Are you thinking strategically about your business and its future? 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 benefit advisers are still in denial. It’s time to act like your business life depends upon it — because it does.
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Your role is going to change. It’s not about accessing products. It never was, but it definitely is not that going forward. Your clients need your expertise, advice and counsel. They are confused and anxious, and rightfully so. The bottom line is that we all will be awash on 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 who seems to have some information or some process for coping with all this change. And that includes every one of your clients as well.
Enormous opportunity
For forward-thinking benefit advisers, all this uncertainty creates enormous opportunity, provided they are prepared. You must take action, and you must take it now. 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 see is $18-$22 PEPM.
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You also need to evaluate your firm’s ability to offer other HR services that are complementary or synergistic with benefits. We are talking about payroll and tax filing services; benefits administration; workers’ compensation administration; outsourced HR consulting; regulatory compliance training and audit services; employee surveys; total compensation planning; year-round benefits communications programs; HR management training; and 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 clients’ changing needs? If you don’t, someone else will, and they won’t stop until they have the total account.
For many, we are taking you way outside your comfort zone. But going out of business won’t feel so comfortable. With so much uncertainty, your clients need your expert advice and counsel now more than ever before. They need a trusted adviser, and you can fulfill that role. 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 by charging consulting fees and earning commissions on voluntary benefits product sales. And in the process you will be writing yourself into the “script” for the next three to five years from a client retention perspective.
Kwicien is managing partner at Baltimore-based consulting and advisory services firm Daymark Advisors. Reach him at jkwicien@daymarkadvisors.com.
