There’s a misconception among many employers that using the benefits administration platform included in your benefits consultant’s services will result in smoother transactions and more coordinated administration. In our experience, this is not the case. Further, we believe that employers short-change themselves when they limit their options to what their benefits consultant offers.
The skills associated with being a great benefits consultant are very different from those associated with great benefits administration. And much like the conversation around “all-in-one” systems versus “point solutions,” it’s hard to be really good at all things. Based on their size, needs and budget, we advise our clients to consider a variety of solutions, including standalone solutions and solutions available with their payroll and HR systems.
As for the much-touted “coordination” between a benefits consultant and a proprietary solution, the two almost always function as totally separate operations, with little or no collaboration between the two. That’s not to say there can’t be effective communication between your benefits consultant and a benefits platform service provider. However, this should be the case with any service provider.
In all fairness to employers, many (especially in the small market) are unaware that there are independent HR technology service providers that operate outside the sphere of a benefits brokerage operation and work with any number of consultants. In fact, there are more than 150 benefits administration providers in the market today due, in part, to the fact that no two employers share the exact same set of needs (or have the same resources). There is no appropriate “one-size-fits-all” model in our estimation, and to take this approach would be a disservice to our clients.
Gallagher advocates a consulting-first approach to helping employers find the technology solution that best meets their specific needs. Practicing what we preach, we do not own or recommend a single, specific solution. Instead, we guide each organization in sourcing their best-fit option available from among the vast pool of HR and benefit technology providers.
The cost factor
There is no single model when it comes to the cost of a consultant-sponsored benefits administration platform. Some benefit consultants provide it free (or subsidize it) in conjunction with their services. In other scenarios, the employer pays for the platform, just as they pay for the other software they use in their businesses, including other HR technology platforms.
While “free” or “discounted” may be attractive, keep in mind that it often comes with some resulting challenges. We work with employers to help them optimize their technology and to ensure they get what they paid for. However, if you pay nothing for the technology (or pay less than market rates), you may find it hard to get the service you want or need.
Governing the service provider relationship
We counsel employers on the importance of governing the relationship with their service provider. Anytime an employer shifts responsibility to a third party, there is an inherent risk of things not going as planned. To ensure the best possible outcomes, employers need to govern their technology service provider relationship actively. Your benefits consultant should be your trusted advisor in all this, but if that individual is also the source of the service, you can imagine how awkward things can get. Worst case, it can be nearly impossible to govern, which brings us to the biggest downside to tying your benefits platform to your benefits consultant.
In all likelihood, at some point, you will want to make a change. You may become dissatisfied with either your benefits consultant or the service provider. If the two are tied together, it’s very difficult to swap out just half the package. We frequently work with employers who love their technology but want to make a change in benefits consultant but fail to understand that because their consultant provided the technology when that relationship goes, so too does the technology. And, even if they can get the same technology directly from the provider, transferring all the data is not like flipping a switch. It usually requires implementing from scratch, which takes time and resources.
We also see the reverse—employers who are highly satisfied with their benefits consultant. Still, the technology no longer supports their needs. In these cases, the employer may opt to make do with inefficient processes or even limitations in their benefit offerings. This can have some significant implications, including the ability to attract and retain talent.
Maximum options, minimal risk
There are very good benefit consultants in the market who associate themselves with very good technology. However, that technology is not going to be right for every client. Gallagher made a conscious decision to eschew this model and to embrace a consulting-first approach. This ensures that our clients have access to the broadest possible range of solutions and to help them avert the risk and limitations associated with a consultant-sponsored benefits platform.
Contact us today if you’d like assistance identifying the best-fit benefits administration solution to support your organization’s needs and budget.
About the Author
Rhonda Marcucci, together with Ed Barry, co-leads Gallagher’s HR and Benefits Technology Consulting Practice. Their team provides unbiased, well-researched HR technology and benefits administration consulting, including sourcing advice and service provider capability audits. Rhonda’s extensive and broad-based experience in finance, accounting, administration, strategic planning, information systems, sales and marketing, and operations is instrumental in helping employers identify a comprehensive strategy and execute against it.
Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. and/or its affiliate Gallagher Benefit Services (Canada) Group Inc. Gallagher Benefit Services, Inc. is a licensed insurance agency that does business in California as “Gallagher Benefit Services of California Insurance Services” and in Massachusetts as “Gallagher Benefit Insurance Services.” Neither Arthur J. Gallagher & Co., nor its affiliates provide accounting, legal or tax advice.