Idmg employee benefits7/10/2023 ![]() Here is a summary list of the five steps we recommend any size employer take when undertaking a broker selection process: You aren’t sure you are getting the day to day service you need or deserve.You haven’t shopped in more than 3 years.You aren’t clear on the value you are getting from your broker for the commission or fees you are paying.You question whether your broker is keeping up with the myriad of regulatory and technological change in the marketplace.There are several specific scenarios requiring a broker selection process: If you are hiring a broker only to shop your plans, you probably aren’t maximizing the broad spectrum of results top brokers deliver to employers. It involves a holistic approach to your overall company strategy, budgets, benefit plan design, HR strategy and even IT concerns. Optimizing benefits isn’t just about shopping for coverage from carriers. Employee benefits brokerage has become a complex profession and process, regardless of company size. We highly recommend you go through a broker selection process as far in advance of your plan renewal date as possible. When should a company shop for a new broker? When considering hiring a broker, consultant, or advisor it is best to ignore the title and instead focus on what they do, how they do it, and how they get paid. “Advisor” has become a popular moniker for brokers it connotes a strategic, advisory orientation towards clients. However, many brokers now work on fees and many consultants will work for commission. Historically, a consultant worked on a fee for service basis and a broker worked for commission. ![]() For simplicity and consistency, we always use the term broker to describe the services the market refers to as an employee benefits broker, consultant or advisor in this document. What is the difference between benefits brokers, consultants and advisors?Īll three of these terms are used in the marketplace to describe employee benefits professionals that provide benefits advice, products and services to employers. SHRM WEBCAST: Don’t Get Bitten by COBRA Administration So how can you properly take the crucial first step and select the best broker for your company? Before we dive in, let’s clear up a couple of common questions about broker types and timing of broker selection. Third, they don’t see a measurable difference in broker options clearly enough to warrant change from a broker they “like.” Second, it is often hard for employers to understand how different brokers deliver different results because historically good tools for broker comparison were not available. First, employers don’t select brokers very often, so they are not up to speed on the latest skills and capabilities expected of brokers that are continuously evolving and improving. Why do so many employers fail to properly select a broker? There are three primary reasons. This includes even those at entry level who don’t have nearly the strategic and financial impact a broker has on their business. However, we estimate around 90% of companies use hiring practices similar to these five steps when hiring internal employees. Our experience indicates that less than approximately 10% of employers use all five steps outlined in this guide when hiring a broker. When these moments arrive, will you and your broker have worked together adequately to ensure employees have all the coverage and support they need? It often has a profound effect on the health and welfare of employees and their families. Even a small difference in capabilities and results can have a dramatic difference on costs.Ī broker’s work doesn’t only impact the financial wellbeing of your company. Your broker helps you manage a budget of 25-40% of payroll. Your choice of employee benefits broker has far reaching effects. Your Employee Benefits Broker: An Essential HireĪn effective benefits strategy gives employers a competitive edge, yet too many companies fail to take the crucial first step: choosing the optimal benefits broker for their company.
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