Executive benefits for top-tier employees can make or break an employer’s attraction and retention strategy for top executive talent, but challenges exist when implementing such plans. Advisers working with employers should understand the issues and how to overcome them.
Industry experts say the first challenge facing advisers is employer fear about compliance. Tiffany Stiller, vice president of carrier relations at BenefitMall, says a fear exists among groups that worry executive benefit plans may be considered discriminatory and, therefore, not compliant with the Affordable Care Act or ERISA.
Stiller says it’s contingent upon advisers to explain these plans are acceptable, and in most cases the fear is unwarranted.
“Advisers can walk employers through what is an acceptable plan and how they can implement it without fear of being non-compliant,” she says.
Post-ACA she says, administering employee benefit plans has not gotten less complicated, it’s become more complicated, and “this is just another reason why advisers are extremely valuable in the process.”
Helping the employer identify a clear strategy for its executive benefit offerings is another challenge advisers face.
First and foremost, employers should understand what the goal of the benefit plans are for the company, Joe Carpenter, president of NFP Executive Benefits says.
“Are you focused on helping executives retire? Are you trying to reward them? Trying to recruit them, or trying to retain them,” he says.
Understanding what the executive wants or is looking from executive benefit offerings is the second part of that equation.
Carpenter says executive benefits are focused on mitigating several risks, but the risks are not of equal importance to each executive.
Those risks include:
- Living too long and not having enough assets to live comfortably on
- Dying too soon and how it financially impacts your family
- Being sick and unable to work (and draw paychecks)
Advisers should focus on the consequences of one of these events occurring, not the probability of its occurrence, Carpenter says.
These risks can be mitigated through retirement benefits, life insurance and disability plans. But, knowing which of these risks is of most concern to each executive is a key to understanding what to offer. And key to understanding executive concerns, Carpenter says, is working with the C-suite itself, not just the HR department.
The smart adviser, Carpenter adds, will not try to implement an executive benefit plan alone.
“They will engage experienced practitioners,” he says. “You have to recognize where your strengths are. If I am dealing with a prospect that brings up health and welfare issues, I will bring in the expert to deal with that. I’m not going to do that alone. All too often in this business advisers think they can handle anything and everything.
Stiller agrees advisers should “work with a good partner” experienced with executive benefit plans.
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