The changing role of advisors and supplemental benefits
by Brad GalineyMr. Galiney is senior vice president, Employee Benefits Distribution, with Voya Financial, Inc. Visit www.voya.com
Supplemental health insurance used to be just a subset of an employer’s benefits program – a nice addition for employees who wanted a little safety net in case of an unexpected life event. It wasn’t a necessity when employers funded the majority, if not all, of their employees’ health care plans and when health care and living expenses were more manageable. Those days are now gone for many, with increasing health care costs and other financial demands tugging more and more on employees’ purse strings, jeopardizing current and future retirement savings. What were once “voluntary” benefits that so many previously glazed over during enrollment season are quickly becoming necessities for both employers and employees.
While this might seem like a daunting challenge to some, it is an exciting time to be part of the benefits industry. As an industry, we are at a point where we can make big differences in people’s financial wellbeing by making relatively minor changes in how we approach delivering important insurance products to help people plan, invest and protect their savings.
Thinking Holistically About Financial Wellness
Over the past few years, large numbers of employers have moved to high-deductible health care plans (HDHPs), shifting the onus of health care costs to employees. At the same time, the costs associated with health care are increasing. This is leading to more out-of-pocket expenses for employees that they might not be prepared to cover. In fact, Voya’s own data indicates that half (50%) of the people who have used our financial wellness experience do not have enough emergency funds to cover three months of living expenses, and nearly two-thirds of retirement plan hardship withdrawals are due to unplanned medical costs.
What’s more, studies are finding that financial wellness plays a large role in employee productivity, affecting employers’ ability to achieve their business goals. In PwC’s 8th annual Employee Financial Wellness Survey, 35% of employees reported that issues with personal finances have been a distraction at work. This trend reinforces the need to make these supplemental benefits a more visible and integrated part of a workplace benefits program.
The good news is that more employers are offering supplemental benefits, creating more holistic benefits programs that can mitigate employees’ financial stresses and can help employees with their financial wellness. According to a recent LIMRA report, new annualized premium for voluntary insurance products increased 3% year-over-year from 2017 to 2018.
Making the Most of All of the Choices
Fortunately, there are a lot of products and tools to help with various financial challenges and fulfill an employers’ benefits goals. The need for supplemental insurances – e.g., accident, critical illness/specified disease, disability income insurance – as well as health savings and spending accounts offered through the workplace – can help individuals fill the financial gaps caused by unexpected, covered events, and protect their long-term financial savings and investment products such as their retirement savings plans. With so many options, employers and employees need help understanding the value of all of the available choices. If given too many choices, they may decide to stick with what they’ve always had or worse, decide on nothing.
During benefits planning with employers, we have limited mind-share and limited share of wallet. A lot of companies are offering a lot of choices for employers, and lines are blurring between historically distinct firms in the workplace benefits market. Group and worksite carriers in financial services and health care, financial technology and human resources platforms, benefits administration and enrollment firms are just a few of the examples of organizations playing across markets. Employers count on their advisors to whittle down the choices to those that will provide the most value and best client experience from the initial sale, through implementation and ongoing administration.
The same is true for employees during enrollment season. Enrollment fatigue can often set in by the time they get through their major medical, eye care, dental and group insurance choices – which was all they typically needed with past employer-paid health care plans and pensions. In addition, each benefit tacks an additional premium payment onto their payroll deductions. Reasons to consider supplemental benefits must be clear, compelling and part of the employees’ bigger financial picture to pique their interest. Also, employees often don’t know the difference between all of the benefits being offered. Many of these products are fairly new in the benefits space or the policies are laden with industry terms that don’t clearly communicate the purpose and value of the products. For example, employees may not know the difference between accident insurance and hospital confinement indemnity, or a health savings vs. a flexible spending account.
It’s not all or nothing for employers or employees. Employers should choose the benefits they believe will best fit their benefits goals and their employee demographics. And, for employees, just one or two supplemental insurance choices can mean a world of difference during an unexpected covered event.
The Changing Role of the Advisor
Given the above, it’s increasingly important for advisors to adapt with the changing market demands. As “voluntary” becomes “necessary,” advisors need to go beyond pulling products off the shelf and instead become more consultative. They need to work with employers to determine the right benefits to fit their business and employee goals, and employees’ understanding, enrollment and use of the benefits should be the ultimate measures of success.
Here are four ways you can adapt to help employers and consumers make sense of it all:
Decide whether you want to be a generalist or a specialist:
Learn more about the broader choices an employer needs to make, so you can be fluent in myriad products; or be a specialist in just one, knowing who to go to for other product knowledge to help pull together a holistic benefits program. For example, if you’re an expert on voluntary benefits, and your client’s health care plan is self-insured, work with your colleagues who are knowledgeable about stop loss insurance as a way to help protect both the employer’s and employees’ financial wellness.
It’s always easy to do things the way we’ve always done them, but it’s more important to do the right things at the right times. Consider packaging benefits in a way you think will be of most value to your clients and in a way that will help them see the full picture. For example, for employers offering HDHPs, suggest an HSA that complements both their HDHP and their retirement-savings plan for added tax-advantaged savings and growth to and through retirement.
Provide tools to help employers and employees:
Serve employers and employees when, where and how they want information and assistance. Online reporting can give employers easy access to administration and engagement data. Online education tools can lay the groundwork for employees to see how their benefits can help them meet immediate or future needs. Online claims systems can help employees get the benefit they need when they need it. And, of course, nothing replaces the personal touch of experts in service centers when customers need clarity, assistance or just affirmation that they’re doing the right thing.
Ask questions and bring feedback:
Benefits providers appreciate an ongoing dialogue. It’s how we improve – together – to help employers and employees and their families achieve financial wellness and be future ready.
Employers want to feel good about their choices and know that their investments in their benefits programs are being put to good use. They look to advisors to help them make the initial decisions, continually evaluate them and to keep them apprised of new opportunities to bolster their benefits programs. Let’s take the word “voluntary” out of our benefits lexicon. Combined with a health care plan and a retirement savings plan, supplemental insurance benefits can be an integral part of the foundation for financial wellness now and in the future. ◊