Your employee benefits budget is one of your businesses largest expenses. So who do you entrust to manage and control this large, complex and growing expense? An insurance agent that takes you out to play golf a couple of times a year? Some broker from a regional employee benefits firm who only pays attention to you and your needs at renewal time? Better yet, some new online software company that promises to streamline and automate your employee benefits process while keeping you in compliance and your employees happy by using an 800 call in number for HR support?
Whether evaluating your current insurance relationships, shopping for a new employee benefits broker or dealing with the daily marketing and sales barrage your company is subject to, some pretty specific knowledge is required on your part to cut through the background noise and hire the right people to assist you and your company.
First, what’s the difference between an agent, broker, employee benefits advisor or consultant? With the advent of Health Care Reform, politicians, major publications and of course the talking heads on Cable are always lumping agents, brokers, employee benefits advisors and consultants together as interchangeable and merely middlemen making commission connecting employers with insurance carriers. Clearly there is a significant lack of knowledge about what an employee benefits professional should be doing for the employers they represent.
The terms agent, broker, employee benefits advisor or consultant mean very different things when used correctly. Captive Agents represent one insurance company. Independent agents may represent many carriers but typically have an incentive to place the majority of business with one or two carriers. For example, an agent may represent a particular life insurance carrier and have their office located within that carrier’s local sales office. While that agent may sell various group medical carriers, at the end of the day the agent needs to sell that carriers life insurance.
An employee benefits broker has the duty to look at each client’s particular situation and then go out into the market, both domestically and internationally, to secure the appropriate coverage. They are not bound to any one carrier. Employee benefits advisors and consultants go the extra distance and use sophisticated analysis and years of specific knowledge to understand their client’s particular employee benefits needs, recommend and implement those solutions and monitor the entire employee benefits process providing the client ongoing metrics. They have knowledge in many disciplines: insurance, employee benefits law, compliance, human resources, technology, health care reform and finance.
Let’s get out of the textbook meaning of these terms and back into the real world. These labels mean nothing on the street. With thirty years in the business I can unequivocally tell you that when any insurance person or firm markets themselves they will march themselves up the label chain to make themselves sound like something they are not. The vast majority are simply sales driven and 
transactional in nature. They are not consultative and proactive no matter what their Web site proclaims. Any business owner, CFO or HR professional intuitively knows this but probably didn’t understand what services, support, and technology they should have been getting. Your “insurance person” probably shows up once a year, takes a census and then spits out the ubiquitous Excel spreadsheet with the same four insurance carriers. The broker, who insisted they will watch over your organization, only shows up at renewal. During the year, their trusty account manager handles all of the daily transactions. Sound familiar?
How do you see through all of the labels, sales, and marketing hype and find an insurance professional that can effectively help your organization manage and control costs of one of your largest expenses? It’s much easier when you are armed with the knowledge of what an employee benefits professional and their team should be doing for you, your employees and your organization each and every day.
To acquire this knowledge you can start by looking at what other employers look for in an employee benefits broker. Every year we put out our Broker Services Survey. Over 5,000 employers respond indicating what they look for in an employee benefits professional. You‘ll probably be astounded when you see what you’re not getting from your current relationships. Click here to request a free copy (No, we won’t add you to any annoying email marketing list).
Now that you know what other employers look for you’ll be able to ask the right questions during the sales process. You know, that’s when all of these firms march into your office and promise you the sun, the moon, and the stars. They put up a lovely Power Point presentation with lots of moving images and graphics. They provide a large binder to show you all the work that they did. But are these polished professionals merely the sales team? How is this broker sitting in front of you compensated? Are they compensated primarily as hunters to bring in new business? If so, do you really think they are motivated to “farm” and provide you with ongoing service and consultation or are they going resume the hunt and hand you off like a hot potato to the account manager once you sign on the dotted line? How is the brokerage firm compensated? Do they work on a commission or flat fee basis? It makes a big difference in terms of long-term cost to your organization and aligning interests between the brokerage firm and your organization. Just sayin’, you might want to ask.
Lest anyone think I am disparaging an entire industry, there are many talented, dedicated, caring and professional employee benefits people throughout the country working independently and inside of employee benefit firms. Understanding what benefits professionals and their team should be doing for you and your organization will allow you to cut through the sales hype and separate the true professionals from those merely peddling policies.