Can Your Benefits Business Endure?

I spent the past few weeks traveling across the country meeting with different benefits brokers when I had a question asked of me that required some thought but produced what I think may be an interesting observation. The question was “What brokers are investing in changing their businesses the most to meet the changing demands of the benefits marketplace?” I speak to many brokers and work with many more and as I thought closely my answer came out as follows: “The brokers changing the most are those that plan on being around in 10 years. It is those that want to perpetuate their businesses independently rather than prepare their businesses for sale.” I could actually visualize the business owners of these firms that I was referring to as I was answering the question.

In my business I contract with brokers and one of the things I try to figure out is whether the broker I am speaking to is going to survive and thrive, sell, or fade away. I don’t know if one of the options is to exist as is in perpetuity. Can a broker survive but not thrive, sell, or fade away for a period of 5, 10, or 15 years? Will “as is” be an option?

The question also reminded me of a quote I saw in Peter Thiel’s book Zero to One that stated, “For a company to be valuable it must grow and endure”. The most important question you should be asking yourself is “will this business still be around a decade from now?” He is not asking whether the business will look different but will it even be around. Using this idea I thought about some of the questions one needs to ask oneself including:

  • Will health insurance still be purchased through an employer plan?
  • Will benefits brokers still be the main distribution source?
  • Will the carriers still be paying commissions? If so at what rate?
  • Will the current insurance companies still be around?
  • How will people (employees) be accessing their benefits information?
  • Will there still be claims analysis tools, underwriting, and where will wellness be?

–          What will health insurance plans look like? If they exist.

There are probably many other questions I could ask.

If you honestly answer these questions or at least make an educated guess then the future of the benefits world will be much different than it is today. If the industry is different how will your business be different?

What I am finding in the marketplace that the national firms are working hard to change. Obviously if they are publicly held companies then there are many people in the organization that want growth or at least compensated for growth. Other organizations that are changing include ones where the owner had brought in a son or daughter into the business. Organizations where the owner is less than 45 years old also see then need to be around 10 years from now. I don’t want to put everyone in the same box as we know there are exceptions to every rule but these are trends that I see.

The behavior of those that plan to be around is much different from those planning to sell or those wanting to hang on until retirement. Those planning to be around are investing in the future. They are making strategic decisions based on the long term and not just short term. They are building a culture that is not complacent but one that is dynamic where people can think different. They lead not follow.

Others have a plan of “Hope”. They hope the world doesn’t change. They hope that they can survive as is. They hope carriers don’t reduce commissions. They hope Zenefits goes away. They don’t invest in the future but actually reduce expenses to save money. They make minimal changes, usually following some other firm rather than think outside the box and plan for the long run.

So now I have written another article on change. I had one broker ask me what I would do if I were a broker. Good question. I don’t write these articles without taking my own advice. Or should I say take the advice of Peter Thiel. The answer to this question will be revealed in my upcoming webinar titled, “Upping the Benefits Game – Introducing Ideas Most Brokers Aren’t Thinking About”. Benefits brokers are welcome to attend this webinar by clicking on the following link to register. http://www.hrtadvisors.com/AboutUs/HRTWebinars.aspx

I guess I will finish with a quote from Henry David Thoreau who said, “Never look back unless you are planning to go that way.” I think it is safe to say that the future of the benefits business will look nothing like the past. So ask yourself, can your benefits business endure? Will it be around in 10 years? If so what will it look like? It is time to ask and answer those questions. Then take action.

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