SELLING BENEFITS BETTER
What to do when the old ways of selling just don’t work anymore
By Marcus Newman, RHU, CBC
The world of employee benefits has changed, and continues to change. The way advisors used to sell and administer health insurance has changed as well. Gone are the days when an advisor could pick up the phone and get a prospect to answer the call. Gone are the days when sending direct mail to a prospect’s office was effective, particularly now when so many are working from home. Gone as well are the days when it was easy to book an appointment with a prospective client face to face.
So, what can a broker do to continue successfully selling benefits? The answer: Do it better.
The global pandemic and community standard rating for smaller businesses are not leaving us room for outdated approaches. We all need to get creative when it comes to finding our prospects’ “hot buttons.” So, how can we accomplish this?
A common challenge
Ask any number of businesses what their biggest challenge is right now and they will discuss the trouble they are having hiring quality staff. Wouldn’t it be something if an advisor could help these businesses understand that their approach toward health insurance might be the solution? Well, now that’s possible.
Businesses that are having trouble filling open positions are everywhere and are in need of creative solutions. One can drive through just about any town in the country right now and see advertisements for signing bonuses and other perks. A Chicago-area Kentucky Fried Chicken had a sign posted outside offering a $500 signing bonus while the Burger King across the street was offering a $750 signing bonus. Circumstances like this show just how dire the hiring situation in the U.S. has become. The problem is that it’s not just fast food businesses that are experiencing this dilemma. Similar complaints are being heard from prospects and clients in just about every sector of the economy.
Many companies, like the ones mentioned above, have reported that they are offering these signing bonuses and higher starting salaries in order to attract people and, hopefully, fill positions. Strange as it may sound, this unfortunately may not be the most cost effective way to find and hire the right employees.
A creative solution
In the insurance business, an advisor can separate himself or herself from the rest of the pack by demonstrating their creativity as a forward-thinking advisor. An insurance advisor should encourage prospects to consider the idea that paying more toward employee health insurance can solve their problems and offer a better financial solution for their business, rather than offering incentives like sign-on bonuses or increased salaries.
When a business offers more money to potential new hires, there can be a significant financial impact. Taxes will ultimately cause the business to spend even more money than they originally intended to offer. When higher salaries or bonuses are paid to employees, that results in more taxes paid to the government. Businesses can expect to pay approximately 10%-12% to Uncle Sam.
Don’t forget about a prospect’s retirement plan. If there is a match, then employees who are paid more will, on a percentage basis, have larger amounts deferred. This means the company must contribute more as well. How about another 3%-5% of the increased offer?
Additionally, advisors should remind prospects that higher starting salaries can also result in the expectation that existing employees will receive increases too. Attracting does little good if you can’t retain. A mass exodus can be expensive. And the impact could be long lasting.
It’s important to help prospects understand that implementing a forward-thinking health insurance strategy is the superior move from a financial perspective. A business can pay more toward the health insurance of its employees without any additional taxes. Additionally, an increased contribution toward insurance benefits does not necessitate additional contribution to a retirement plan.
Simply put, it costs the business less money. Compared to a signing bonus, health insurance contribution is spread out over 12 months and therefore protects cashflow in a way that a signing bonus does not.
The time is now
Our nation is still struggling to come out of a global pandemic. As a result, employee appetite for health insurance is at an all time high. Millions of people have been unemployed for some time. Many of them were sick or afraid of getting sick. With government assistance with COBRA continuation coming to an end, many potential hires may find themselves without adequate health insurance.
If a company wants to get the attention of job seekers but does not want to commit to paying for the entire health insurance premium, an advisor can suggest a solution—and show their value. For instance, they can suggest the introduction of a bronze high-deductible, limited network plan for small businesses. This option can cost significantly less than their current choices. For example, a company could create a $0 cost option for a single employee. Then, using that plan’s premium as a “jumping off point,” the group can ask employees to pay the difference, or a percentage of the difference, for a plan upgrade.
Ask … businesses what their
biggest challenge is right now and they will
discuss the trouble they are having hiring quality staff.
[What] if an advisor could help these businesses
understand that their approach toward health
insurance might be the solution?
By using such an approach, businesses can advertise “free health insurance” and significantly increase the number of applications they receive.
Exploring a creative approach with prospects by suggesting that paying more for employees’ health insurance will address their hiring concern, appease current employees and, without any doubt, cost less money. If an advisor decides to use this approach, it is important to remind prospects that, in regard to existing employees, treatment needs to be equal across the board. What is done for one, must be done for all, meaning that a strategy of paying more toward health insurance must be applied to all employees.
An advisor could suggest explaining to existing employees that they will pay less for their insurance, which will go a long way in the retention department. Essentially, clients will be offering a small raise to their existing staff, and, arguably, at a discount to the business. Who doesn’t like the sound of that?
Of course, it goes without saying that every business has unique circumstances and there is no “one size fits all” solution to hiring or benefits. A quality advisor is aware of this and approaches every prospect with an open mind and no agenda.
Based on personal experiences and with what is reported in the news, a business won’t have to look far to find a prospect interested in this approach. Use it wisely, create meaningful conversations with your prospects, and show them an advisor who is capable of bringing creative strategies to the table that address their biggest concerns.
By doing so, an advsior will definitely stand out and sell benefits better.
Marcus Newman, RHU, CBC, is vice president, Employee Benefits at GCG Financial, an Alera Group Company, a provider of employee benefits, risk management and wealth management solutions. You can email him at Marcus.Newman@gcgfinancial.com or visit www.gcgfinancial.com.