A benefits industry veteran has ideas about how to stay relevant.
These names ring a bell? Atari. Blockbuster. Myspace.
What do they all have in common? Failure to change. Regardless of current economic conditions, the one constant is the need for employers to gather advice on how to address problems within their business so they can adapt, change, and remain sustainable. Interestingly, not adapting and changing or pivoting is one of the reasons businesses fail. Many of us have heard, “change or die.”
Although everyone is aware that the only thing constant in the world is change, people resist change due to various reasons, including fear of failure or criticism, and certainly fear of the unknown.
(Related: The 10th Amendment’s Impact on Employee Benefits Today)
But, for many business leaders, benefits advisors are key to helping navigate the waters. To do this effectively over the course of their career, they need trustworthy advisors. This is what makes the brokerage and advisor industry so valuable.
Looking back at the agency/brokerage business model, it too continues to evolve and adapt to the changes that are occurring all around it. And we can expect change to continue with President-elect Biden’s new administration. But what are those key changes that have impacted and will continue to impact businesses?
Clients Business Model and Expectations
Client’s businesses are reacting to the competitive marketplace, forcing them to adapt and evolve. This in turn sets the client’s expectations very high — perhaps too high that the performance cannot be met.
Over the past several years studying the market, it seems clients would prefer the following:
- Fewer advisors handling them.
- An advisor that understands their specific business and industry.
- An advisor that understands the interrelated and interoperable components of the business (for example — benefits, compensation, human capital management, technology and regulatory environment are connected topics to one another).
- An advisor that is looking to deliver to the client solutions that are faster than what they receive today, the experience was easier for the client to understand and put into practice and the outcome was better.
Regulatory Environment
Who could forget FASB 106, Non-Discrimination Testing rules in Cafeteria Section 125 Plans, or the Affordable Care Act? The list could go on and on.
These are new rules introduced by new presidential administrations. We should expect this trend to continue with a new incoming administration. The actions required from these new regulations are positive to the business in some instances and harmful in others.
The point here is that the rules continue to change at both the federal and state level. These laws are often complex and may lack clarity that advising the client requires thoughtful research and study.
Technology
Thirty years ago, if an advisor specialized in employee benefits, he or she could earn a comfortable living providing benefits to their client’s employees. Back then, the advisor would put together a request for proposal (RFP) and drop in mail, as in the United States Postal Service.
Today, the RFP process is largely electronic. Today, employees and individuals can shop for insurance products on-line. We also see more and more technology companies entering or attempting to enter the advisor space.
The enrollment process into benefit plans is also largely electronic. For employees, the plans they can select, personal information, contribution amounts, participating family members — can all be changed and updated electronically, even on a mobile phone.
For employers, EFT payments and ACH’s are largely a non-issue anymore, making electronic commerce fairly standard.
The key point here is that technology will continue to force processes to change, ultimately leading to faster decision making in the future.
Consolidation
For the brokerage agency, there are multiple layers to this conversation:
- Competitors continue to consolidate. By growing, they can provide more resources to clients than they could as an independent or individual agency.
- The insurance market also continues to consolidate which is leaving fewer choices for advisors.
- Other key industries supplying products and services to the agency are also consolidating. We see this with pharmacy benefit management (PBM) companies, ancillary/worksite companies, and reinsurance companies, just to name a few.
- Clients may be acquired, leaving the agency at risk of losing revenue.
The current value proposition advisors often share is that they bring a strategy or program that can save money for clients, or they bring a better program for the employees, or as an agency they can bring a total package of risk mitigation strategies since they consult on both property and casualty and employees’ benefits.
While this value proposition is not wrong and will resonate with a client, there is an alternative value proposition worth considering. The advisor’s definition of success with their client should not be built around measures that are time-sensitive.
For example, an advisor can save their client money for this upcoming year. This is because these metrics have a defined start and stop date, such as the fiscal year. Instead, the role of the advisor is to introduce strategies and tactics that result in their client having a sustainable business.
The actions and activities the advisor takes and the resources they bring should “Lead2Healthier” assets, business, and people and culture.
Advisors
The one constant this industry has faced is change.
Advisors should continue to embrace it, so they don’t become Polaroid.
But keep in mind, it is an extremely valued industry to so many employers who rely on their advisors. It truly is one of those industry’s that can and does perform well regardless of the macro forces that are impacting the economy — positively or negatively. Because what an advisor does everyday impacts people and that is truly a noble profession.
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Perry Braun is the executive director of Benefit Advisors Network (BAN) — a national network of independent employee benefits brokerage and consulting companies.