Free: Adjective – Given or available without charge. Adverb – Without cost or payment.
Who doesn’t like “free”. You go to the grocery store, there’s free samples. Buy one get two free. Even free delivery if you order online. We are inherently drawn to free, but in reality, a person or a society cannot get “something for nothing”. Even if something appears to be free, there is always a cost, although that may be a hidden cost or an externality.
Why do we constantly hear about “free” when in comes to employee benefits – specifically carriers, brokers and consultants providing these services?
- Free COBRA Administration
- Free HSA / FSA Administration
- Free Employee Assistance Program
- Free Telemedicine
- Free Wellness
- Free Benefits Technology
- And my all-time favorite: Free Quotes
There is no value in free and eventually the entity receiving the service for free doesn’t respect it.
Let’s talk about benefits technology.
I am asked about how to position pricing for our benefits technology platforms all of the time. Doesn’t matter if it’s a consultant from a top ten firm or a smaller state-based firm. You worry about what the competition is doing or how you can win the business and quickly undervalue what you bring to the table as a consultant of choice.
If you don’t win the business because you didn’t offer something for free – you are better off.
There are two ways to go about it if you are a broker or consultant. One is providing the technology as long as you are the broker of record, this is common and isn’t a bad deal if it’s disclosed right up front. The client knows that it’s part of their offering and going into it they are fully aware that if they change their broker chances are they lose the technology. Most brokers I know that do this will bake the cost of the system into their consulting fee.
Many of the folks we work with position technology in a different manner, however. Employee Benefits and Benefits Technology are not the same and they should not be treated the same. A strategic broker provides value to a client for what they deliver on the benefits side but also helps the client in recommending options for technology solutions they can utilize. The costs are different and there is transparency in this since the two are not tied together. The partners we work with get extremely competitive rates, so they pass this savings along to the client; the client then engages with us directly and they don’t feel handcuffed to anything.
Last week I wrote an article about benefits technology utilization and highlighted the fact that having full access to your data at all times is crucial and cannot be overlooked. We see it time and time again when we take over business – clients can’t access their own data because their prior broker, payroll vendor, or other party was managing the system for them and they had little or no access. Lack of control over data is often the price that many employers pay for “free”.
Carriers are offering “free” benefits technology more and more. We all know it’s not free… they are killing you with premium, it’s the least they can do, right? Let me give you some advice. Never take a benefits technology solution from a carrier. Ever. The time and effort it takes to install and train staff and employees on a technology solution is an investment. Most of the time these carriers offer technology but only for their products (not a full solution) or you can load in your other carriers, but they don’t send enrollment and termination information to those carriers. Not to mention when their renewal comes in at a 30% increase, you are either stuck with them since you are using their technology, or you leave them and have to start all over again.
It’s the same thing with payroll vendors who offer benefits technology for free. We all can think of at least a handful of these vendors who want you to use them for just about every service. They may be exceptional when it comes to payroll, but don’t expect to receive that same quality in the benefits solution that they’re trying to hook you with as well. Do your due diligence when vetting a solution and don’t get into a relationship that makes it impossible to get out of.
For brokers reading this, think twice before giving away your services for free. And for employers, make sure you are doing your homework when you agree to take something for free. It’s never free, there is always a catch.