In Part 1 of this blog series we offered tips on how to select a benefits broker and when you should consider looking for a new broker. In this follow-up post, we’ll take a look at the 5 Steps to follow in the broker selection process.
When contemplating how to choose a benefits broker we strongly suggest you start the process well in advance of your planned renewal date. The broker selection process is multifaceted, regardless of the size of your company.
There are a number of situations that may influence how to choose a benefits broker:
- It has been 3 years or more since you shopped and compared benefit packages.
- This industry has undergone many regulatory changes as well as technological changes and you may be questioning how well your current broker is able to keep in step with the times.
- You are questioning how much value your broker is bringing for the compensation you are providing.
- You don’t feel the day to day service your broker is providing is meeting your company’s needs.
Here are five recommended steps you should take when deciding how to choose a benefits broker:
Step 1: Build the Strongest Candidate Pool Possible
We recommend comparing 4 or more candidates for experience and services but finding the top compatible brokers may take some time and effort. There will be plenty of benefit brokers vying for your business.
The difficulty is in generating a refined short list of candidates. Prospective candidates need to not only specialize in working with businesses of your size and location, but also appreciate and address your employees’ needs and your goals and objectives as the employer.
Step 2: Create and Provide Candidates with A Request for Proposal (RFP)
Your homework is to create a “Request for Proposal” or questionnaire for prospective candidates. This will help you to determine exactly what you are looking for in a benefits broker. An RFP comes highly recommended by Society for Human Resource Management (SHRM) as it also calls for the candidates to document what they can do and are willing to bring to the table.
Keep in mind, the RFP or questionnaire should not be the only method used to help you choose a benefits broker, it is simply a supporting tool. Some top candidates may not reply solely to an RFP or the questionnaire you have prepared if they don’t trust they will have the opportunity to fully tell their story.
A simple but comprehensive cover letter to the RFP will help you achieve the response you are looking for by effectively communicating your needs. The cover letter should clearly state:
- Background information about your company and employees.
- Why you are looking for a new benefits broker at this time.
- How you can be reached to address any additional questions, or if they wish to learn more details about your needs.
The purpose of the RFP is to support your broker selection process, which may include, at your discretion, subsequent phone or email communications and possible in-person meetings or interviews.
Step 3: Compare & Score Candidate Answers and Choose Finalists
Refer back to your RFP or questionnaire for each candidate and compare the scoring.
Although the scoring is an essential part of the process of how to choose a benefits broker, be sure to recognize and take into account the relationship that will be built between you the prospective broker. Developing a strong rapport between you and your broker is also important. This can get overlooked if you are only focusing on the RFP rankings.
Step 4: Interview the Best Candidates for the Job
Once you have narrowed down your choices to just a few candidates, you will need to interview each of them. Use the RFP from each broker to generate follow-up queries for your next meeting. The final interviews will give you a good sense of what each broker offers and if they will be a good fit for the needs of your employees and your company.
Part of how to choose a benefits broker is finding someone you can develop a long-term, mutually beneficial relationship with. Someone you feel you can openly communicate and collaborate with as you move forward together to build the best benefit plan that will serve your employees.
Step 5: Archive Supporting Materials and Documentation
Congratulations, you’ve selected your new benefits broker! Just a few concluding notes to consider when hiring that will get you both off to a great start.
Services Agreement – Plan to sign a “Services Agreement” that will be used to govern the new relationship. The Services Agreement will ensure that there is complete understanding about the rules of engagement.
Terms & Conditions – A review of the terms and conditions from your attorney is always recommended.
Supporting Documents – Request that your new employee benefits broker also provide you with the following:
- Business Associates Agreement (BAA)
- A copy of their Privacy Act
- And a declaration on commission and fee transparency
Having these documents is not essential but is strongly advised.
We Are Here to Help
Do you still have questions about how to choose a benefits broker? Or, are you ready to start the process?
With more than 30 years of experience administering employee benefit packages for companies throughout the Western Provinces, the Yukon, and the NWT, we can promise and deliver effective strategies tailored to your company’s philosophy.
Let us help turn your employee benefits program into a profitable and much appreciated investment.