Hey Mr./Ms. Benefits Broker,
I know you don’t have much time, given it is the big, bad Q4, after all. I’ve heard the many variations of “Sorry, I am crushed in the 4th quarter” and the “I’m in the thick of renewal meetings, please be patient.” As this isn’t my first Q4 working in the benefits space, I have come to expect these excuses, rolling in like foliage, right around the middle to end of September. But I wanted to write this article because as a broker, your role has become incredibly important. Like so vastly, monumentally, leviathanically important that I don’t think even you realize the potential halos or horns that could adorn your crowns if you don’t do your job well.
I say this because last month, the DOL’s Bureau of Labor Statistics published the Employer Costs for Employee Compensation, a product of the National Compensation Survey. You can find a link at the bottom for your own review. And within it, the survey found that X% of total compensation for employees is linked to benefits. Notice how I say “X”? That’s because I want you to guess before the big reveal. Go ahead, pick a number between 1 and 99. Do you have it?
Within their findings, the Bureau of Labor Statistics found that, on average, (and please, if you believe that by using the term “average,” I’ve grossly misrepresented the cost, and in doing so, your importance, and you believe that you, Mr./Ms. Benefits Broker are, in fact, less important, announce it in the comments below. I’ve been wanting to tell you that for a while now-) benefit costs are 11.8% of total compensation. Almost 1/8th of the cost pie. A pizza pie, if you will, because it’s near lunch. So with that remaining slice of pizza left on the table, therein lies your responsibility, and thus, your performance as an adviser, inextricably linked.
Two things. First, employers are the largest payers in healthcare. Second, employers have an incentive to understand where their money is going. As Ali Diab, CEO of Collective Health stated in a recent podcast “No self-respecting CFO is okay with ‘oh hey man this budget is going up 20%, I can’t tell you why, our broker said it is what it is and you have to pay the piper, you cool with that?’ but that’s what CFOs have been conditioned to accept..”
This doesn’t even address the issue of your fiduciary responsibilities under ERISA (surely a topic worth discussing in detail another time). Have you bothered to brush up on those duties lately? No? This link from the International Foundation of Employee Benefit Plans (IFEBP) – lays them out for you like little garlic knots so you can digest them in six easy bites. [Hot tip: divulge yourself on bullet #3.]
You, Mr./Ms. Benefits Broker, have to be able to tell a CFO every minute detail about the last piece of pizza on the table. They know that wages and salaries are responsible for 6 of the pieces and the government takes the 7th. But you Mr./Ms. Benefits Broker, you have a direct influence on that 8th slice. You can make that serving delicious, delivering more value and, ultimately, savings for CFOs and their employees.
So think about that as you’re trudging through Q4. Let that guide your work ethic. You’re at the table of every CFO’s pizza party. No doubt, insurance carriers and providers can be blamed for that 8th slice, and rightly so. But the solutions are out there, and the perfect sauce of solutions does exist. Ultimately, only you know how well you’ve handled that slice of ‘za. I can only hope CFOs adjust and start to hold their advisors more accountable. For the complacent advisors, I bet you just felt a tinge of apprehension. For the progressive advisors, your time is here.
Good luck with your Q4s. May your clients stay happy.