“Hey Bud, what’s your problem!?”
- Sean Penn as Jeff Spicoli in the motion picture Fast Times at Ridgemont High (1982)
I follow Zenefits on LinkedIn because I want to know what one of the most talked about companies in the employee benefits business is up to. The other day a Zenefits BLOG showed up in my newsfeed titled, “Ask Bud, Your Trusted Benefits Advisor – How Do Brokers Choose Insurance Plans.”
I had an immediate viscerally negative reaction to this seemingly innocuous post that I had to take a few days to process my emotions. There were several problems I had with the Zenefits Ask Bud BLOG.
The Benefits Broker Stereotype
Let’s start with the title: How Do Brokers Choose Insurance Plans. First of all, brokers do not choose insurance plans. Clients do. The job of the employee benefits broker is to provide their clients with as much information as they need to make an informed decision. It’s kind of patronizing to clients and prospects to believe that you’re going to choose the plan for them.
Clients suspect, and rightfully so, that there may be more than meets the eye to any broker’s recommendations. Clients want full disclosure. Armed with the right information anyone can make a choice that fits their needs.
Helping clients to choose an insurance plan is the lowest common denominator of what brokers can do. It plays into the stereotype of the benefits broker as merely a “shopper”- the old gregarious guy who fell into the job at the end of his career. It’s a common perception among the ill-informed, including Zenefits.
Companies are looking for far more from their employee benefits broker than how to choose an insurance plan. If that’s all that an employee benefits broker brought to the table, then most companies probably would not use them, and, yes, technology could easily replace them.
I’ll admit that there are a lot of employee benefits brokers, and, by that, I mean most, who see shopping as their job while leaving everything else to chance, but that’s not me. I’m different. So very different.
The Carrier-Centric Model
“People on ‘ludes should not drive.”
- Sean Penn as Jeff Spicoli in the motion picture Fast Times at Ridgemont High (1982)
In his BLOG, Bud adds, “I also recommend offering a menu of ancillary plans too.” Gnarly! So does every benefits broker. How special?! The problem is that Bud is product and carrier focused. This makes him, and all of the brokers like him, interchangeable commodities. In contrast, employee benefits brokers who win and consistently retain business focus on the needs of their clients, not those of the carriers.
I recently met with one of my clients, a franchisee with 17 locations in 3 states to discuss their upcoming renewal. We spent the first five minutes talking about the insurance. During the rest of the meeting we talked about their strategy for complying with the Affordable Care Act. I then showed them how the tools we’re providing them, and to all of our clients, reduce administrative costs and mitigate compliance risk. “This will make our lives so much easier,” my client remarked.
Clients want expertise well beyond “shopping.” They’re looking for help on compliance matters, human resources, wellness, HR administration, and benefits technology. They want their employee benefits broker to know more than just the insurance products.
The Trusted Advisor
“Surfing’s not a sport, it’s a way of life, it’s no hobby. It’s a way of looking at that wave and saying, “Hey Bud, let’s party!”
- Sean Penn as Jeff Spicoli in the motion picture Fast Times at Ridgemont High (1982)
Clients are looking for an advisor. The term “trusted advisor” gets thrown around a lot but employee benefits brokers that are considered “trusted advisors” by their clients are rare. The reason is that few employee benefits brokers do the things to earn the status of “trusted advisor” in the hearts and minds of their clients. Here is what your employee benefits broker should bring to the table.
A trusted employee benefits advisor treats their client like a commander-in-chief and acts like a member of the cabinet. Clients want to be educated so they can make informed decisions. Without all of the necessary information, a client could make the wrong decision. I brought on a new client last year that had followed a recommendation of a broker to disband their group which was facing a 35% increase and move all their employees into individual plans. To the client, the arrangement made sense because the cost of individual plans was significantly less than group coverage in their market.
What the client didn’t know was that the pre-tax treatment of such arrangements was the subject of much debate, that the IRS had yet to provide specific guidance, that it was possible the IRS would issue a definitive ruling on such arrangements, and that such a ruling could have negative consequences. The IRS subsequently issued a ruling that denied the pre-tax treatment of such arrangements. The broker’s failure to fully disclose all relevant information put the company in a position where it would face significant fines if it continued with the arrangement.
Employee benefits is a highly regulated industry. In order to rise to the status of “trusted advisor” an employee benefits broker needs to broaden their knowledge beyond insurance to include tax, compliance and human resources. This is the world in which you operate. A broker isn’t doing you much good if they cannot understand how their advice fits into that context. The broker in the previous example had relied on the inaccurate advice of a third party administrator who stood to gain from the arrangement. Their advice was biased. The broker was focused only on the insurance and not on the bigger picture.
A “trusted advisor” anticipates their client’s needs, giving them what they need even if they don’t know they need it yet. This can take any number of forms: educating clients about new and changing regulations, providing them with compliance tools, and helping to ease their administrative burdens are but a few ways a trusted advisor can help their clients.
A whole variety of regulations are placing an ever greater administrative and compliance burden on companies. Several years ago we began exploring the market for software tools that would ease this burden. As these tools have developed, we have made investments in ones that would benefit our clients. Our clients didn’t ask us for these tools. Most of them don’t even know they exist. We anticipated their need. How about a BLOG with information that will actually be helpful to a client?
Probably the hardest thing for a “trusted advisor” to do is to give their clients “tough love.” It’s human nature to want to please you customers, but sometimes you have to tell your clients things they don’t want to hear. Things sometimes, no doubt, that contradict what they’ve been told by another very convincing broker or salesperson. It’s the job of an employee benefits broker to make sure their clients are grounded in reality.
The broker in the earlier example clearly was afraid the employer would fire him if he didn’t come up with a solution to the 35% increase. The irony is he got fired for everything but that.
A Trusted Advisor Isn’t Made in a CE Class
Bud’s bio says that “he’s teaching new Zenefits employees at Zenefits U”, no less, about how to become a “trusted benefits advisor.” It’s funny but it’s also insulting. This is Zenefits attempt to make it look like their salespeople are interchangeable with an experienced knowledgeable employee benefits advisor. They’re not.
Like Rome, a “trusted advisor” isn’t made in one day, and you aren’t a “trusted advisor” simply because you call yourself one. You can’t fake being a “trusted advisor.” Clients deserve someone who knows their stuff. A good advisor, like a good attorney or CPA is well-educated, and has learned their craft over a period of time.
What you need to know is that companies like Zenefits don’t hire seasoned experienced benefits professionals because they would have to pay them significantly more than an entry level person new to the insurance industry. That would eat into their profits, and that wouldn’t sit well with their investors.
Guess who loses? You. You don’t get a trusted advisor. You get a salesperson hell bent on selling you their solution, not someone focused on your needs. About a year ago I got a call from a representative of ADP who asked me to meet with some of their local management to talk about “partnering” with them. I make these calls myself because as a “trusted advisor” I’m often asked by my clients to make recommendations of other professionals who might help them, but I rarely receive such calls myself.
I had a few interactions with them and each time I waited for them to ask me a question about my business, any question. They never did. They had their sales pitches down pat and they said things like “We have 10 appointments a week in the C-suite.” The focus was on them and nothing but them. It should have been obvious to anyone, but they were oblivious. During the third and final interaction I finally asked, “What do you do when your client says “that’s too expensive?” “Oh, you don’t focus on that. We’ll take care of that,” one of them replied. “That won’t work,” I responded. “You see; my job is to find solutions that work for my client. This is what my clients look for me to do.” I never heard from them again. It was all about them.
Zenefits is marching down a similar path. Churn and burn. A frequent lament I hear from clients who use ADP, PayChex and similar services is “every month there’s a new account manager. I can’t keep track of them.” No one considers them their “trusted advisor.”
With that said, I’ll leave Bud with a final scene from Fast Times at Ridgemont High:
Jeff Spicoli: “What Jefferson was saying was, Hey! You know, we left this England place ’cause it was bogus; so if we don’t get some cool rules ourselves – pronto – we’ll just be bogus too! Get it?”
Mr. Hand: “Very close, Jeff. I think I’ve made my point with you tonight.”
Jeff Spicoli: “Do you have a guy like me in class every year? You know, a guy who you make an example of?”
Mr. Hand: “You’ll find out next year.”
Jeff Spicoli: “No way!” As soon as I cruise history, I’m not coming near your side of the building.”
Mr. Hand: “Cruise history?”
Jeff Spicoli: “Soon as I pass your class.”
Mr. Hand: “Ooh. If you pass.”
Jeff Spicoli: “You’re gonna flunk me?”
Mr. Hand: “Don’t worry, Spicoli. You’ll probably squeak by.”
Jeff Spicoli: “Yeah! Aloha, Mr. Hand.”
Mr. Hand: “Aloha, Spicoli.”
Yeah. Aloha, Bud. If you’re looking for an employee benefits broker that’s a trusted advisor email me at mdmowski@comprehensivebenefitservices.com or call me at (952) 237-6956.