Opportunity Cost: the loss of potential gain from other alternatives when one alternative is chosen.
Would something like this be relevant when it comes to Employee Benefits and brokerage selection? Absolutely. There is a running joke in the industry about ‘golf course brokers’ and as with anything comedic, there is an element of truth to the statement. Has your broker ever claimed ‘the market is the market, but we do great work (and/or we are popular), so stay with us’, or that ‘trend is normal, paying more is ok’? If you have heard these statements, the inherent truths are:
The broker is leveraging a relationship over delivering value. The market, strategies, workflows, are NOT the same from brokerage to brokerage. Consider this; is every attorney or surgeon equally skilled? No, of course not. There is a continuum of talent, ability, and efficacy that exists in all professional services. If you believe this doesn’t exist within the realm of employee benefits, then you may benefit from a 2nd, 3rd, or 4th broker opinion. Truthfully, the most talented consultants will not give their secrets away to non-clients, and why should they? Would you see a Dr. and get his or her advice and then tell another Dr. who is your friend that they should treat you with that treatment plan? Would you refuse to pay the Dr. that gave you the best advice? Of course you would not. This happens all the time in employee benefits, but it isn’t justifiable or ethical.
Sure, pharmacy prices rise, and medical technologies MAY constitute higher prices for these services, but should you pay more for ‘industry trend’? Trend is a fancy way of saying, ‘we cannot identify where your dollars are going, but healthcare costs a lot and you should pay more each year’. Is that acceptable in the remotest way? No, it isn’t. Know your data and control your risk. Find an advisor that is obsessed with transparency and a better future for all. Only then will you know that you are paying the appropriate amount for premiums.
If you noticed that most of this post is NOT addressing the relationship between company and broker, you picked up on an important fact. Relationship does NOT supersede value. If a broker that is inherently aligned with a positive outcome for your business approaches you, have a listen. Put another way, have you ever wanted to pay $50,000+ per year more for worse coverage just to be ABLE to shake someone’s hands once per year? Is their handshake worth 50k?
Like your broker, but DEMAND value first. Your P&L will thank you. Your staff will thank you. Let the best Consultant WIN your business and don’t be afraid to hire someone that can perform better for your company and staff.