Category Archives: Agency Operations

What is the Speed of Your Benefits Business


I often wonder why the benefits world is so slow to advance new ideas and new technology. I have been in the business for over 30 years yet have seen very little evolution relative to other industries. In my personal life, almost everything has evolved. The way I do my banking, communicate with friends and businesses associates, book an airline ticket, turn lights on and off in my home, pay at Starbucks, or get around a city, have all changed. Things are easier. Yet, for the most part, the benefits business is almost still the same as it was when I got in the business in 1986. Up to this point lack of change has not significantly impacted those in the business. I think that is about to change.

I started my career in finance at General Electric where the CEO, Jack Welch, was good at putting things in perspective. One quote has stuck with me and that is as follows:

“If the rate of change on the outside exceeds the rate of change on the inside, then the end is near.”                                  Jack Welch

Since I have been running a business I have heeded that advice. We try hard to change with the times and it isn’t always easy. I would say it is never easy. But we haven’t sat still.

With all the attention to health care and health insurance in the U.S. I have spent a great deal of time researching the market so that I can make an educated guess as to where the market is headed. What I have seen is that the outside world, (outside of the current benefits market including carriers, brokers, TPA’s etc..) is moving much faster than the inside world. If you only looked on the inside; at broker and carrier conferences; read benefits magazines or blogs; or listen to one’s buddy in the business; you would miss what is going on outside. The outsiders don’t care about the insiders. Unlike the past 30 years, new technologies, new business models, significant capital, a populace looking for better solutions, and government debt that is unsustainable, are the catalysts for change that exist today and not at any time in the past. Things are different.

A changing health care market is right under everyone’s nose yet many don’t see it. The Apple Watch, an Amazon Echo, Bitcoin and Blockchain technology, Artificial Intelligence and machine learning (highlighted on 60 minutes) all can be the foundation for huge changes. Never mind simple things like video conferencing, online chat and text messaging, and bots.

A few years ago, some benefits organizations started pushing Private Exchanges as some new idea. I wasn’t buying it. I sold similar plans in 1987. Many think they are offering some game changing idea, but most are simply different packaging of the same thing.

In the benefits business, small brokers may not have the capital to make the changes needed to keep up with the outside world. Many larger firms appear to be building moats around their businesses hoping the outside world won’t touch them. And as the old saying goes, it takes a long time for a big ship to change its course. The outsiders will just go around or over the moat anyway.
One doesn’t need to invent everything to have a sustainable business in a changing market. You may be able leverage the tools or resources invented by others to compete effectively. But all this change is not easy. Yet we all know that “Hope” is not a strategy.

So, look around and not just at your competitors or at some broker conference. When your Apple watch gives you your pulse. When you talk to your Amazon Echo. When you video chat with your son or daughter. When you turn on the air conditioning in your house from work. Wonder why this isn’t happening regularly in the benefits business. Is the outside moving faster than your inside? If so, well hoping Jack Welch is wrong is probably not a good strategy.

“Alexa – What is my deductible?”


When it comes to adoption of technology simple is most often better than complex. Steve Jobs and Apple went to great lengths to make their products simple. Without user adoption products fail. Current technology trends continue the move towards simplicity with the advent of artificial intelligence and personal assistant tools like Amazon’s Echo and the Google Home. Before you know it, these tools will enter the benefits world. The question is, who is going to be first and best? And if I am a benefits broker how does this impact my business?

While many brokers are aware of the vendors that call on them or have tradeshow booths at industry conferences, I believe the benefits technology race is going to heat up with new competition entering the market. These new competitors see the market opportunity to automate large segments of our economy including health insurance and health care. You may have heard of some of these companies like Microsoft, Google, Salesforce.com, and Apple. This would be in addition to current leaders such as ADP and Paychex. The stakes of the game will change and the price of entry, from an investment standpoint, is in the hundreds of millions of dollars. Those with the capital will quickly outpace those with less capital.

Don’t be surprised when you start to see major mergers and acquisitions in the HR and Benefits space. Could Microsoft buy Ultimate Software? Why not? They already purchased LinkedIn and recently hinted at getting deeper into the HR space.

When I look at products like the Amazon Echo and Google Home I see products that have very quickly grabbed market share with high rates of adoption. My wife, who is not an early adopter of technology, quickly became a user of Google Home. Why? Because it is easy. Would she have a better understanding of her health insurance if she could simply ask Google? Absolutely!

Benefits technology, on the other hand, has not had broad adoption by employees. Yes, employers have bought systems or brokers have given them away, but when you look at utilization on the employee side it is abysmal. I believe the reason for this is because there is not enough value as a stand-alone solution to generate broad adoption. Keep in mind that the majority of people hardly use their health care in a given year so there is little need to access such a system. I don’t know about you but I can hardly remember the login to my computer never mind something I may not use for 6 months.

The next generation of technology in the HR and Benefits area is going to have broader and “everyday” value, while being much easier to use. Market leading vendors, especially those with a great deal of capital, will invest in the latest technologies to try and win the technology race and gain more customers. And before you know it you will be saying the following:

“Alexa, is Dr. John Smith from Boston in the Blue Cross network?”

“Ok Google, request Friday off from work?”

“Hey Siri, how much does the average office visit cost?”

“Alexa, what is the balance of my 401k?”

“Ok Google, transfer $500 from my savings to checking?”

The advancement of technology and artificial intelligence has enabled many to have more personalized user experiences. Your Amazon Echo will “get to know you”. Maybe in the near future your doctor will get to know you a little better too.

Many benefits brokers have chosen some technology vendor with a mission of putting as many clients on the system as possible. This is a risky position competitively as more advanced solutions from highly capitalized companies come along. I don’t know many sales people or business owners in any industry who like running around with the 8th best product. Even more so when it is not necessary. The market and your customers do not care if you have invested thousands of dollars on some technology that may quickly fall out of favor.

One should take the advice of Jack Welch, ex- CEO of General Electric who once said,

“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

For those that have purchased the Amazon Echo or Google Home you don’t have to look far to see that the outside world is changing faster than the inside. The health insurance and health care industries often feel like they are moving at a snail’s pace. Private Exchanges were lauded as change when they really are a reincarnation of cafeteria plans from the 80’s.

With the Trump administration, changes in health insurance legislation may create a shift that empowers the consumer. The industry may need an army of people on the front lines to help the industry move to a whole new paradigm. The vendors will need help and the employers and employees will need it too. The technology is there. Alexa is ready. Are you?

Your Competitors May Not Be Who You Think


This past week there were two press releases related to the benefits brokerage business that were fairly significant. One of them was picked up by the industry publications, generated some kudos on LinkedIn, and created some noise in the benefits community. Brokers were talking about it and many emailed me or called me to see what I thought.

The other one went mostly unnoticed in the benefits world. The industry pubs didn’t pick it up and I did not get a single phone call asking my opinion. Yet, from my perspective, the second press release will have a greater impact on the average benefits broker than the first.

This contrast made me think of a quote I keep on my wall that reminds me to not be complacent. It is from Jim Keyes, the former CEO of Blockbuster Video, who once said:

“Neither RedBox nor Netflix are even on the radar screen in terms of competition,” he said. “It’s more Wal-Mart and Apple.”

We all know how that turned out.

The first press release announced the merger of 20+ benefits firms, many who I know. While this is noteworthy, I am not sure that the world is any different today because of it. Yesterday they were wearing one uniform and today they are wearing another. They are the same people, in the same locations, and until there is some other new big announcement they are probably doing pretty much the same thing today that they were doing yesterday.

From a competitive standpoint, I am pretty sure this event won’t change the landscape much. Most brokers are already competing with larger firms that use their size and resources as their competitive advantage. Some brokers may even think this is good for them competitively because their market just lost another boutique firm and the competition of local boutique firms just got smaller. In reality, not much has changed until someone brings something new to the market.

The second press release was from a company called Namely. Namely raised an additional $50 million in capital bringing their total capital raise to $157.8 million. (Source: Venture Beat January 5, 2017) Concurrently, Namely also announced the following:

“Namely also announced today a new benefits offering called the Namely Health Advantage, which groups together similar companies to offer their employees health benefits at preferred rates.”

What makes this significant is that Namely has brought something new to the market. They have developed an engaging HR-Benefits-Payroll platform promising simplicity and ease of use. They also act as a benefits broker, creating a single source technology and service offering to employers. And as can be seen from the quote above, they created a new health insurance offering for their clients.

Namely claims to have 650 clients totaling 120,000 employees which would be an average client size of around 185 employees. Unlike companies like Zenefits, that targets much smaller employers (< 50 employees), Namely targets mid-market employers ranging from 100 – 1000 employees. From a competitive standpoint, this is the sweet spot for many benefits firms.

If you do the math and assume they are generating revenue at a $25 per employee per month rate, then their annual revenue would be in the range of $36 million. This is a real rough guess. Even if I am off by $10 million it would not be bad for a company that was founded in 2012. That would make them one of the fastest growing benefits brokers in the country. Though I am sure they would not classify themselves as such.

In 2015 there was $2.4 billion invested in HR Technology type companies. And as one industry analyst said, “Do you know what they will do with that money in 2016 and 2017”? Spend it. They will spend it on marketing and sales. They will have Ads on LinkedIn and Google. They will be at all the HR trade shows. They will be everywhere marketing to your customers and prospects. Namely has even had TV commercials on Fox News. I don’t see many brokers advertising on TV.

I could imagine asking the average benefits broker about their competition and it would not surprise me if they responded as follows:

“Neither Namely nor Zenefits are even on the radar screen in terms of competition,” he said. “It’s more Gallagher, Mercer, and USI.”

You may not have recognized this competition yet. Many brokers say they never lost a case to Namely or similar companies. What they don’t know is how many prospects they lost to these firms. How many employers looking for solutions found Namely but did not find you? How many prospects would respond to their value proposition versus yours? Do you even know what their value proposition is?

There is a way to meet and beat this new competition. But is takes work, planning, investment, and risk taking. Or maybe these firms are really nothing to worry about. Ask Jim Keyes what he thinks.

It’s a Saturday night and I should go. I could end this article by saying I am going to be watching a movie on Netflix tonight but playoff football is on, and anyone who knows me would know I am lying. But if you want to learn about these new competitors and what you can do to compete with them, check out our latest webinar titled, “The Future of Human Capital Management and Benefits” by clicking on this link.

Webinar Invite – Taking Benefits and HR to the Next Level in 2017


I know, another webinar invite. This is a really good one though. If you are a benefits broker I guarantee this is worth 45 minutes of your time. Here is the bottom-line with this webinar. We have been delivering technology solutions to both brokers and employers for 16 years now and have seen gaps in the market over that time that are actually being magnified now as the market changes. Many brokers and most employers are often not recognizing those gaps. We think that by filling those gaps you can take an employer’s HR from a 3 to a 9 and improve a broker’s operation in similar ways.

In this webinar, we will share some but not all the secrets. We then introduce a model that we think is quite unique.

The dates are: January 5th, 10th and 12th at 12:00 – 1:00 Eastern Time

If you are a broker and have an interest in attending feel free to click on the link below to register. If we don’t know who you are we may give you a call before approving access to the webinar. Thanks.

Register Here

Is Your Benefits Firm Built to Handle a Benefits Bear Market?


I often reference a quote from Mark Cuban that says, “Everyone’s a genius in a bull market.” When you think about the benefits business it has really been a bull market since I have been in the business, which is 30 years now. Everything seems to be going up, up, up, regardless of the quality of the product or service. Benefits brokers have benefited significantly, getting medical inflation raises for years. Admittedly they have also been adding more services, often at no cost. But this is behavior you see in a bull market. It is easy when the math is in your favor. However, do we even know what a benefits firm would look like in a bear market?

I know what a benefits bull market looks like. Companies good and bad are thriving. Money is spent fairly recklessly. Wages are often above the averages for similar jobs in other industries. There are trips and more trips. Everything is great. Those are the good parts.

Bull markets can also have some negative effects. Weaknesses in one’s business or value proposition aren’t easily recognized. Inefficiency is hidden. Complacency can creep into the organization. There can be a failure to recognize competitive threats. Common business practices aren’t practiced. And a belief that one’s world will never change can blind one’s vision of the future or reality.

But what does a bear market in benefits look like? What can cause a bear market? Commission compression? A move to fee for service? Government intervention including changes in tax laws? Obamacare collapsing? The budget deficit getting higher with rising health care costs being a big contributor? The MLR? Hospitals getting squeezed? Higher deductibles and employee contributions? All these factors appear to be present right now, favoring a need for change. Could it signal a coming bear market?

Warren Buffet loves bear markets because he thinks there are deals to be made. And it is bear markets that allow the cream to rise to the top. Bear markets eliminate a lot of competition. But do we really know who the superstars are? Can we tell the real genius from the bull market only genius? And what does a bear market benefits firm look like? Without really having been in a bear market I am not sure what one really looks like.

If a benefits bear market hits there will be opportunities. Opportunities for those who have anticipated changes; for those who built a model to sustain over the long haul; for firms whose infrastructure can adapt quickly to change; for those who have worked hard to expand their non-medical revenue reducing some business risk; for those who have differentiated their value proposition not by giving things away but by delivering products or services of value that an employer would pay for. Think about that one for a second. Of all those “value added services” a firm provides, what would an employer pay for and what would they pay? Would they pay anything at all?

Much like my financial advisor I don’t have that crystal ball. And it is hard to run a business when things you don’t have any control over can cause you chaos overnight. But hoping the benefits world doesn’t change isn’t a strategy. You also can’t put your head in the sand either. Recognizing business threats is a critical component of any business. Even Apple assesses business threats. So don’t let the first benefits bear market get you down. Some good planning can reap great rewards, even when the world changes. Or maybe we will have a bull market forever. Place your bets!

Webinar Invite – Growing Your Benefits Business by Leaps and Bounds


How does a broker go from 5 employees in their benefits firm in 2005 to 60 today without an acquisition? How does another go from 5 to 200 in just 8 years? Or another that generated $40 PEPM in addition to commission on a single account?

In this webinar we will get into the details of how some firms are skyrocketing while others struggle. We will show you the details of what these firms did to generate rapid growth, and show you how you can do the same.

This is a no-holds-barred webinar. If you want me to tell you what I think you are already thinking, then this is not for you. I am going to tell it like it is.

In this webinar we will answer the following:
• What are these brokers doing that is different?
• How they generate up to $20 PEPM above the regular commission?
• Why their model sustains any changes in healthcare reform?
• What is the difference between faking it and making it?
• The 3-year plan to a better future?

This webinar is a culmination of all others we have done. It puts things in a nice neat package and explains things in a different way. If you want to learn this formula, please click here to register.

Register HERE

The dates are September 9,13,and 16th at 12 noon eastern time.

This is for benefits brokers only.

How well do you know your customers?


In today’s environment where information is readily available and leveraging the web and mobile to provide service is an expectation, personalizing that service is also expected. When I buy an airline ticket I am asked how I would like to be informed of any changes (email, text, phone call). When I check into my preferred hotel chain they have my preferences and personalize my service. For some reason this type of personalized service hasn’t become the standard in the benefits business, or at least to the level of other industries.

I often reference the Wellness Newsletter I got from my broker giving me tips about pre-natal care. As a 54-year-old male this is not relevant and the email itself not only did not address my needs but in some way reflects poorly on my broker. It made me think he is really not that organized. Not only was the newsletter not relevant to me, but what my broker also does not know is that I already subscribe to a Wellness Newsletter directly from another online company. This newsletter sends me the information that relates specifically to someone my gender and age and is delivered at the frequency I want in the method that I want. I did not need a Wellness Newsletter.

On another occasion a broker I know provided an online HR Library to the HR person of an employer where the outcome was not what was expected. This HR person was on a committee for a company that also provided HR content on the web and she found many flaws in the product the broker delivered. It started with good intentions, but the outcome was not what the broker intended. Should the broker have known the HR person was on such a committee?

I can go on and on. People putting in enrollment systems to clients that already owned one but didn’t know it? Building benefit websites for employers that already had a regularly used intranet. I am not just pointing the finger here at others. In my own organization we struggle with the same issues when serving our clients.

All this reminds me of some stats I saw from a book published by Jack McKean titled, “Information Masters: Secrets of the Customer Race.” In the book he cites the following:

“Only 2% of the knowledge that organizations have about their customers is actually used.”

“Only 5% of the body of knowledge about a client is available digitally and indeed only 20% of the knowledge is recorded at all.”

What is amazing is that this book was published in 1999. The stats may not be the same today but it in many cases it is close to the truth. And of course this is not reflective of you and me. We are better than this.

It takes a lot of work to create a personalized service experience. You need technology to store and manage the data. You need a methodology to gather information and keep it current. You need processes in place to automate certain functions. You need people either on staff or through an outside resource to plan and execute such a strategy. It is a herculean effort.

In today’s environment most brokers provide service to the employer which could include HR, finance or the business owner. This has its own challenges but at least gathering information to personalize the service for a few people is somewhat manageable. Imagine the effort if we move to a consumer centric world where the services need to be personalized for the employee. What is the broker’s role in this environment? What would be the cost in time, technology, and resources, to deliver the experience consumers expect in today’s world.

From the employer’s perspective they have the same challenges. The expectations of how they are going to support their employees is changing. The needs of a 26 year-old with significant college debt are much different from a middle-aged employee preparing for retirement who may have health issues. These employers may not have the resources, technology, or capital to move their HR to this new level.

Many brokers say they provide such services but I have not seen it. Many do provide great service but not in the personalized way I am talking about. Relative to their peers in the current environment they may superior. But what happens when someone comes along and raises the bar? This happens often in many industries.

As someone in the technology consulting business I am seeing firms behind the scenes beginning to develop new models of service. Models that don’t exist today in the benefits world that can raise the bar. And it can raise it in a way that gives these firms a distinct competitive advantage that is not easily duplicated. Like providing benefits advice to a millennial on a Saturday afternoon via video conferencing. Some of these firms are traditional brokers but others are coming in from outside the industry. Those outside the industry love disrupting current business models. The health care business, and by extension the benefits industry, is a primary target because the capital running through it is so high it invites disruption. People want a piece of a very large pie.

Many brokers rely on relationships and are pretty sure their clients are loyal. I once saw a statistic that said that most companies think about 80% of their clients would be loyal. When employers were asked how loyal they were to their vendors the answer was 20%. This is a huge disconnect between perception and reality. One way a relationship can be severed is when a competitor brings in a better idea or better service. Companies like Zenefits displaced $63 million in commission business from many brokers with loyal customers. One told me he lost a 20-year relationship to Zenefits. So new ideas can be powerful.

I am not going to pretend to have all the answers. And I certainly look in the mirror when writing this because I am somewhat talking to myself too. But I have seen technology and models that can start the process to personalizing service for employers and employees. I have spoken to some companies that have started the process. I have seen the revenue models too. I don’t know when this “tipping point” will happen, but it will, because it is possible and the market wants it. And the opportunity is there for those who want to provide such services, but one must start. So my advice is to start. And start today because it is a big challenge.