Questions to Ask Your Group Benefits Broker

Good Group Benefit brokers can really add value to group benefit plans.  A good benefits broker is experienced and knowledgeable on designing and implementing a good line up of benefits.  They can help save money by tendering the plan to different providers from time to time.  A good broker continues to service the account through communication, educational meetings, and reviewing the plan from time to time.

That being said, not all brokers are created equal and I’ve seen many circumstances where employers have no idea who their broker is.  Far too often, I’ve heard stories where brokers came in and did a slick presentation off the start and then never came back to service the account.  I’ve also seen situations where the service provider is the only one servicing the account as opposed to the broker.

Benefit plans including life, health, dental and retirement plans are an integral part of attracting, retaining and rewarding employees.  Employers spend good money on benefits for their employees and brokers get paid to put these plans in place.

A good broker can take a mediocre plan and make it exceptional.  But what makes a good broker?  That will be different things to different people but here’s a list of questions I suggest asking to help figure out if they the broker is working for you!

Is your group representative truly independent?

Many group brokers work with only one or two carriers. Some brokers work only for one institution.  This is a problem for several reasons. Shopping the market is one of the keys to implementing a good benefit plan.  There is just too much at stake to not tender the plan out to different carriers.  Truly independent brokers recognize the importance of shopping the market as one of the keys to success.  Shopping can not only save you money on fees but also find better service.  Shopping is also something that should be done regularly.  As a rule of thumb, this should be done at least every three years. This requires some work by the broker, but that’s what you’re paying for.

Did your group representative negotiate your renewal rate?

Many group representatives will simply let your group plan renew without even contacting the insurance company. Insurers are in business to make a profit. It’s your broker’s responsibility to make sure your renewal rate is justified and that you are receiving the best value for your group benefit dollar.

Are you working with a true group specialist?

In talking to some of the biggest group benefit carriers, more than half of the plans are sold by what I call generalists.  These are people who sell anything to anyone.  They sell life insurance to families; They sell mutual funds to retirees;  and they sell group benefits to employers.  Group insurance is one of the more complicated forms of insurance planning. It is crucial that your broker be up to date on industry developments and specializes in employee benefit plans.

How does your group representative get paid?

Commissions vary from flat to graded rates, and some brokers charge additional consulting fees. This directly impacts the premiums your company pays and should be fully disclosed by the broker.  Good brokers have no problems sharing how and how much they get paid.  It’s important to know not only how the broker gets paid but also what value they will bring to the plan and how they plan to service the account and your employees.

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace. For more information you can follow him on Twitter @JimYih or visit his other websites Group Benefits Online and Advisor Think Box.

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