2022: The Perfect Opportunity For Benefits Brokers Looking To Grow

Crystal balls are not always accurate.

Just a few years ago, brokers looking ahead to 2020 could not have predicted the radical changes that the pandemic would soon bring to the industry. And assumptions about the economy over the past few years have consistently proven to be wrong. What the coming year has in store is anyone’s guess, but benefits advisors continue to move forward by applying the lessons of the past and implementing new strategies for the future.

“Change is often small and incremental, but small changes every week or month create large differences between yourself and your competition,” says John Griffin, president of Sterling Capital Brokers in Toronto, the largest independent employee benefits broker in Canada. “The key is to start to change.”

Lessons from the pandemic

Perhaps the best way to look forward is to first look back. Despite the many challenges of the pandemic, it has also taught valuable lessons and presented new opportunities.

“Recruiting, retention and adapting to a hybrid environment have been some of the biggest challenges,” says Denise Stefanoff, interim executive director of the Benefit Advisors Network. “But by focusing on improving communication and engagement and leveraging technology, we have been able to continue moving forward successfully.”

TRUE Network Advisors, which supports more than 60 benefits agencies in 20 states, is another example of moving ahead during tough times, having grown by more than 30% during the pandemic.

“The biggest challenges at the beginning were client-facing,” president and CEO Scott Smith says. “A lot of businesses had no idea what was going on. It was an incredibly emotional time, and it was also very complex.”

Compliance continues to be a major issue for members during this time of uncertainty, and Smith says he uses technology to provide timely advice. “We hold monthly webinars around whatever the highest-need topic may be. When COVID hit, we went from monthly webinars to weekly webinars. We went from about 800 people on the webinar every month to about 4,500 people being on every week. That decision to invest in our members was the singular reason why we grew.

“Our members were able not only to help their clients navigate through that process, but also interact with prospects,” he adds. “Many of our agencies experienced growth at that time, because they were able to offer something that no one else was providing.”

Sterling Capital Brokers also put technology to work.

“Early in the pandemic, we moved to an entirely work-from-home model,” Griffin says. “We maintain offices in a few cities across the country, but we rarely use these and have now set up all of our employees to work remotely. We implemented more use of Zoom and transitioned many internal conversations to Slack.

“In addition to this, we posted new job opportunities with a geography-agnostic view, meaning we would hire any person suited for a role, regardless of where they live in Canada. During this time, we grew from 25 employees to 89 as of January 1, 2022, and this hiring practice allowed us to hire great new teammates in locations where we never may have hired before. Casting a wider net has been great for recruitment.”

Technology has also enabled Sterling to respond to fast-changing client needs.

“For our clients, the challenge has been how to access services in an era of limited in-person interactions,” Griffin says. “We saw a huge increase in telemedicine services being deployed as a new addition to employee benefits plans. Uptake of this product moved from perhaps 5% of our client base up to 60% in a 12-month period. We also saw a proliferation of mental health support services delivered through mobile apps.”

Pivoting to 2022

So, what does this mean for the coming year? It depends.

“Unfortunately, there is still polarization because of some of the politically driven dialogue around the pandemic,” Smith says. “If I were to ask my member agencies in the Southeast versus those in New York or Chicago, I’d get a drastically different answer. Where you live and how you experience the pandemic is going to drive the answer to that question.”

Unlike the past two years, when the focus was on helping clients navigate the pandemic, he expects many brokers to begin focusing more on internal challenges this year.

“The biggest issue facing employee benefit agencies right now is hiring and retaining talented people,” Smith says. “It is such a competitive environment out there with talent in the insurance space that many agencies are struggling. It’s something we are dealing with on a daily basis, and there are no simple answers.”

Stefanoff summarizes these challenges as the three Rs: recruiting, retention and revenue.

Several intangible factors that once influenced employment decisions are no longer in play, she says.

“Many agencies have fantastic cultures, but with so many people in a complete work-at-home environment, you take that away,” she adds. “It becomes more transactional: ‘If I am going to work from home, who is going to pay me the most?’ That’s a tough one. If you are competing only on income, there is always someone who is willing to pay more and convince someone that the grass is greener. The biggest challenge facing organizations right now is how to create a meaningful culture in a remote environment.”

Based on recent experience and the current outlook, brokers expect several other issues to come to the forefront in the coming year.

Strategic expansion

We completed seven M&A transactions in 2021 and organic growth equivalent to having acquired another 10 to 12 firms,” Griffin says. “We see an acceleration of this as more and more independent advisors are looking for ways to continue growing and need the scale of a partner who has invested in technology and can deploy it throughout their business.

“The feedback we get from potential new partners is that the climate is right to secure the next phase of their business,” he adds. “Historically, our company has grown 100% year-over-year from inception, and we see that continuing in 2022.”

Compliance solutions

“There is an ever-growing list of regulations for businesses,” Smith says. “You have to be able to deliver comprehensive solutions to clients. The compliance burden is growing, and agencies that don’t outsource their compliance are going to have huge advantages in the coming year.”

One key to doing this is viewing new regulations as opportunities to serve clients.

“The smartest employee benefit advisors are happy every time some new piece of legislation passes because it’s an opportunity to reach out and get more business,” he says. “On the flip side, agencies that don’t have solutions go into panic mode. Obviously, the Consolidated Appropriations Act is on everyone’s mind because it’s such a broad act with so many different pieces. The CAA is what people are going to be dealing with over the next 12 months. That creates a wonderful opportunity for advisors who are prepared for it.“

Addressing cost

“Our clients continue to tell us they want better long-term cost certainty and more streamlined access to benefit services,” Griffin says. “We are well-positioned with technology to provide precisely these improvements. In the Canadian context, we do not see many regulatory changes on the horizon that may impact benefits plans. There is a strong sentiment in Canada that some form of a national pharmacare program may launch, but this continues to be focused on Canadians who do not have coverage through a private employer-sponsored plan.”

Embracing technology

“Zoom and other video platforms will continue to be the norm for meetings,” Stefanoff says. “While video conferencing has been an integral part of our business during the pandemic, it will be critical to encourage in-person meetings going forward, following protocols, of course. Collaborating and socializing are keys to doing business. Communication tools like Teams, Slack and CRM platforms to improve efficiency and operations are integral as we continue to work in a hybrid environment. We think these communications tools, which have become mainstream in all our lives, will still be critical for use if and when we move out of the pandemic.”

Sterling Capital Advisors expects to invest in technology that makes the working lives of clients easier, while continuing to grow through M&A and organic sales, Griffin says.

“Strategies to support these goals may change, but a few core components remain: Do things nobody else is doing that clients constantly seek, find partners who share our values, and do something together that is unique,” he adds.

Putting people first

Although the pandemic has pushed technology to the forefront, benefits remain a people business.

“People understand now that small things matter in a virtual environment,” Smith says. “People have to like you, they have to see themselves doing business with you, and they have to trust you. Doing that virtually is different than when you are in person. It’s easy to be a salesperson; it’s hard to be an advisor.”

He reminds his member agencies to never let technology take the place of interpersonal skills. “The softer skills are more important in a virtual environment, which is counterintuitive,” he says. “It is a skill to be able to have a Zoom call and create the same feeling that one has in an in-person meeting. Those who ask the best questions and show empathy and expertise in discovery meetings are the ones who are driving the most sales.”

As always, successful brokers will find ways to turn challenges into opportunities.

“2021 was a busy year for regulatory updates and this will continue into 2022, especially as we head into midterm elections,” Stefanoff says. “Change provides the perfect opportunity to connect with clients and gain new ones. Improve operational efficiency, training and development, and help clients become more sustainable.”

Discussions about the future of the benefits industry naturally revolve around taking care of customers and employees. Smith reminds brokers that now more than ever, self-care must also be a top priority.

“Investing in yourself is the best thing an advisor can do in the coming year,” he says. “We are in a complex business that wasn’t always this complex, so it’s created stressors in the lives of agency principals and leaders. The fourth quarter probably doesn’t even exist anymore, and if it does, it’s only marginally busier than the other three quarters. It’s now incredibly busy 12 months of the year. Setting aside time for yourself has never been more important.”

Finally, Griffin says, brokers who work not only harder but smarter will be the most likely to succeed.

”Doing business in 2022 with the same model you may have had in 2020 simply won’t work anymore,” he says. “Clients are asking for more. Find a way to give it to them, and you will win more often against the brokers who have not been able to find a way to keep up with the pace of change.”


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