In these days of increasing reliance on electronic communication and high-tech Internet applications, in-person meetings have never been more important for Darrell Phillips. By holding regular face-to-face meetings with the 4,000 employees at his 41 501(c)(3) and governmental hospital plan clients across the state of Kansas, Phillips' mission is three-fold: 1) Build trust with the employer; 2) Serve the purpose of the programs by helping employees take advantage of their benefits; and 3) Let employees know they have access to a resource who truly cares about them.
"It's fantastic - the relationships we build as a result of that are superb," says Phillips, president of DPI Benefits in Manhattan, Kan.
The philosophy is no lip service, either. When nearly two-thirds of the staff at Kiowa County Memorial Hospital lost their homes to an F5 tornado a few years ago, Phillips and his employees at DPI made the more than 200-mile trip from Manhattan to Greensburg to help.
"DPI was on the scene immediately looking at what could be done to help us," says Hospital Administrator Mary Sweet. "They made monetary contributions to aid employees and looked at our benefits to see if there was any assistance needed."
The hands-on approach clearly pays off for the firm. Annual recurring sales revenue at DPI, which was founded in 2004, has nearly doubled in the last three years - from over $500,000 in 2008 to over $900,000 in 2010. Phillips expects to finish 2011 somewhere in the $1.1 million range.
He attributes the success to his commitment to outstanding customer service through DPI's "Total Benefit Management" advisery services that cover a client's health, voluntary and retirement needs.
This client-focused, full-service business model led to a 100% retention rate in 2010, and makes EBA proud to call Phillips our 2011 Employee Benefit Adviser of the Year.
Service first
A native of Indianapolis, Phillips moved to Manhattan in 2004. He was struck by the politeness and sincerity of the people as he traveled the heavily agricultural and rural regions of Kansas. "I was immediately taken by that," he says.
The temperament of the people, combined with the fact that Phillips found immediate success in serving the "dramatically underserved" hospital marketplace, made for a phenomenal growth opportunity in a block of business that had previously seen two years of declining sales. "We had great success right from the outset," Phillips recalls.
The in-person meetings play a huge roll in that success, he adds. He feels the most important aspect of the employee benefits business is trust - people must see and get to know the people who are selling and advising them on their benefits in order to trust them.
"I want these employers to trust that not only are we going to bring them good prices and products but also trust that we will be there communicating these benefits to their employees," says Phillips. "We will be carrying the banner for that employer. They commit a tremendous amount of money they commit to these programs, and we want them to know we're there supporting that."
Roger John, chief executive of the Great Plains Health Alliance and past chairperson of the Kansas Hospital Association, has 20 hospitals that work with Phillips and DPI, and each experience regular meetings. "We're never left in the lurch. We feel like he works very well with the employees and makes sure that their needs are met. So that's important to us," says John.
The Great Plains Health Alliance receives health, voluntary and retirement services from DPI. "Darrell just spends a lot of time making sure that his customers are treated fairly and that he answers their questions and I think that's important," says John. "He and his staff have an attitude of service, and that's very important."
Phillips and his staff bring laptops to prearranged client appointments, sometimes meeting with clients every month simply to educate employees and answer any questions they may have about their plans.
"After we started demonstrating to these clients that they were in fact going to be taken care of, then we started getting additional business opportunities. They would open up and allow me to look at other things," says Phillips.
Once he's sure a client is receiving adequate customer service, the next priority is to communicate the whole spectrum of benefits available to them. "These are small rural hospitals with strained budgets, and having to manage multiple broker and/or vendor relationships is a challenge for anybody, let alone somebody that's wearing three or four hats," says Phillips. "So my proposition was, 'Let me handle that for you, let me do that.'"
Finding a niche
The youngest of three sons raised by blue-collar parents in Indianapolis, Phillips never thought of entering the employee benefits business. He married his junior high sweetheart, Carmen, at age 18 and took a job as a welder. For the first six years of their marriage, the couple was content with Phillips' career path and happy in their lifestyle of water skiing and fishing during their free time.
It wasn't until driving to work one morning soon after he found out his wife was pregnant with their eldest daughter, Natalie, that Phillips began to rethink things. He pulled up next to a man who was about his same age - except that man was dressed in professional clothing and driving a nicer car.
"With Carmen's pregnancy, it dawned on me that it was time to grow up a little bit: 'You need to find a career that will allow you to make the kind of money you need to support your family, to drive a nice car and wear a suit and tie to work. You need to set a better example for your new baby,'" he says. "From that moment on, I knew I could no longer be a water skier who happened to also weld for a living."
In 1982, as part of his new life plan, Phillips called his father looking for a life insurance agent so that he could buy some coverage. Through the agent, he found a job with a now-defunct company, Life of Virginia, where he remained for more than a decade and rose to the rank of sales manager.
"I never really intended to be in the insurance or investment business," says Phillips. "It just kind of happened."
When a former employee called with a job opportunity at VASA Brougher/Seaboard Life (USA) in 1992, Phillips joined the medical stop-loss MGU as the director of marketing in charge of launching Seaboard Life's fully insured products. He remained there for five years until the company was sold.
He then joined CUNA Mutual Group, where he served as division manager, members financial services, and recruited, trained and supervised more than 20 stockbrokers working in credit unions.
From there, Phillips entered the hospital market in 2002 as vice president for business development and medical practice manager for a firm specializing in the field. He moved to Kansas two years later when a company partner located in Manhattan retired - founding DPI in the process - and served as an independent contractor for the company until going independent with DPI on April 2, 2008.
Now, "business is better than ever" with staff members Robin Norris, client service manager, and Laura Laughlin, assistant manager, there to provide support along with David Bucholtz, senior account executive, and account executives Jason Yoxall and Phillips' son, John. In addition to being married to Phillips for 34 years and the mother of three (youngest daughter Little Carmen is a sophomore at Kansas State), Carmen Phillips has also worked for DPI for the last seven years.
"They're a vital part of our business," says Phillips, who also credits his Christian faith as contributing to the firm's success.
Voluntary conversion
Also a vital part of the DPI business structure is voluntary benefits. Term life, vision, cancer, accident, heart and stroke, and critical illness sales account for $650,000 in annual premium covering 3,400 lives.
It wasn't always that way, though. When Phillips first entered the group benefits business he was skeptical that voluntary products were in the best interest of the buyer. "I didn't believe in them," he says.
Then, as he increasingly encountered people who have had claims under those plans and observed the positive impact of the benefits on their lives, he began to change his mind.
"The reason I didn't believe in them is because I thought, 'OK, you've got to have a good solid, core benefit offering and as long as you have that, then you don't really need these worksite products.' But the reality is that when tragedy or illness strikes, those core benefits are just simply not enough, especially nowadays," says Phillips. "The benefits have become eroded under the core. Price pressure and cost shifting and everything else have created a need, and I've seen the impact of [voluntary] benefits in peoples' lives. So it completely changed my way of thinking."
Phillips is experiencing a great deal of success with vision sales, thanks to a new partnership with Ameritas Group. Only a handful of clients previously offered their employees a vision plan due to the challenges of finding PPO network coverage in a rural environment. But because of Phillips' large book of business (he serves more hospitals in the state than any other adviser), he was able to negotiate exclusive pricing with Ameritas to offer his clients' employees rates normally reserved for groups of 500 or more with no minimum participation requirement. Now, 38 of the 41 hospitals working with Phillips offer vision benefits.
Of all the voluntary benefits offered by DPI, vision has the highest take-up rate at approximately 50% t 55% participation, followed by cancer coverage at 30% to 35%, and accident plans around 10%.
Phillips says the low participation rate on accident plans is due to the fact that the majority of employees in the hospital market are women who already have adequate group health coverage. However, many also have self-employed husbands, and as Phillips rolls out a new accident product this open enrollment season, he will remind them to consider the value of the product to their husbands who may not have great insurance on their own.
No cookie-cutter retirement
Just as Phillips approaches each voluntary benefit from its unique angle, all but one of DPI's retirement plans - $170 million in assets under management with $12 million in annual recurring deposits - are custom designed. Because the hospitals are either governmental entities or 501(c)(3) charitable organizations, Phillips is able to tweak plan designs to benefit not only the rank-and-file participants but also the higher compensated employees. "We can take advantage of the retirement plan laws to allow maximum contributions by those people with minimal top-heavy or discrimination issues," he says.
Bob Brazil, chief operating officer of Memorial Health System in Abilene, is impressed with how Phillips handles his employees' accounts, which are under the Kansas Public Employees Retirement System. KPERS limits long-term disability payments to $5,000 per month, leaving those making more than $100,000 a year potentially vulnerable. Phillips works directly with administrative members and physicians to show them how they can supplement KPERS. "He shows people a way to do it yourself and be able to approximate 60% of your salary," Brazil says.
Brazil also appreciates how Phillips will provide seminars for employees older than 50 who need to go through the catch-up phase on their 403(b) plans. "He's believable. When he says something I believe him," Brazil says of Phillips. "I think he's a very honest person."
Phillips knows in times like these it's important to meet with employees who are looking for reassurance to discuss their retirement plans and monitor asset allocation. DPI doesn't pick their funds or build their portfolios, but the company does provide education based on the employees' stated risk tolerance and what employees plan to live on in retirement.
Phillips is also on top of the upcoming 408(b)(2) disclosure rules, having already benchmarked all of his plans appropriately.
Going to bat
Should health reform eventually bring an end to the commission structure, Phillips is prepared for that as well. As he is not an RIA, his retirement business is purely commission-based. However, he offers clients the choice of a fee or commission-based compensation plan for medical and dental plans. He's even open to switching to fee-based for traditional life and disability offerings, but clients don't request it.
Because he is already so open with clients (most fees reflect what he would have earned in commissions in the first place), Phillips does not worry about health reform and the implications of the medical loss ratio provision of the Patient Protection and Affordable Care Act. If the MLR becomes an issue, "I will just go to a consulting services agreement," says Phillips. "I have always made it a point to discuss my compensation and to disclose. People don't expect you to work for nothing. And if they see that you actually are working and delivering service and value, then they don't mind paying you."
Phillips works on a flat commission basis rather than receiving a percentage of premium, which he finds unfair when clients are experiencing skyrocketing rate increases.
"If I am being paid on a percentage of premium, that means I get the same percentage increase in my compensation as the client is getting in increased premium," he says. "That doesn't seem entirely fair. So by working on a fixed consulting fee, my clients don't have to worry about that. And when it's time to increase my compensation, I'll call and talk to them about it."
He's also not afraid to talk to carriers when clients have a service issue. Many of the more than 30 clients who nominated Phillips to be Employee Benefit Adviser of the Year described specific instances where he went above and beyond the call of duty to advocate on their behalf after a claim was denied or another carrier dispute arose.
"I know bad service when I see it and when I experience it. It happens all too often. I'm not going to have my company associated with that. It's just simply not going to happen," says Phillips. "We're going to do business the right way; we're going to treat people the right way. We literally do care. It's a matter of personal pride."
Phillips recalls instances where months after a benefit should have been awarded, employees did not receive the compensation to which they were entitled. "So we've gone back to the carriers and got it for them," he says, matter-of-factly.
A client of DPI for around eight years, Brazil remembers one time Phillips contacted a national carrier when one of his employees had a life insurance claim issue. "He actually stood up to a national company and had that decision reversed. The employee was really financially strapped, and he helped this person with this life insurance," says Brazil.
Although Phillips is located about 40 miles away from Memorial Health System, Brazil says he never hesitates to come by if needed.
"He really gives you that personal touch. And that's what I think it's all about. He wants to serve, so I would say that's one of his strong points," Brazil says. "He goes to bat for you when you need help, and he's right on. He's very knowledgeable. I'm just very impressed that he takes care of our hospital."
Phillips understands that such superior customer service is what will make an indelible impression on clients, and what accounts for his 100% retention rate. "It's also just the right thing to do," he says. "In this day and age, it seems like everybody is willing to settle for mediocrity in their service providers or their vendors. In my opinion, it's right now, when the economy is so difficult, that people should be demanding the most of their adviser, because everybody is fighting for your business."
If he could offer any advice to fellow benefit advisers and brokers it would be, "tell the truth."
"I've told my team here, 'Let's create a special experience.' When someone calls here or we're out at their facility, let's make it such a good experience that they have to stop and say, 'Wow, I'm not used to getting that kind of treatment,'" he says. "If we can do that consistently, we'll never have a shortage of people looking to do business with us, and we'll make a lot of wonderful friends along the way."
