History has proven many times over that things change. It’s inevitable. And yet, most of the time we do not see it coming. But there are shifts happening right now in the benefits advising world that will change how we play the game as brokers.
Many of us remember when Blockbuster was the place to go for your latest and oldest video selections. Every weekend, customers lined up to pick out their rentals, especially when the retail chain came out with its unlimited video option. Then Netflix entered and changed the entire game. We no longer needed Blockbuster.
For years, brokers were compensated for their consulting and servicing time in commissions received from enrolling health plan participants. Some of us are starting to charge fees instead of commissions, more for transparency than anything. This way, our employer clients know what they are paying their broker.
But I think there is much more change on the horizon. Netflix saw a sea change coming when the company decided to separate movie streaming and DVD rentals. The world initially balked, but over time, that gamble paid off.
The bright light in the benefits world is that consulting and administration are starting to separate, much like the movie-rental business did. Our employer clients have been taught how to shop and purchase their benefits programs from the insurance broker community. Replacing commissions with fees was a fair move to show what we are being paid. But now, how will clients react to the fee model being separated for the first time?
Payroll companies are becoming more aggressive about essentially stealing our commissions by requesting to change the broker of record. They streamline benefits and payroll into one system, eliminating confusion and duplicated work for HR and operations. Seems like a no-brainer. What many CEOs, CFOs and CHROs eventually find out is that they lose the consulting side of things.
For large employers, this has been going on for years. But this arrangement will be new to small and midsize employers that haven’t really seen the change happen while their healthcare premiums keep rising. In some cases, employers think we are pocketing the money — but this is only a perception – and more reason to remove our commissions from premiums for transparency purposes.
Therefore, the overarching lesson here is that it’s far more important to show the value you bring to the table as a consultant than as a benefits administrator. They are completely distinct roles we play in our practice, both of which should be compensated.
With the current inflation rate and challenging economy, brokers will have a hard time staying in business collecting the same fee for benefits administration and giving our advice away for free just to maintain business. We are paid a flat rate per employee enrolled, in most cases, on smaller groups under 100 employees, mainly to service the account.
If you read your broker contract, it most likely will not even say we are paid for consulting, but rather to assist the company with administering the benefit program and pulling some reports for the C-Suite.
As we grind our way through another open-enrollment season, we need to think about the time spent consulting vs. administering benefits to employees of the clients we serve. There are really two sides of the business we serve. We should be compensated for them separately like any other business expense would be to the client.