Mention the name Zenefits to a group of brokers, and you’ll likely evoke a visceral reaction. The HR tech company has certainly created a stir in the benefits industry. Its technology platform and no-fee business model have snagged more than a few clients away from veteran benefit advisers. Should brokers be scared or should they be thanking Zenefits for pushing the envelope?
According to a panel of benefit experts at EBA’s Workplace Benefits Mania last week, it’s the latter.
“Zenefits has done us a favor. They’ve given us a kick start,” said Tanya Boyd, president of the independent agency Tanya Boyd & Associates, who says the Zenefits threat has taught brokers to be more proactive about the solutions they can offer.
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“I am out there talking to my clients. I’m talking to them about technology. I’m telling them, ‘I want you to know that whatever you need, we will deliver it. You want a tech platform, we will find one,’” she said.
While Zenefits has piqued employers’ interests about technology solutions, she also said a trusted adviser cannot be replaced by technology, and it’s incumbent upon brokers to demonstrate their value to clients.
Kevin Trokey, a founding partner and coach with Q4Intelligence, agreed, saying, “As a broker you are not competing against technology. We can’t fall into the trap of thinking that we are in the product business. We are in the advice business.”
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Benefit advisers “have to take the conversation and show the client why we bring value. We have to elevate their expectations of what a broker can do. That’s what the employer values — somebody who can see their problems and find the solutions, no matter if it’s with a technology product or without,” he added.
Trusted adviser
The title “trusted adviser” is something earned over time, Boyd said. “A technology platform does not care. What a broker does is not transactional. It’s strategic. We’re going to use our heart and soul and sit down with the client to see them succeed. We’re going to find what helps them.”
“It comes down to, what is a trusted adviser?” said Brett Rosen, SVP of mergers and acquisitions for Digital Insurance.
“When I think of a trusted adviser, I think of somebody that is offering guidance and helping clients prioritize,” he said. “When I look at Zenefits, what I have never understood is how they operate as an adviser. I understand the technology they bring to the table, but I don’t even associate that business with what we do on a day-to-day basis. What we do, we are an insurance broker, insurance sales organization. We have to position ourselves as trusted advisers because most people should have the products that we sell.”
The new style of sales where people go online and do their own research is all part of the formula now, Rosen said. But clients and prospects still need expert guidance on the options out there, and, he said, “That’s why being a trusted adviser is so far ahead” of merely providing a technology platform.
The Zenefits business model has exploited employer fears largely brought about by the Affordable Care Act’s disruption of the market, Trokey said. But what the company is offering is nothing new.
“We see so often with Zenefits that they’re identified as innovative, but going out and offering service for free is not innovative,” he said. “Ben admin systems have been around for decades with little demand — but the ACA has made them in demand. Zenefits is exploiting that. The real disruption Zenefits has brought is that they are a real sales organization and that means we have to reinvent ourselves as more aggressive sales organizations.”
“Any broker today must make sure their clients and prospects understand the value they deliver,” said Rosen. “There is a lot more choice today. Know your strengths and use those tools to win. Don’t be naïve. There is an incredible amount of competition and it will continue to grow.”
Fee-based model
As commissions continue to decrease, brokers may also need to look at switching to a fee-based model, said Rosen.
“Commissions have been decreasing for a while now, but the margins in the employee benefits advisory business are still relatively high. It’s a great business relative to other businesses. But commissions are going to continue to decrease, because everybody is under pressure — doctors, carriers, etc. We are going to have to continue to do more with less,” he said. “We believe that you should probably get away from commissions and work toward fees. It’s a new concept to our business, but we’re trying to move our company in that direction because we believe we can compete better in that way.”
Trokey agreed, a fee-based model can work if brokers demonstrate the value that fee buys for employers.
“The most dangerous words brokers use are, ‘I’m free.’ We need to have that stewardship conversation with clients,” he said, adding that he’s worked with many brokers who have approached small clients and had conversations about fee-based compensation and the value provided for that fee.
“They didn’t lose any small clients,” he said.
