If you hated word problems in high school math, here’s one you’ll like:
An insurance advisor in Tampa, Fla., had as a worksite client a large national trucking firm. The company had switched from using employee-drivers to independent-contract drivers, and wanted to cement the new drivers’ loyalty to the company by offering an attractive voluntary benefits package. With the help of Dallas-based voluntary benefits firm U.S. Now, the advisor sold the trucking company a benefits package in which 75 percent of the truckers enrolled.
Question: How much in commissions did the advisor earn?
Answer: A sum that is in the mid-six figures.
We’re not making that up.
Instead, the Tampa example shows the power of worksite marketing, an industry niche that has evolved from an insurance guy with a clipboard and clip-on tie knocking on employers’ doors hoping for a nibble, to a sophisticated market segment backed by expanding product lines, advanced marketing programs and a finely-tuned carrier infrastructure.
Today’s worksite marketing is a win-win-win. With the spiraling cost of health-care coverage forcing benefit cut backs in other areas, business owners win by adding voluntary benefits that attract and retain top-quality employees—but don’t subtract from the company’s bottom line. Employees, meanwhile, win because they can get the coverage they need with the substantial underwriting benefits of group coverage, as well as the convenience of buying insurance during working hours and paying for it through payroll deduction. Agents win because they can reach big pools of underserved people, earn premiums from those large groups and multiply their marketing efforts geometrically over what they could achieve by doing individual, kitche-table appointments. Agents also can spin off individual sales, further building their books of business.
The worksite market
How big is the voluntary benefits market? U.S. Now CEO David Lindsay (whose firm, a Pan American affiliate, helped the Tampa advisor earn big bucks in our opening word problem) estimates that the untapped worksite market on supplemental medical plans alone is more than $500 million in premiums. Underserved industries include nursing homes, staffing agencies, hospitals, the transportation industry and municipalities—all of which share a common factor: A high percentage of permanent, part-time workers.
Companies don’t have to offer employer-paid benefit plans to employees working 38 hours or fewer. But they still want to keep those employees from seeking greener pastures elsewhere. That’s led to a boom in voluntary benefit plans that provide four basic elements: A limited medical plan, basic group life, group disability and group dental.
"A lot of these companies are looking for solutions," says Lindsay. "They are looking for a way to attract new employees to their companies and keep them, while providing benefits that the company can afford."
Advisors can best build their worksite business by treating employees with the same care they would business owners.
But that’s not all that’s driving worksite marketing growth. Dennis Adams, senior vice president for Allstate Workplace Division, points out that the decline in the number of insurers is rapidly shrinking the number of middle-income Americans reached through traditional kitchen-table sales.
"Middle-income earners are not being served by the insurance industry through general agency systems," says Adams, a Florida AIFA member. "Employees are now looking to employers for a broader range of insurance benefits."
Carriers are responding to the need. Over the past five to seven years, traditional group carriers and worksite specialists have rolled out a smorgasbord of voluntary, supplemental benefits including "mini-medical" plans, supplemental life coverage, critical-illness insurance, dental and vision coverage, prepaid legal plans and veterinary health insurance.
How can advisors break into worksite marketing or improve their performance on existing worksite accounts? First make sure you’re adequately prepared, advises Daryl Logullo, founder of Strategic Impact!, a referral coaching consultancy for financial professionals in Vero, Fla. Logullo, whose firm has coached more than 2,500 advisors on building their practices, explains that agents often assume employers understand the value of voluntary benefits packages. Further, advisors sort of expect business owners to grant them access to employees based on some shared affinity—or simply on faith.
It doesn’t quite work that way. For example, Logullo had as a client an advisor in North Carolina who was trying to network his way into doing worksite marketing for a small group of African-American-owned businesses. The advisor was an African-American and a captive agent with a major insurance carrier. With his name-brand business card and shared cultural heritage, he figured he had an automatic "in."
"The problem he kept running into," says Logullo, "was that none of the business owners had ever experienced his work." In other words, he hadn’t earned any kind of reputation—good or bad—among the employers he hoped to do business with. Logullo’s firm coached the advisor to get involved in working with the boards of area service organizations and local chambers of commerce in which his target employers were involved.
"People started experiencing [the advisor’s] work, his insight, and how he thought," says Logullo, adding that the advisor documented that work, detailing the results. His preparation, along with his new higher profile among area employers generated by his service-club work, gave the advisor fresh confidence. After six months, he again approached the employers to offer voluntary benefit plans. This time, he succeeded.
Similar groundwork, says Logullo, is critical for any advisor wishing to crack the worksite market. "Be able to document who you’ve done work for and what the results have been. Regulators don’t allow testimonials, but you can list work you’ve done and a reasonable assessment of results. This breaks down initial walls between advisors and employers."
|HOW TO SUCCEED AT WORKSITE|
Beyond 50 percent
Logullo, who worked for 12 years as an advisor and senior vice president of a regional investment advisory firm in Florida, says worksite marketing requires long-term commitment. Too many advisors, he adds, give up too easily. "I’ve been on that side of the desk. Advisors will go to a chamber meeting, and say, ‘I went there and it was boring,’ or ‘I tried that once and it didn’t work for me.’ I am proposing that advisors come past the line in the sand, which unfortunately is not 50 percent [of the way toward the client]. When you go beyond 50 percent, step over the line, do a little extra. That’s when people will remember you. That’s how the relationship process begins."
Another way to build relationships with an employer: Position yourself as a person who will educate and service the company on the need and range of voluntary employee benefits. "A good advisor can go in and offer to survey the employees ahead of time to help the employer understand their needs," says Gail Van Dalen, senior vice president of marketing sales support for Conseco in Carmel, Ind. "This can show workers that the employer cares about them and about making valuable benefits available to them."
But to show that, first it’s nice to make sure an employer actually believes voluntary benefits are valuable. One way to do that, Van Dalen says, is to point out to the employer that such programs acknowledge workplace diversity—that they demonstrate to workers that the employer isn’t content to offer a one-size-fits-all benefits package, but is also concerned about workers’ individual welfare.
The most successful advisors will approach the worksite market with an attitude of service.
With a voluntary benefits package sold onsite, employees can conveniently and economically choose products that meet their specific needs. For example, a married working mother may not need supplemental health coverage or a hefty disability policy since her husband’s income and health coverage may function as the family’s financial safety net. But an employee who is a single mom may leap at the chance to purchase additional life or disability coverage on easy, inexpensive terms.
Van Dalen suggests surveying employees’ needs annually in an effort to track the ... well, benefit of the benefits. Such annual service, he says, "serves the worksite client well and also gives the advisor a good opportunity to up-sell and cross-sell additional supplemental products."
Cross-selling opportunities extend from employer to individual employee, making worksite marketing arguably the next best thing to cross-selling heaven. Take, for example, Chris Collier, a Mass Mutual agent and disability income insurance specialist. He has as a worksite client firm a white-collar, Cincinnati-area, brand-consulting company. Recently, during an individual consultation with a $150,000-a-year employee, Collier asked about life insurance. As it turned out, the man had only a $50,000 group life policy.
"He had known he needed to increase his life insurance and also start a 529 plan for his kids, but no one had ever approached him about it," he says. "I ended up putting over a million dollars in term life in place for him, some for his wife, plus the 529. In my experience, for every dollar you make on a voluntary benefits product, you’re going to make a dollar on something else."
Daytime worksite marketing activities include such individual consultations, but also group meetings at which advisors explain employee benefits. There is, of course, an enrollment cycle during which carriers hope employees will sign up for every conceivable coverage. But Van Dalen also recommends that advisors ask employers permission to set up group meetings off-cycle, outside the whirlwind of benefits sign-up periods.
During sign-up periods, she says, "employees tend to suffer paycheck shock. They sign up for major medical, dental, basic life, and disability, and are sitting there asking themselves, ‘How much of my paycheck is this really going to eat up?’ Then they won’t sign up for anything supplemental because they’re afraid."
By holding off-cycle worksite group meetings, advisors give employees a chance to consider supplemental, voluntary products at a time when they’ve already absorbed the impact on their take-home pay of their regular employee benefits.
A worksite group enrollment meeting can go two ways: One, the advisor induces the equivalent of a group coma, droning on with technical explanations of potential product solutions. Or two, the advisor connects with and educates employees, helping them to understand the value of the benefits package and of additional voluntary coverage to their financial futures.
Achieving the second scenario means improving presentation skills and collaterals so benefits meetings become, for employees, less of a necessary evil and more a key part of their financial planning.
To that end, Guardian Life is reexamining all materials and processes its agents use to communicate offerings to employers and workers, says assistant actuary Chris Swanker. "We’re creating better collaterals and improving agent presentation skills so that they can really educate employees on their benefits. We’re heavy on education, and initially offer only limited product choices that aren’t overwhelming," Swanker explains.
Pro bono work
Since worksite marketing is dependent on employers granting access to employees, Logullo says, advisors must show business owners that they have employees’ best interests at heart. One way to do this: Consider donating pro bono time to a limited number of worksite clients. This could mean donating an hour or two a month, working onsite and performing needs assessments but agreeing not to sell to that employer’s workers.
How can advisors build worksite business by agreeing not to sell? "It builds your referral business," Logullo explains. Off-limit employees at Business A have friends and family at Businesses B, C and D. Perhaps more importantly, Employer A moves in the same circles as Employers B, C and D.
"You will get referrals," Logullo promises, adding that those referrals may even begin coming from other financial services professionals, some of whom usually shy away from working with insurance advisors. "Set up this kind of [pro bono] arrangement with an employer and watch what happens. ... All of a sudden you’ll be speaking one of the love languages of CPAs and attorneys."
Service is everything
Allstate’s Adams agrees that the most successful advisors will approach the worksite market with an attitude of service. "A lot of people out there have needs and aren’t being reached."
He suggests that advisors can best build their worksite businesses by treating employees with the same care they would business owners. "You may not sell them a quarter-million dollars in new coverage. But they have needs just like the employer, and we need to fill them. After all, that’s why we’re in this business."
Lynn Vincent is a frequent contributor to Advisor Today .
|SELLING THE UNDERSOLD|
Even as voluntary benefits packages expand to include such esoteric offerings as pet insurance, there are still some foundational products that remain undersold.
Among them: critical-illness insurance. "It’s fairly new in this country and is the least understood," says Dennis Adams, Allstate Workplace Division senior vice president. But critical-illness coverage is well received by employers because it is diagnosis-based, not indemnity-based. Also, such policies provide nonmedical-related money when an insured needs it most—not just for doctors’ bills and medication, but also for travel, special diets, phone calls, loss of income, and other expenses not covered by traditional, disease-specific policies. Adams says critical-illness insurance could, within the next five years, become one of the top three voluntary benefits.
Another undersold product: Supplemental disability insurance. "Everybody knows they’re going to die, but nobody thinks they’re going to be disabled," says Chris Collier, a Mass Mutual Agent and disability income insurance specialist. Advisors can help employees see their need for additional disability coverage by tactfully pointing out gaps in group coverage and asking questions. Does the group policy provide sufficient replacement income? Since group policies don’t provide lifetime disability coverage, does the client, if disabled, have a financial plan for living past age 65?
And when selling all supplemental products, Collier recommends that advisors use a consultative approach: Let the employee know that you’re not competing with the employer’s benefits plan, but complementing it and offering additional choices.