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.

Consumerism in Healthcare is Not Practical


I read a lot of articles about consumerism and how employees need to be better consumers. And as one who implements technology I am very familiar with most of the decision support tools in the market and all the online symptom checkers. So let me make a bold statement. It is all garbage. I have always thought that individuals will never have enough knowledge to make educated health care decisions. Health care is too complex and always changing so how am I ever going to have the time to keep my knowledge current. I don’t want to, trust me. And the last time I needed health care I was driving very quickly to the emergency room. Not a lot of time the think there.

I recently listened to a presentation that Aetna CEO Mark Bertolini gave a few years ago at Stanford. (you can see it here) The final question asked of him was as follows: “How do you create a more educated consumer in a marketplace where they are being directing their own health care decisions?” What surprised me was his answer.

“Trying to educate to everybody on how the health care system works and the level of detail isn’t going to work. Sorry to say. And the reason is that unless the amount of information I can gather is immediately available and that when I act on it has an immediate response I am not going to pay attention to it.”

With all the articles out there about consumerism and directing one’s own health care I thought I was the only one that had such view.

Every time I have my car fixed I am wondering whether I am getting ripped off. I don’t know enough about cars to “shop the market” for service. I remember watching 60 minutes or one of those shows where they show auto mechanics taking advantage of everyday consumers by doing things people didn’t need. That’s me. I wish I had a trusted auto consultant who would tell me whether I really need the services some mechanic is saying I need. You get my point. If I don’t know whether my car is getting the proper treatment how the heck am I expected to figure out whether my doctor is doing the right thing.

Just last night my wife and I had a debate about the value of multivitamins and we couldn’t even agree on whether they worked or were a waste of money. So I Googled the topic, read a bunch of articles, and still don’t know whether multivitamins work.

Let’s not confuse choosing health care versus choosing health insurance. When choosing health insurance is one supposed to be predicting what their needs are going to be in the next 12 months to essentially “game the deductible”? Insurance is supposed to protect one from an unanticipated event that may cause financial duress if one were not insured. Anything that doesn’t fit into this category is simply a reimbursement plan. Dental insurance is almost not insurance. It is a prepaid reimbursement plan for most. There should be two types of insurance plans. One that runs like dental and is simply discounted reimbursements, and another that is real insurance. It is for this reason health savings accounts should rule the day.

So what is the solution? I don’t like when people run around talking about the problems without giving viable solutions so I won’t do that myself. I always say that stating the problem is easy, it is the solutions that are tough. Let me start with what I would want as a consumer. I would want someone who would give me sound advice as to what is proper treatment. I want someone who has an incentive to do the right thing for me. I want someone who would spend my money as if it were their own.

I think the solution requires properly placing incentives. I want to live a healthy, happy, long, and financially viable life. I want someone advising me who understands my goals which I will safely say that these goals are more than likely shared by many. I am all about incentives. It is funny how when you have the right incentives you get better outcomes. That requires having someone who wants me to be healthy and not just fix me when I am broke. This sounds like the things I would want from my car consultant who would advise me on how to take care of my car. I want my car to last long, be healthy, and financially viable. I am not sure what a happy car would look like.

There are emerging models out there that will provide this type of service. And making consumer based decisions around the small stuff may become common. But as a means of controlling healthcare costs, no way. We all know that the majority of health care costs come from few people with chronic conditions. If I need to have my oil changed maybe I can shop the market. But if I need a new engine I would hope to have a very educated mechanic at my side to help me make the best decisions.

Participate in our 2016 HR/Benefits/Payroll Technology and Services Survey


HR Technology Advisors is conducting our 2016 National HR Technology survey for the small to mid-sized employer market. We conducted this survey two years ago with great success and we are doing it again. Much has changed since then. This survey will help benefits brokers and employers gain an understanding of the following:

• What employers are using for technology (HR/Benefits/Payroll/Time and Attendance/ACA)
• Satisfaction levels with their vendor
• Who is looking for new solutions
• Who they are moving to and who they are moving from
• What employers are looking for from a capability standpoint
• Who is deploying employee self-service via web and mobile
• Vendors employers are using for ACA Tracking
• And more…..

With old brokers and new brokers leading with some technology solution, many giving solutions away for free, we think it would be important to:

• Know what your clients have
• Know what your clients want
• Know who is shopping
• Find out what vendors employers are really using versus listening to the sales pitches from the vendors.
• Provide your clients with valuable market information

If you are a broker and want to participate you can do so by clicking on this link. There is a fee to sponsor the survey and personalize it for your firm. Considering all the money and time brokers are spending on evaluating and paying for technology this is worth it.

If you are an employer and would like to participate send me an email or give me a call. Contact information is below. I will send you a link to take the survey. A summary of the results will be provided when we close the survey.

Participants will be eligible to win a $500 Gift Certificate.

Brokers Click HERE to Participate

Contact information: Joe Markland – 508-530-5043 jmarkland@hrtadvisors.com

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.

Are You Too Comfortable to Change?


I don’t hide the fact that I think the benefits world is going to change. And when giving presentations I often refer to a quote by Steve Case from his book the Third Wave that states “Incumbents often fail because they underestimate the speed at which the future is approaching.” But something became evident today when talking to a broker about some of the changes going on in the industry when I realized that he simply did not want to change. More likely he didn’t want to take risks. Not everyone is a risk taker. In fact, very few take big risks.

I have heard at least once, or maybe a hundred times, that benefits firms are struggling with organic growth. The thing about the benefits business is that it is getting commoditized. I hear it all the time. I don’t always hear it from the business owners or the producers living off of a block of business and referrals, but I do hear it from the young producers who are dialing for dollars and knocking on doors. They are begging for differentiators but often the owners are living in a different world. And from the owners’ seat many don’t see the different challenges between what the veterans and what the rookies are facing as it relates to the competitive market.

To be competitive in today’s world it is important to change. To have a unique value proposition that is not easily duplicated is important. But change often requires taking risks. As Mark Zuckerberg says, “In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”

The thing is few want to take risks. I have pointed out new competitive threats many times to brokers who did not act until they lost business. In fact, over 50% of our new clients lose business after hearing about a competitive threat and not taking action. Losing business is a pretty big motivator. Yet most won’t act until they feel the pain.

I had one broker tell me his clients or prospects didn’t want one of the new HR technologies. I couldn’t imagine every firm in his market thinking the same thing. Anyways, what I didn’t tell him was that the reason I was calling him was because I was working with an employer that told me she decided not to choose him as a broker because of his technology strategy. Brokers often know why they lose clients but often don’t know why they lose prospects, which was the case here. Do you know why you lose prospects?

I have had people read my articles and ridicule me because of the message. Often I am just pointing out that there are some out there who say the benefits business is going to change. Zenefits, Gusto, and Namely are changing it. The CEO of Aetna says it is going to change. The government may also want it to change. All are a threat to the status quo. Sometimes I think that people don’t want to know these things. It is like having a lump in your side and you don’t want to check it out because you may think something major is wrong. If you ignore it, it will go away. Well, I don’t think so.

Change doesn’t happen because you wake up one day and say “I’ve changed”. And change doesn’t happen because you stock your shelves with a few more products or services that are easily attained by anyone. I see many people “pretending” to change but not really changing. And I say, “not really” because the changes I imagine brokers need to make aren’t easy. Many brokers are choosing “easy”, thinking they have made big changes. If the change doesn’t make you feel uneasy. If it doesn’t appear to be very risky, then many will do it, and they do. Then you are not unique.

Personally I think there are big opportunities in the benefits business. I would say more so that I think there are big opportunities in the human capital management business of which the benefits is a piece. But to capitalize on those opportunities one must change. And this change requires taking risk. Big risks.

So you can stock your shelves with new toys. You can do all the sales training in the world.  But what if insurance commissions were cut in half on January 1st?  What if the government made individually based health insurance tax deductible? What if Zenefits, Gusto, Namely, and Paychex are right and employers will switch brokers for HR and Payroll technology and services? That would require the type of change I am talking about. And if some of these things happen and you “underestimate the speed at which change is approaching” could you survive?

I don’t want to over-generalize but I think we have an industry where taking big risks isn’t the norm. Protecting the status quo is. But there are big opportunities for those that really want to take some risks and Challenge the status quo. Feel a little uncomfortable. Work a little harder. And have a lot of fun along the way.

I am going to finish by saying our new business, ProHCM is all about challenging the status quo. It is taking a big risk. It is different, very different. We are betting on and preparing for a future that may be approaching faster than most anticipate. I am looking for the blue oceans. So I will finish with a quote from another FaceBook employee, the COO, Sheryl Sandberg, “If you’re offered a seat on a rocket ship, don’t ask what seat! Just get on.” It could be fun.

Don’t Sell Lawn Tractors When They Want Landscaping


I have written many articles and have spoken at many conferences about HR/Benefits/Payroll (HCM) technology and services and how the coming changes are going to impact the benefits business. I often have used a lawn tractor/landscaping analogy to make it easier for the audience to understand some of the key points in my position on the market. Yet, just the other day, a person who I have spoken to several times in the past, made a statement to one of my salespeople that would indicate that he really did not understand the concepts I was espousing. So I have decided to put these concepts in print so it is accessible at any time. If you have heard me speak before or read some of these blogs it may get redundant but at least I warned you. This may also get long but I do want to cover all the details.

One of my first articles around this concept was when I wrote an article about Zenefits titled, “If You Want Results Like Zenefits You Need to Mow the Lawn”. My key point was that I felt brokers were viewing the attraction of Zenefits the wrong way. On the surface it may appear the attraction was free HR Technology in exchange for the benefits business. When I looked at their marketing I concluded that what they were selling was the idea of making HR easier. They were promising “worry-free”. I like to say they were selling life preservers to people drowning in HR administration. And the analogy I used was that if I wanted to mow my lawn I could either buy a lawn tractor or lawn mower, or I could hire a landscaper. If I hired a landscaper I would go to work and then come home and my lawn would be done. A landscaper would sell me “worry free”. When I hire a landscaper I am buying a service, not technology. On the other hand, if I bought a lawn tractor I would need to fill it with gas, learn how to drive it, and mow my lawn once or twice a week. Lawn tractor is a technology purchase while landscaping is a service purchase.

In the HCM technology and administration market I think there are different types of buyers. There are those that want to buy technology to manage their HR and there are others that simply want someone else to do it. One may want a lawn tractor and the other wants a landscaper. Or you could be like me that uses a lawn tractor to mow my lawn but a landscaper to fertilize, do spring and fall clean-up, and plow my driveway in the winter. Employers may use technology for some things and want to outsource other services. Or they may mow their own lawn until they go on vacation and have someone mow it while away. Different people have different needs.

The comment the person made to my salesperson was that he thought at my company we only represented one technology vendor and he wanted to represent the market. I guess what he did not understand was that at HR Technology Advisors we provide different services. We have a technology consulting business, where we help employers find the best technology (find the best lawn tractor) but we also have a landscaping business. To stick with my analogy, if you were to have a landscaping business you would need lawn equipment. And you may need to choose between a John Deere, Toro, or whatever else is in the market. You may also have more than one. For larger lawns you use a John Deere commercial stand-behind 50-inch lawn tractor but for smaller lawns with tighter spaces you may use a Toro 20-inch push lawnmower.

Recently we launched a new business, ProHCM, to put the focus on the services. The best way I can describe it is that at HR Technology Advisors we helped over 1000 employers find the best lawn tractor (HCM Technology solution) through 40 different vendors. We have been agnostic. ProHCM is our landscaping business. If an employer simply wants someone to do the work, we can do it. We can manage their payroll, support HR, or do whatever it takes to help the employer in the HR area.

However, we also have a lawn equipment repair business. In the process of consulting employers on technology, one option is to fix what they have. So, we help employers fix their current technology. And if you were start a lawn equipment repair business it would be smart to learn how to fix the lawn tractor that is most widely used. You will get more customers that way. In our business that is ADP. When we fix ADP for an employer we aren’t helping ADP. We are helping the client who has already purchased ADP.

In the HCM technology space there is a big disconnect between the technology sellers and the buyers. The sellers are essentially selling technology with Payroll services but the buyers are thinking their getting a landscaper too. They think that they are buying services well beyond what is being sold. This has created another gap in the market that few are seeing. It is actually this gap that prompted the forming of ProHCM. So part of ProHCM is to provide services to fill the gap between what the client thought they bought and what they really bought.

I often show the example of how we add content to an employer’s HCM platform to help communicate benefits better to the employees. The HCM technology vendors provide benefits communication technology but they don’t provide the service of adding the content to the employer’s system. And they also don’t create the carriers content. So we have a service that adds benefits content onto the HCM platforms. It is a service. Once again, we aren’t helping the technology vendor, we are helping the employer communicate benefits to their employees.

Then there are the employers that have bought their lawn tractor (HCM Technology) but don’t know how to use it very well and need help. Recently we had an employer using ADP technology whose payroll person quit. They had the ADP lawn tractor but the person internally who mows the lawn quit. Our service supplies them with a person to process their payroll using their technology until they hire someone new to pick up the work again. They needed a landscaper to mow their lawn using the lawn equipment they already purchased. Once again, if you are going to provide the service of managing someone else’s payroll what system would you get to know first and best? You would know the one that more employers are using. If you were to write an app for a smartphone wouldn’t you write one for the iPhone? It would be smart. Apple has lots of customers.

The services under a landscaping business can vary tremendously. Some people just mow lawns. Others will edge, trim hedges, fertilize, and do fall clean-ups. Some will also handle sprinkler systems and others have landscape architects available to do design work.

In the HCM technology and services business the same is true. There are those who provide benefits outsourcing and others that provide HR outsourcing services and payroll too. Some like Zenefits, Gusto, Namely, and Paychex have added benefits advisory services to their menu. Smaller employers will more likely look for a single source for these services to make it easier, but also it is often cheaper to do it all under one roof too. Simpler and cheaper is often a popular formula for business success. It attracts lots of customers.

Some brokers don’t want to provide all the services. That is Ok, as long as it is Ok if a certain percentage of the market is no longer considered a prospect. I think more and more small to mid-sized employers will be looking for a single, or fewer sources, to manage their HR. And we all know that there are many larger employers who are understaffed and need help too. From my perspective, as the HR world gets more complex, the demand for these outsourced services will expand.

Some brokers have partnered with some payroll or HR company down the street. I think that there is a difference in how a buyer would perceive the value from a firm that brings in all kinds of third-party vendors from those that “own” the outcome. There is a difference in selling someone else’s stuff versus selling your own. I wrote about this in my article titled, “An Arms-length May be the Distance Between Winning and Losing”. First, there is the accountability thing. Second, it is often more expensive to buy these services in pieces versus buying them together. Many firms, and not just the Zenefits and Gusto’s of the world, provide lower prices for some products or services if the benefits BOR is included. Brokers have been doing this for years with benefit websites, HR Libraries, HR call centers, benefits enrollment systems and more. It is not Zenefits that created the great “giveaways” in the benefits business.

ProHCM provides the services that brokers may not want to provide such as answering a payroll question or providing an employee to manage their HCM technology when someone quits. There may be a time when the broker may need to provide a service more core to the benefits business that on their own can’t afford to provide such as a benefits call center on nights and weekends. I could go on and on with examples of services needed today or in the future that may require an investment and scale.

I guess the last point I will make is that selling lawn tractors is much different than selling landscaping. Think of what you say when selling me a lawn tractor versus selling me landscaping. Pause here and think about this. It is much different than selling landscaping. If you were to sell me landscaping would you take me out to the driveway and ask me to see your lawn tractor or to “demo’ it? No. They don’t care how you mow the lawn. They want it done right.

At ProHCM we have multiple lawn tractors for our landscaping business. One for smaller employers and another for larger ones. When someone hires us to find the best HCM technology we don’t show them our landscaping business. When someone wants landscaping we don’t demo lawns tractors. I don’t think there is a conflict. They are simply different. I don’t think someone who has a landscaping business thinks that someone who sells lawn tractors is a competitor or vice versa. They understand the difference.

I would contend that the biggest problem Zenefits had was that their sales pitch sounded like they were selling landscaping but they then delivered lawn tractors. Some people will accept and run their own technology but many others will need help. Those employers either not capable of running the technology and those expecting more services would not have been happy. Zenefits will get it right in time.

So when someone says that we favor ADP I would disagree. We provide services to help the client that may have the ADP lawn tractor. We help the employer, not ADP. We could help someone who has Kronos too, or Ultimate, or Ceridian. Though I am sure ADP others appreciate the fact that we help keep their customers happy. And if you were to start a service business to fix or support some technology it would be a sound business decision to provide a service around the technology that more employers are using. If you were to start a landscaping business, you would need to choose your equipment. If you choose to use a John Deere that would not make you a John Deere salesperson. You would be selling your landscaping.

When it comes to the next prospect meeting and technology comes up make sure you know whether they really want technology or if they want the services. Or maybe they want both. And it would be important to understand what services they need.

I hope this is helpful. This lawn tractor/landscaper analogy may not apply to every situation but it works for me.