.
These changes also gave rise to a different animal; the financial advisor whose interests were more closely aligned with those of their clients. Like the financial advisor, the employee benefits advisor is poised to step into this changing market and deliver unique value to companies, but not everyone will make the transition.
Most brokers have largely been dependent on third parties to deliver the expertise and unique value employers require. These brokers are simply salesmen for these third parties. Like the stockbrokers of the 20th century, these employee benefits brokers’ value is limited.
Baseball is a wonderful sport. Most people don’t realize that players often toil away for years in the minor leagues to master the skills necessary to compete in the major leagues. It is during this time that players are exposed to “breaking” pitches: change-ups, knuckleballs, sliders, and curve balls all of which are designed to deceive the hitter and throw off his timing. This is important because when they reach the majors, players are scouted by opposing teams so that their weaknesses can be exploited. Most cannot adapt. Most brokers have not, and will not, adapt to the market changes we’ve discussed, and like minor leaguers who can’t hit a curveball, they’ll simply washout.
Back in the day, employee benefits were boring but easy because clients didn’t seem to expect much and would often entertain other brokers on the possibility that they could get a better price. It annoyed me that clients saw me as interchangeable with other brokers or representing an insurance carrier. That kind of relationship was dysfunctional, and like all bad relationships it doesn’t have a future.
You don’t know how happy I am that the market has changed. I know brokers who think clients expecting more from them is a bad thing. Seriously? I welcome the higher expectations. The more I provide to my clients the more valuable I am to them, and the relationship becomes mutually advantageous. I’m freed up to focus on more complex issues which I’d much rather do than quoting and processing applications, and my customers benefit by receiving advice that helps them solve more complex issues.
Expensive Alternatives
Some companies let their brokers off the hook by employing a third party’s solution, such as those offered by payroll companies. These solutions tend to be very expensive. “With the price they want to charge they must all be driving Maseratis,” remarked one business owner. Yes, payroll companies are gouging you, their customer. They’re not your trusted advisor, and, no, they do not have your best interests at heart. They serve their shareholders, not you.
A few years ago, I met with a couple of representatives from a publicly traded payroll company. They boasted about the number of “C-Level” meetings they had each week. They’re high powered corporate salespeople whose job is to convince you to buy their stuff and nothing more. That’s what they get paid to do. It blew my mind how many company executives would take meetings with these guys, and it still does.
The sales guys also walk away once the “sale” has been completed, handing off implementation responsibilities to someone who is unfamiliar with your business. A large percentage of companies that have implemented onboarding and employee benefits management systems have expressed dissatisfaction with the implementation process. Too many hand-offs and not enough ownership and accountability.
We begin our implementation process by sitting down with you and your staff to lay out all the steps. A timeline is established. Responsibilities are assigned. Accountability is built-in to the process. Like an architect, I continue to be involved in the process to ensure that everything is done according to plan. This is what your trusted advisor should do.
It’s Time
You need to fire your employee benefits broker now. The employee benefits and compliance landscape is changing and your broker is most likely behind the curve, leaving you to consider more expensive options. You need an employee benefits advisor. If you’re ready to make the move, need more convincing, or would like to learn how we’re bringing exceptional value and advice to our clients call me at (952) 237-6956 or email me at mdmowski@comprehensivebenefitservices.com.