How to Choose an Employee Benefits Broker

Not all Human Resources leaders and CFOs are benefits specialists—that's why partnering with the right employee benefits broker is essential.

The most valuable feedback is something you can act on. A broker who takes a consultative approach doesn’t just give you options but uses their expertise to provide actionable insights. Let's face it—not all Human Resources leaders and CFOs are benefits specialists. People in these roles make critical decisions about benefits for their companies, but their main responsibilities lie elsewhere. That's why partnering with the right broker is essential.

What type of broker is right for you?

“One size fits all” is rarely a true statement. The same goes for your broker. The right broker can work as an extension of your benefits team, guiding benefits decision-makers on choosing the right carrier and plan design, mitigating health insurance costs, staying updated on laws and legislation, and more. The best place to start is assessing what your organization and team need to be successful.

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Benefits Specialization

When choosing a broker, look for someone who knows your business. Some brokerages specialize in different sized groups or industry segments. Employees’ needs for benefits at a manufacturing company are likely different than at a financial services company or non-profit organization.

Two ways you can determine whether a broker has relevant experience and is trustworthy are: ask for client examples and referrals. Clients stay with their brokerage firm because of strong teams and resources, so having long-term clients is a good indicator.

Ask yourself: Does this brokerage demonstrate knowledge relevant to my industry, size, complexity, and key priorities?

Data-Based Insights

Data is great. But actionable insights are better. What type of benchmarking do you receive, and how do you measure your plan against others? Does your broker use a benchmarking resource that can be broken down by industry, size, and region? Reputable and expansive data can be sliced so that you can better understand how your plan is aligned from a competitiveness standpoint.

A partner who can pull data on your behalf, identify trends, and suggest changes can help you improve your benefits program and control costs. Does your broker offer additional data analytics beyond benchmarking? Data mining is an important element in interpreting the past to predict the future. If you receive detailed claims experience on your plan, this capability can provide clarity on historical claims, identify flagged areas, and ultimately enact change. Using these services could help you identify key cost drivers in claims to develop solutions. It can also help you identify chronic health conditions and any potential gaps in care.

Ask yourself: What kind of data analytics does my broker partner provide? Do they provide actionable insights when discussing strategy, or is that on me to figure out?

Business people shaking hands

Understand the Team Dynamics

Servicing Your Account

When you're meeting with a potential new broker and developing relationships, are you meeting with the team that will be working with you? When you build a relationship with a salesperson, you don’t want to get passed off to a whole new team that doesn’t know your business in the same way. If the salesperson remains involved, they can ensure your needs are being met, and the relationships built during the sales process continue to grow. Additionally, having another person who understands your company's pain points means you have another advocate on your side.

Ask yourself: Am I getting a seasoned team to service my company's ongoing needs? How will our teams work together?

In-House Experts

Your broker likely has multiple team members handling many aspects of your employee benefits program. Do you have a relationship with these in-house experts?

One example is data analytics—having a data analyst present on relevant calls allows you to ask data-related questions to the source directly. If you have a compliance question, can you ask your brokerage's in-house lawyer to hop on a call with you? Can your broker's communications specialist help you better educate your employees about their benefits and offerings?

Ask yourself: Does my broker listen to my needs and pull in the right experts to help resolve concerns?

Review Broker Compensation

Since broker compensation is a key concern for most CFOs, it’s important to assess your knowledge of how compensation breaks down.

Billable Hours

Some firms bill clients for the time they spend on their accounts. That means the clock is ticking once you pick up the phone to ask your broker consultant a question or to work on a specific project. Depending on your needs, this fact can make it difficult to form a true partnership. Firms that include consultation in their standard fees can take the time needed to understand your business fully; share their expertise in benefits; and guide you in cost, compliance, wellness, communication, and technology needs.

Ask yourself: What kind of interaction does my team want/need with the broker, and how could that affect the cost?

Compensation Structure

Benefits brokers can be compensated in various ways, including a commission, a flat consulting fee, or a combination of these. New transparency rules in the Consolidated Appropriations Act (CAA) mandate that brokers outline to the client the compensation they receive for their services. With this transparency, you can keep a pulse on what your broker is making and ensure you obtain adequate service in return.

As your company grows, it’s good to review the broker compensation method to make sure it’s still the right fit. For example, smaller companies traditionally have standard commissions built into their programs, but broker compensation can increase significantly when a company is in hyper-growth. In this circumstance, it might make sense to discuss lowering the standard commission levels upon renewal, putting in a commission cap, or carving out commission altogether, paying via a flat consulting fee.

Ask yourself: What do our employee growth projections look like, and how might that affect what my broker is being paid?

Your Broker Consultant Is a Partner

An effective broker doesn't view you as a number but as a partner. They're not counting hours spent on your account but working to ensure your questions are answered and your problems resolved. And they're continuously advocating for you, focusing on overall transparency and looking for ways to reduce your employee benefits costs while maintaining a competitive benefits program.

Of course, these are just a few of the things your broker can and should provide. Woodruff Sawyer checks off all these boxes and more, and we strive always to do the right thing for our clients.

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