What is the role of the local broker under PPACA?
In the current broker/client business model local relationships are clearly preferred. However, that does not take into account the new health care landscape. Consider the advent of insurance exchanges. If Massachusetts is an example, a state’s exchange could gain a 30% market share in 3-4 years. So the client may purchase a health plan online without a local broker; the broker won’t necessarily be the only access point for products. So the question becomes, what is the role of the local broker in the future? And will most be able to evolve to fill that role?
And for those of you thinking that client loyalty will save the day, just ask travel agents now that 90%+ of all travel is booked directly or thru a website without the assistance of a travel agent. On the other hand, clients will always need a strategic advisor. Will that always need to be provided locally? If it’s about expertise and guidance, does it matter where the advice emanates from?
Selden Beattie acts as our client’s strategic benefits consultant, creating the roadmap for all major benefits decisions, and jointly we update their priorities on an ongoing basis. We are beginning to collect consulting fees for all that guidance and consulting services. We want to be the “insider”, their “trusted adviser.” In some instances going forward, we can envision clients may opt to purchase through an exchange, or still have a local broker, albeit one that is not a trusted adviser and one that likely will be compensated differently (less) in the future because their role is being de-valued.
However, in our opinion, a trusted adviser that can provide a methodology for managing change and planning benefits strategically, will continue to be valued regardless of the risk transfer mechanism selected (fully insured, self-funded, high deductible, hybrid, etc. with or without a local broker). We think this is especially true during a period when change and uncertainty will prevail for a minimum of four years. What do you think?
Regardless of how the political climate changes the landscape, we think there will continue to be a need for strategic planning in benefits, retirement and financial planning, etc., because clients need expertise and because the adviser can take care of problems the client does not want to deal with. The products and services are the solutions. The goal is to identify the critical needs and problems, and to then provide solutions.
So there is no silver bullet; no one product or service that is going to be the “break through, slam dunk widget sale” and that’s the beauty of it. Advisers that are highly consultative and that employ a needs-analysis approach will always uncover needs/problems and then identify appropriate solutions. “Reading the tea leaves” to identify the needs is the focal point. It’s not about selling widgets; it’s about providing solutions.
Please post your thoughts in the comments on this very timely and topical issue.
By Beverly Beattie