I experienced something in the last few days that embarrassed me as a Benefits Advisor. As much as there are many credible professionals within the benefits business, there are more than our fair share of brokers/advisors that are greedy, lazy and bring no value to their clients. Like in any industry, there will always be a few bad eggs. So what should the role of the benefits advisor be?
Last week, I was on a call with a potential client that I had never met before. After the client had prefaced that they were substantially pleased with their current provider, we started to discuss what could be better. What started to unravel through the discussion was unbelievable. They were getting completely screwed over on their fees, they had huge unrealized liability, and their plan design didn’t serve the company or the employees at all. Then they said in the end that they really didn’t get much value from their broker and preferred to deal with their TPA.
Was the TPA as much to blame as the broker? They probably were. One of the features of a TPA is to mitigate risk and contain costs. Clearly, they contributed to the client’s problem. In the end, the broker was making too much money, giving libellous advice and providing no value.
The Roles of the Benefit Advisor
This situation got me thinking about what should be the minimum expected role of the Benefit Advisor. This is what I came up with:
The role of the benefits advisor should be the client representative between the client and the TPA or insurance carrier. Many benefit advisors have retention bonuses, volume bonuses and business development bonuses with certain insurance carriers. How can they be an advocate for your business when they’re getting incentivized by an insurance carrier not to move you?
To address where the plan dollars are being spent and what alternative solutions may be viable or need to be discussed. They should present you with a concise report that outlines many relevant details. To maximize utilization and put dollars into the plan where they’re being spent, you need to identify this in an annual/quarterly report.
To ensure that the clients’ goals are being served or met by the current benefit plan. If client objectives change, discuss some possible modifications or alternative plan designs. If you’re looking at attracting and retaining the best staff or containing costs, this needs to be considered when setting up a benefits plan.
Keep the client current:
The legislation is constantly changing, and we need to inform of possible consequences before they happen and make suggestions to combat the potential problems. As an example, the OHIP Plus program and then its revised counterpart can have significant effects upon the cost of a plan. Plan administrators need to be made aware of all the implications.
To ensure that plans, processes are communicated to plan administrators and employees. This is important for cutting costs, best practices, employee retention and utilization. If a plan doesn’t get used because employees don’t understand how it works then the entire program fails.
If your advisor/broker won’t tell you what they make, then there’s probably a reason for it. Your company’s Target Loss Ratio is usually a strong indicator of how much your broker is making on the deal if they won’t disclose it to you themselves. Ask your advisor how much they’re getting paid.
Funding model options:
Many different models should be discussed (Insured, ASO, HSSA, Retention Accounting). You need to know what the pros and cons of all options so you can make an informed decision. Often clients are pushed into an insured model because the client makes the most amount of money. Discover what the different funding options are here.
On a service front, discuss your expectations and how they can be met. What are your competitors providing in the way of benefit plans and overall compensation? Are you ahead of the competition, at the mean average or falling below the mark? Understanding where you sit on the compensation scale will help you understand why you’re unable to attract talent.
Proactively dealing with renewals should be discussed before you’re facing a potential 30% increase. Quarterly or semi-annual reports will help to predict better where your renewals will likely come in at. Unfortunately, all too often, this conversation is left too late, and the renewal catches the client completely off-guard.
Understanding Government programs and how they may integrate with your benefit plan
Government programs can save a private benefit plan thousands of dollars. The challenge is understanding what programs exist, who is eligible and what are the real costs to the company (time, education, coordination, financial and administration). Here is a list of Government Programs that can be coordinated with your private benefit plan.
Manage your clients’ risk:
Ensure your client is not exposed. Putting your client into an ASO versus Insured plan without making the appropriate plan design changes, stop-loss provisions or not addressing other critical plan considerations can leave your client exposed without them even realizing it.
Once again, this isn’t directed at the broker/advisors who do a commendable job for their clients but instead the few who take advantage of their clients’ trust and inexperience in the benefits world. Hopefully, with some probing questions, we will hold our “competition “ to a higher standard and rid our industry of those who give the rest of the benefits advisors a bad name.
The Role of the Benefit Advisor
Chris Coulter is the Founder and President of The Finish Line Group. He works with business owners to leverage their businesses to increase their wealth, reduce corporate and personal taxes, create viable succession strategies, enable employee retention strategies and allow them to exit their businesses on their terms.
Chris’ passion for what he does evolve from the mistakes he made in his first business; by not diversifying his risk and not utilizing a lot of the opportunities within his business to create significant wealth. Chris found out the difficult way and now educates business owners on how to avoid many of his former oversights and ultimately control where their finish line ends.