Group medical carriers must break free from commissions

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Changing old routines is the hardest thing for an adult to accomplish. Call them traditions, norms or even “the way things have always been done” but it doesn’t matter. In the end, adherence to old practices can hold back you and your practice.

For more than 60 years, benefit brokers have eagerly accepted your offer of commission for brokering the medical transaction. Happily existing in their comfort zone, they put themselves, their livelihood, their value and their worth totally under your control. Brokers have traded their financial independence for a steady — and, yes, until recently, a very rich — flow of commission dollars. Even today’s reduced dose feels good. Too good.

As a former broker, I know how good that steady flow of commission feels, and just how comfortable and complacent you can get. That’s why this needs to end. Now.

Stop paying medical commissions. It’s time you free brokers of their dependence on your commissions. It’s time you stop enabling brokers who resist the adviser role and compensation transparency.

As long as you keep the commissions flowing, brokers will remain mere brokers and never reach their full potential. And, frankly, staying in the broker role while their competitors become advisers can be fatal to their agency.

Commission to fees, broker to adviser
Because of the ACA and industry trends, the transactional broker role and the tactical work of renewing the medical are no longer sufficient. Employers want a strategic approach to the benefit plan from a consultative adviser. To remain relevant in the market, brokers must transform into that consultative adviser with a fee-based practice.

But as long as you continue to force employers to pay commissions, you avoid the transparency that requires a broker to establish and prove his value to the employer. When an employer doesn’t know how — or how much — a broker is getting paid, the employer doesn’t know or appreciate the true value of their broker. And the broker is not very incentivized or motivated to show or increase her value.

As long as they are getting their commission fix, most brokers will never move to fee-based compensation and begin the work to elevate their practice with valuable new strategies and resources.

When Connecticut adviser Joe Bucci of Blueprint Benefit Advisors told a carrier executive that the carrier was holding back brokers, the executive replied, “You mean by continuing to pay commission? We know that.”

So stop already. Free brokers from their commission addiction, and watch the smart ones evolve into consultative advisers.

But, when you end commissions, don’t get greedy; subtract the commission from the premium and bill net of commission. Don’t handicap brokers by making them ask for a fee that’s additive to the current premium that includes commission.

Brokers will rise to the occasion. My agency clients are some of those leading the way. Former brokers, now advisers, who successfully charge fees, such as Tim Olson of The Olson Group; Rudy Garcia of Qandun Insurance Agency; and Mick Rodgers of Axial Benefits Group.

Some of the smartest brokers already have made the change, become an adviser, and started the move to fees.

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