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.