Thanks to the Patient Protection and Affordable Care Act, we all will be living with uncertainty for the foreseeable future. There are thousands of pages of administrative guidelines that have yet to be written. And those PPACA timelines are completely in flux. For example, 25 states have decided to default to an exchange created by the federal government, but of course there's no way it will be functional in less than a year. And there are those thorny decisions about "pay or play" that need to be addressed.
The point is, you need a process for managing change. Likewise, you will need a process for managing change for your own business, since you will need to morph it to be responsive to the changing market conditions. You will also need a process for managing change to advise your clients and to continue to make your practice relevant.
You need a methodology to help your clients plan their benefits decisions and expenditures. Your clients need a roadmap, a strategic plan, to guide their tactical decisions; both their actions and reactions. And it needs to include contingency plans because of all the possible changes that are completely out of their control.
To do this, you will need to become much more consultative in your approach. And you will need a formalized process, training and tools in order to make this transition successfully.
Your clients will be demanding their adviser(s) provide this kind of counsel and expertise, or they will find a resource that will. And all of this will be independent of how they gain access to medical insurance products in the future.
Your primary value proposition cannot be as the access point to products. Your clients need your expertise, and you need to reinvent yourself to remain relevant.
Start with analyzing your clients and prospects first. You need to focus in a very real and meaningful way on what they need now and over the next three to five years.
What do they want to accomplish with their benefits program? Do they even want to offer benefits? Will their competition offer benefits? These are all very real-world strategic questions that any thinking employer should be considering.
Focus on values
For decades, the overwhelming majority of employers felt a moral obligation to be paternalistic and offer an increasing array of benefits. And when the global economy was expanding and there was stiff competition for human talent, the business logic dictated that employers needed to be responsive in order to attract and retain the talent that they needed.
But now, the federal government eliminated any obligation for an employer to "do the right thing" by offering medical insurance. The stigma has been removed and, in fact, they have quantified the penalty (tax) required to make a rational, financial decision. It's no longer a moral issue; it's a pure financial decision.
There are a lot of variables and issues to consider, but it's now quantifiable. Hence, the explosion of "pay or play" calculators in the marketplace.
As a result, you need to first focus on the employer's values. What's important to their business? Their culture? Their human capital strategies? If it's doing business at the lowest possible cost, group medical plan design likely is not relevant or of concern. On the other hand, if artfully providing a benefits portfolio is of value to the business because it permits it to retain the talent it needs to maintain and grow business operations, then it's worth the time to strategically plan what the benefits program should look like.
Prioritize
Next, you need to focus on critical needs. If the client is going to offer employer-paid benefits, including medical coverage, what are the most critical needs that need to be addressed that are relevant to that employer's values, culture and human capital goals?
In this regard, you need to become more of a human capital consultant and not be a benefits broker (perceived as a product peddler by many, anyway).
The beauty of this approach is that by becoming much more consultative you are making yourself relevant and valuable to your clients, while beginning to morph your business practice. Besides, you are more in your element when discerning client needs and thinking about coverage options.
When engaging the client, simply focus on being collaborative and articulating critical needs. Build consensus with the client participants, and make absolutely certain that one of those participants is the CFO.
That's the pivotal executive position focused on strategic goals, managing expenses and critically evaluating financial options, not the least of which are their benefits expenditures. Benefits represent 9% to 11% of total operating expenses for most employers.
This is not the time to be in a sales mode; it's the time to be consultative. You should be asking lots of open-ended questions and taking copious notes.
Being facilitative and consultative will help you to engage the client in a discussion - not a sales pitch.
Once you have jointly identified the critical needs, you can turn your attention to solutions. Your recommended solutions will likely entail:
* medical insurance plan design;
* utilization of an exchange;
* benefits communication and enrollment strategies;
* the application of technology, perhaps in the form of a benefits portal; and
* the intelligent integration of voluntary benefits, among other products and services.
With all the plan design and re-design of the last decade, there inevitably were gaps in coverage created. However, the needs of employees have not diminished. If anything, they have increased.
At a minimum there are opportunities to offer:
* voluntary permanent life insurance;
* disability income;
* critical illness;
* auto and homeowners insurance;
* long-term care;
* pre-paid legal services;
* household budget counseling; and
* retirement plans.
The commissions from the sale of these voluntary benefits can more than make up for the loss of group health commissions. You also need to assess their executive benefits, which may be woefully outdated, and may impact that employer's ability to retain key executive talent during this "slow growth" economy.
A new role
If your clients are demanding answers, or at least counsel from someone that seems to have a process or approach to managing in this environment, then what are the implications for your business model? Have you objectively thought about the ramifications? Are you thinking strategically about your business and its future?
Look, undoubtedly your time is consumed with all the day-to-day tactical activities required to manage your business and to retain your clients. And in all likelihood you are beginning to get used to the potential impact of health care reform and whatever the new norm will be, although the vast majority of benefits advisers are still in denial. It's time to act like your business life depends upon it - because it does!
The bottom line is that we all will be awash in a sea of uncertainty for the next two to three years. As a result, there isn't a client organization out there that's not willing to talk to an adviser that seems to have some information or some process for coping with all this change. And that includes every one of your clients as well.
For forward-thinking benefits advisers all this uncertainty creates enormous opportunity, provided that they are prepared.
You need to evaluate your business model and consider the possibility that you may not be paid commissions on group health coverages.
So how can you monetize the client relationships that you already have? You have already incurred the client acquisition expense, so how can you generate revenues going forward?
One possibility is to begin to migrate toward a consultancy model where you may be paid fee income rather than commissions. It may not be one annual fee per client, either. More than likely it will be a per employee per month fee paid for advice, counsel, service, advocacy, etc. While it may vary by state, the range we most frequently hear being discussed is $18-$22 PEPM.
You also need to evaluate your firm's ability to offer other human resource services that are complementary or synergistic with benefits. We are talking about:
* payroll and tax filing services;
* benefits administration;
* workers' comp administration;
* outsourced HR consulting;
* regulatory compliance training and audit services;
* employee surveys;
* total compensation planning;
* year-round benefits communications programs; and
* HR management training.
Not to mention a myriad of other services that employers need and are increasingly being outsourced to qualified third parties.
You already are at the table handling a portion of their needs. Shouldn't you be morphing your offerings to address your clients' changing needs? If you don't, someone else will. Your clients need a trusted adviser, and you can fulfill that role if you utilize the approach that we are advocating.
You need to have a process that you can communicate to your clients and prospective clients that will instill confidence and that will ultimately build consensus within their management team.
The beauty of this approach is that you can also create new revenue streams in the process by charging consulting fees and earning commissions on voluntary benefits product sales. And, from a client retention perspective, through the process you will be writing yourself into the script for the next three to five years.
Kwicien is managing partner at Baltimore-based consulting and advisory services firm Daymark Advisors. Reach him at
