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LIMRA INSIGHTS

Benefit Advisors: A Vehicle, a Driver or a Passenger?

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Benefit advisors have been a staple of the employee benefits world for many years. However, employers are challenged with balancing costs and new demands from an evolving workforce. As a result, employers closely scrutinize the products and services they receive from their advisor as well as the value their advisor brings to the table.   

Eight out of 10 private-sector employers with 10 or more employees currently offer insurance benefits to their workforce. Offering benefits is an important yet costly enterprise for companies. In addition to insurance, employers offer retirement plans, paid time off and a whole array of nontraditional benefits, such as work-life benefits, health wellness programs and career advancement opportunities. All of these components are part of a complex program that requires significant investment in administrative, technological and human resources. An advisor must carve out a role that supports the employer’s benefit priorities.

Employers Who Want to Go It Alone

According to LIMRA’s new study, at least one third of employers view benefit advisors as the backseat passenger, someone they will gladly leave behind given the opportunity. These employers believe that they already have the ability and expertise to obtain benefits without the help of an outside advisor.

There are two primary reasons for this sentiment: 34 percent of these employers state that they currently receive nothing but transaction support from their advisor, and 60 percent believe they could save money working directly with the carrier to obtain nonmedical benefits.

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Of the employers who would prefer to work directly with a carrier, four in 10 think they could have even better benefit choices if they purchased nonmedical benefits directly from a carrier.

While it is true that we are looking at a relatively small proportion of employers who would jump on the opportunity to purchase benefits directly from carrier, it is still worth considering since the undercurrents of this sentiment are making their waves even through the advisor community. Recent LIMRA benefit advisor survey finds one in five advisors believe employers will work more directly with carriers over the next three years.

Employers Who Value Their Advisor

For some companies and industries, benefit advisors are the only trusted, secure, open-door vehicle into the benefits marketplace and benefits options. Seven in 10 employers believe that it will be very difficult for their company to obtain benefits without the help of an advisor.

While it seems that majority of employers do not question the current employer-advisor-carrier benefits process, there is a caveat to these statistics. Similar to the employers who are already confident that they have the ability to handle employee benefits without a benefit advisor, many employers who responded that they lack the expertise to forgo benefit advisor indicated that their advisor offers only transactional support. Without a service component, advisors, in essence, are just a “vehicle,” serving an access point that can be substituted by any other.

How to Cement the Advisor-Employer Relationship

Employers currently rely on benefits advisors to help them onboard products and services. If technology or innovation removes the need for a liaison, how will advisors distinguish themselves to remain valuable? 

The future will certainly require not only stronger ties between employers and benefit advisors, but a variety of them. Moving from a “product-oriented” model to a “service-provider” paradigm seems to be the only reliable solution for advisors to stay relevant in the employee benefits world. While decisions regarding employee benefits are being made mostly in the C-suite, benefit advisors have the potential to get into the driver’s seat and offer their consultative services at the time and in the area most relevant to employers.

Take, for example, the two biggest challenges that employers face today: cost containment and recruitment needs. The first one is widely recognized and routinely addressed by benefit advisors, but only four in 10 employers report that their advisor brings value in tackling their recruitment and retention needs, the second most challenging business issue for employers.

Benefits advisors who can step up and fulfill this growing challenge will likely become indispensable in the eyes of plan sponsors.

 


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