What are you going to do this year to adapt to the changing market conditions? What will you do differently to more than compensate for any commission reductions that may have been announced by the carriers in your state? How will you make up for the loss of any clients that may have ceased offering employer-paid benefits or that are now members of an exchange?
Please dont be saying to yourself that we are going to continue to do exactly what we have done since our firm was founded. The current changes are market disruptive, profound and threaten the financial underpinnings of your business.
Undoubtedly, your organization made any number of changes and adapted to the dynamic market changes of the past. So why should now be any different especially given the importance of the market changes, regulations and compensation adjustments? Youve undoubtedly morphed your business model before, so why havent you already made appropriate adjustments this time? Or is it that your mindset is different and you are resisting having to change yet one more time?
We know of benefit advisers who began to adapt to the changing market conditions several years ago. In some cases firms that we work with started making changes four to five years ago, because they understood that conducting business as they had done in the past was not going to be relevant going forward. And in 2014 those firms saw their revenues grow 25-40%, resulting from an increase in new client sales and improved client retention, while many firms experienced a decline in their sales revenues and their number of clients.
What happened with your business? Have you even analyzed your business results? Do you know what the key drivers were that caused your results to turn out as they did? Did your revenues increase by 25-40%? Why not? And what are you planning to do about it? What will you do differently this year to positively impact your revenues?
Please dont be thinking that premium increases will make up for any lost clients and revenues. Just observe how many states where carriers now pay a per employee, per month fee as the norm for adviser compensation. Let us know if we can help because this likely is not the time to be going it alone given how high the stakes are right now. Hopefully some alarms are sounding for you about now. As well they should, because this is critical to the longevity of your business operations.
What can you consider doing?
There are a number of strategies that you could and should contemplate. But given your personal motivations, age, skill sets, organizational structure, financial stability, human capital and a myriad of other considerations, certain options will likely not apply to your circumstances or you may be unwilling to pursue certain tough decisions.
Some advisers have decided to move upmarket to only pursue new accounts that are 50-plus employee lives. And others have decided to focus all their new business development efforts in one or two industry verticals. Some have invested in hiring new talent with consultative selling skills in the roles of producers, consultants and account management personnel. Others have become much more consultative and strategic in their approach to client engagement, and are now charging consulting fees for creating benefit strategic plans, thereby supplementing their revenues and decreasing their dependence upon commissions.
We also know of firms that have launched their own private exchanges, albeit with some significant capital investment. And we even know of a handful of visionary thought leaders who are transforming the way that health care is being delivered by creating their own physician networks, developing onsite medical clinics at employer worksites, launching onsite pharmacies and administering self-funded plans with provider incentives to deliver superior medical care while reducing the overall expenses of delivering health care.
So as you can see, there are lots of innovative options that have been implemented by those who are being proactive and who are changing their roles to become human capital consultants, or trusted advisers, or health care network administrators. The common denominator is that they all are changing and innovating, not only for their own personal gain, but to provide greater expertise, counsel, services and solutions to their clients. That is their competitive advantage, and that is why they are taking clients away from their competitors. Perhaps you know a firm like I am describing, in which case you should be concerned. Or perhaps this is how you should be conducting business in 2015. No matter what your circumstances, remaining the same in the face of all the dynamic changes in the marketplace is not an option.
Kwicien is managing partner at Baltimore-based consulting and advisory services firm Daymark Advisors. Reach him at jkwicien@daymarkadvisors.com
