It’s no secret in the employee benefits industry that brokers and consultants perform a wide range of tasks, many of which vary from broker to broker, and many of which might be right for your company while others might not.
For example, one consultant’s services may check all the boxes for one employer while checking none for another. While there are certain things like benefits compliance advice that are black-and-white, the overall broker service model is often very much up for discussion.
This lack of standardization in the broker industry often leads to communication breakdowns that can strain or even end the broker-client relationship. The breakdown can be simple: a broker didn’t send an enrollment spreadsheet to a carrier because she honestly thought the client or the client’s ben admin provider would do it.
The breakdown can also be more complex: a broker feels blindsided by a client who omitted key information about their company’s growth plans during strategic planning, which resulted in issues with the insurance plans and rates halfway through the following plan year. In both cases misalignment in expectations and lack of communication caused different yet serious situations that put the broker-client relationship at risk.
The easiest way to limit miscommunications with your broker is to have a signed service agreement where both parties align on the type and scope of services provided. If you don’t have that today, get one in place ASAP
Beyond that, I believe there are also five things on which both parties should align that can help create and maintain a healthy employer/broker relationship:
1. Your broker should be an architect, not a salesperson. In many cases you can find insurance online by yourself now if you want to, and you know basic math so you can easily compare plan costs. You don’t really need a broker’s help in simply getting plans or comparing costs.
That said, you do need your broker’s help building the blueprint and understanding what combination of partners and services (insurance, technology, data, regulation) form the foundation of an effective benefits plan. If you feel you’re not getting that type of support right now, then start the conversation and clarify your expectations.
2. Your HR technology should be part of the benefits strategy conversation. You have made certain decisions about HR technology that support your business and you may or may not have included your broker in those decisions.
Regardless of his or her involvement in the evaluation process, your broker should care about your technology ecosystem by accounting for it early in your benefits strategy conversations to make sure the benefits strategy is supported by your specific set of systems and tools.
3. Low rates aren’t everything, especially with ancillary benefits. For a long time your broker proved his or her worth by hammering carriers and getting you the absolute lowest-priced insurance plan. Remember that fantastic meeting with your CFO to present the lowest-cost recommendations last year?
Now you’re ripping your hair out because that low-cost carrier doesn’t accept an EDI feed from your enrollment system, and the monthly bills are never right. Take the time to evaluate potential carriers’ technological and administrative capabilities. Sometimes that’s worth paying an extra percentage point or two on ancillary benefits to give yourself administrative time back, and your broker should help you understand these non-financial considerations.
4. A broker is only as good as the information you give him or her. Some of the best brokers out there are proactive and do everything they can to learn about your business, company goals, and employee population early so they can make the right recommendations. However your broker also relies on you to provide that information timely and accurately.
Therefore if your company plans to hire significantly on the other side of the country in 6 months, tell your broker! If you are even debating converting a large group of part-timers to full-time in the next 12 months, tell your broker! Sometimes you can’t share everything, but anything you can share will - or should, at least - help your broker make better recommendations.
5. Wherever possible, simplicity is usually best. Every business operates with financial and administrative constraints that impact the feasibility of this one, but sometimes it is useful to remember K.I.S.S: Keep it Simple, Stupid. This goes for strategy, plan design, carrier selection, employee communications, and data management & transmission.
If it feels too complicated, it probably is, and this should be a sanity check for you throughout strategic planning. An effective broker does not create overly complex situations for her clients; rather she will help you seek simplicity within your constraints, or at the very least help to smooth out unavoidable complexity if needed.
Again, every employer/broker relationship has different factors that can influence its outcome. That said, I strongly believe that in today’s environment it is critical that both employer and broker use these guidelines above to keep each other honest and cultivate a healthy partnership for success.