Whether an emerging company or a long-established corporation, employers in search of a benefit advisor often have questions about what type of company will best suit their style, budget and benefit plan objectives. Benefit managers may have questions such as:
- Will my cost concerns be met?
- Will my benefit advisor be able to meet all my needs?
- Should I work with a large or small company?
Following is a brief discussion of the differences between traditional benefit brokers and consultants and the advantages and disadvantages for employers.
Advantages and Disadvantages
Brokers are cost-effective experts in addressing “insurance” and “benefit plan” needs. As product experts, focused on lowering the cost of insurance, brokers are well-positioned to assist employers in managing relationships with insurance providers and addressing basic government compliance. On the down side, brokers tend to have a limited ability to set a strategic direction for benefits, understand and address broader business needs, and lead an employer through process reengineering and custom solutions.
As an employer’s needs expand to include benchmarking, evaluating benefit outsourcing, succession planning, management reporting and custom employee communications, the need for higher level consulting increases and a broker’s ability to meet the employer’s needs dwindles. This is the domain of consultants. Consultants bring a high level of technical expertise and resources, including the ability to assess benefit processes and lead an employer to custom solutions.
Unfortunately, consultants are expensive and, in many cases, ill-equipped to assist employers with their ongoing needs for insurance placement and day-to-day plan support.
While both types of advisors have their pros and cons, in general, brokers focus on “insurance” and “plans” while consultants focus on “processes” and “payback.”
In the real world:
- Employers who need more developed assistance are under-served by brokers and, as a result, their benefit function is limited to buying insurance, not adding value to recruiting, retention, and compensation.
- Employers who use consultants for core benefit placement and renewal needs often overpay for those services and may not be utilizing the professional resources best positioned to assist them.
- Some employers recognize this separation of skill sets and employ both brokers and consultants to assist with benefit management. This can be an effective strategy, but creates work for the employer by increasing the complexity of managing the benefit function.
Integrated Benefit — The “Consulting Broker“
Integrated Benefit has developed a service offering that combines the insurance placement services and thrift of a broker with the enhanced services and resources of a consultant. As a “Consulting Broker” we provide our clients with solutions tailored to their industry, locale, competitive market, and budget. Our consultants map out a strategy to ensure our client’s benefit function supports, and in some cases surpasses, the needs of the business.
In the final analysis, we bring employers the advantages of both brokers and consultants while minimizing or eliminating the disadvantages. This synergy of brokering and consulting skills generates additional benefits for our clients:
- Focus on needs-based-solutions, not product-based-solutions
- Single-source benefit experts spanning the entire continuum of employer needs
- Formal Benefit Management Process to take the chaos and uncertainty out of benefits
- Engagements are ongoing, allowing us to assume responsibility for the ongoing process
- Value is measured by overall results, not just lowest premium
- Promotion and succession-enabling
- Compensated through commissions or fees, creating flexibility to meet client needs