While attending the 2015 Benefits Selling Expo last week in beautiful Scottsdale, AZ at the Westin Kierland Resort, it was apparent right from the start that benefits brokers are finally realizing they need to change their business model in order to continue to grow or even maintain their current revenue levels. As you may know, brokers have recently seen their commissions and margins cuts in large part due to legislative restrictions placed on insurance carriers. For an industry that had remained largely unchanged in over half a century, it was not a welcomed change, and a handful are still reluctant to adapt. After sitting in on a few sessions and speaking to a number of brokers at the Kronos SaaShr booth, I found two distinct areas where change in the broker industry can be clearly seen: technology and product mix. These are my observations of those, as well as areas where service providers have an opportunity.
It was summed up quite bluntly by Troy Underwood, CEO of benefitsCONNECT, who said, “If you aren’t using technology, you will go out of business within two years.” He was referring to both brokers and the employers they work with. In the world of workforce management, we also know how vital technology is to efficiently running a business. The Affordable Care Act is just one of many pieces of legislation that necessitate technology in order for businesses to remain compliant. And in order to remain compliant, businesses need to work with providers offering products that enable them to more efficiently manage ongoing compliance, as well as report on it to the IRS. The consensus at the show was that this can be achieved best by having a robust benefits administration product, ACA management product, and payroll system all under one human capital management platform.
Brokers continue to realize and accept that they need to move away from only offering the core group benefits they’ve relied on as the crux of their revenue for so long now. But change means going out of one’s comfort zone, and that is never easy. Many of the brokers are simply looking for better plans from other carriers, or are now offering voluntary benefits. That said, we did have some great conversations with more progressive brokers who see that they really should be expanding their product mix further to offer other products that their clients need to efficiently run their business. This is due in large part to the national payroll companies that have been moving into the benefits space and offering clients an all-in-one solution of benefits, payroll, and workforce management.
Tying It All Together
The benefits broker industry continues to realize the times have changed, and they must change with them. Those that don’t will unfortunately get the message once it’s too late for them. For those that do, however, now is the perfect opportunity for workforce management and payroll providers like you to be reaching out and looking to work with these brokers via a referral relationship. This enables the brokers and their clients to access the excellent technology you provide, while also allowing you both to collectively go to market with an offering that competes with the national payroll companies.
Brokers see the value that technology can bring to their clients when combining a benefits administration product with ACA management and a payroll solution. There’s a perfect storm brewing in the benefits community between the slimming margins and commissions, the ACA, national payroll companies moving into the space, and the Zenefits model turning brokers on their heads. Now is the perfect time for you to be engaging this audience and pitching the tremendous value that a referral relationship can bring to both your businesses.
Do you already have referral relationships with benefits brokers? Do you have referral relationships with other types of businesses that you’ve found to be a great source of business? Share your comments below.
About Colin Menchin:
Colin is a Marketing Specialist at Kronos SaaShr responsible for the inbound and outbound marketing programs of the company along with other responsibilities within the department.