Employee Benefit Adviser: How to Boost Ancillary Commissions through Enhanced Enrollment Tools
For many small employers and their advisers who still do open enrollment through the traditional pen-and-paper process, switching to an electronic system can be a win-win scenario for all.
By transitioning clients of all sizes to an online platform, brokers can not only expand their clients’ benefit offerings and reduce the chances of input errors, but they also have the potential to triple their ancillary commissions in a few years, say ben admin professionals.
Alex Tolbert, founder and CEO of Bernard Health and its ben admin platform BerniePortal, says moving a client to an online enrollment platform will not grant a broker a double or triple boost in commissions overnight, though. To achieve an increase in ancillary commissions of that size would require work with multiple clients over the course of at least 24 to 36 months.
“It is a very real goal to achieve. It is worth it because if you have a broker business that makes $1 million a year, you can add $100,000 a year in broker commission that is mainly profit, because these are customers that you are already talking to,” Tolbert says.
Carriers are seeing, on average, just under one-third of eligible employees purchase voluntary benefits during enrollment, according to Eastbridge’s 2017 Voluntary Participation Rates Spotlight Report.
This increase in enrollment is credited to the combination of decision support tools and the ability to speak to someone via phone or face-to-face should employees have questions about their options.
Bart Yancey, CEO of DirectPath, says many online enrollment tools today allow employees to take a quick questionnaire in order for the enrollment platform to identify the types of benefits the employee may want to enroll in to reduce uncertainty among overwhelming options.
“One of the differentiators we have compared to our competitors is that we don’t stop with just the online tools,” Yancey says. “A lot of employees prefer to have the ability to access a knowledgeable educator or coach about complex benefits, specifically when it concerns healthcare.”
Yancey adds that employees can set appointments with non-commissioned benefit educators through the DirectPath platform, allowing the employee to have a one-on-one walkthrough during the enrollment process.
Eliminating human error
One area to target when helping clients to expand offerings, Tolbert says, is disability insurance. “The number of people who have disability insurance is way below what many would say is appropriate, because it is so hard to sign-up for on paper,” he says.
Disability insurance is based on an employee’s percentage of earnings and can sometimes be driven by the employee’s age. Corey Friedman, vice president of benefits consulting at GCG Financial, says when enrolling for disability insurance on paper there are multiple factors to consider during the process that can lead to unnecessary human error, resulting in many employees not enrolling in the benefit all together.
“An online enrollment tool would do all of that math for somebody just by identifying what benefit they are eligible for and what the contribution per month or per paycheck could be,” Friedman says. “It makes it very easy for someone to evaluate financially whether or not this benefit is worth their enrollment.”
Friedman adds that if the process for enrollment is simplified for the employee then more employees will enroll in the benefits offered.
“In time, you will see more people enroll in benefits that currently exist just by making it easier to enroll,” Friedman says. “Clients could then start to introduce more benefit options to employees and that can also increase participation.”
Rising participation means greater commissions for the broker. However, Friedman says that should never be the driver for any adviser. “Any broker that is introducing technology in an effort to generate additional participants for the sole purpose of generating higher commissions is doing it for the wrong reasons,” Friedman says.
Read the article here.
(Cort Olsen is associate editor at Employee Benefit Adviser.)