But I would say that…
Is big always best when choosing an Employee Benefits Consultancy? Large intermediaries are, arguably, the best place for both large multinational companies (though that could be a whole other blog). However, does the same apply for the SME market or indeed some larger companies?
There are a not inconsiderable number of reasons why a smaller intermediary may suit companies of all sizes and not just those with a handful of employees and some of these are as follows:
- The often-continuous turnover of Employee Benefit Consultants means those representing clients at large intermediaries will not be consistent. Smaller brokers often have employees who stay with them for an extended period of time, often because they have ‘skin in the game’.
- With this consistency in terms of a point of contact the relationship between the consultant and their client grows, with the consultant having a deeper knowledge of their client and their benefits very well, rather than starting a new relationship every 2 or 3 years.
- Arguably, there is a risk of apathy from consultants if they deal with the same client, for an extended period of time. However, for a smaller consultancy a 200-employee company with existing benefits would be ‘a big fish in a small pond’ and on that basis would be treated more attentively than they would do in a large EB consultancy where they are one of many. Apathy would not come into it!
- In larger intermediaries Group Risk (Group Life, Group Income Protection etc) and Healthcare (Private Medical Insurance, Dental & Health Cash Plans etc) are often two separate areas of expertise, with a consultant from each speciality dealing with the same client. This leads to two sets of fees for the one client.
- Smaller consultancies often have staff with experience in both elements, perhaps partially due to necessity. This decreases the cost to the client and also allows the consultant from the smaller intermediary to pick up on areas where Group Risk and Healthcare may cross and therefore provide a better, fuller service to their clients.
- On the subject of costs, small intermediaries tend to have far lower overheads and no shareholders or venture capitalists to answer to and therefore often charge lower fees or need a lower income than their larger contemporaries to meet their needs.
- Large consultancies have historically offered more when it comes to international benefits given their global footprints, but the smaller consultancies are beginning to push into the market due to improved technology and the eagerness from the insurers & multinational pooling partners in this sector to share their knowledge and services with smaller brokers.
- Economies of scale is an argument to stay with a large broker, however, given that dual pricing (the practice of offering different terms to different intermediaries for the same risk) is now taboo this is not really a coherent position.
- I’d also argue smaller consultancies will have consultants who have the time, capability and, perhaps, more of a free choice of the insurance market to provide terms which will often mean they:
- Will match the client’s needs more appropriately
- Will potentially be from a broader range of providers making the terms received potentially more competitive
- On the previous point, larger intermediaries often stick to a limited panel of insurers, but the flexibility of smaller consultancies means they can produce benefits which meet clients’ needs. For example, we have built our own Travel Insurance & Private Medical Insurance schemes and have a ground-breaking benefits platform (amongst other products), because we saw gaps in what was being offered or was available to our clients.
- Yes, small intermediaries may not be able to head hunt whomever they would like to take on roles within the business as they grow, due to budget constraints, but any individuals are likely to progress more quickly and therefore stay in the business (career progression is seen as a key factor to retaining staff).
- By the same premise, a client is unlikely to have someone who does not have the capability to deal with their consultative needs working on their benefits for long. In a small consultancy there is nowhere to hide, and any areas of improvement required for that consultant will be quickly spotted and support given to improve.
- Can small consultancies deal with the administrative burden of the larger clients? Again, technology comes riding to the rescue on this question. Insurers are spending small fortunes in providing technology that supports the intermediary in terms of administration. Anecdotally the expectation is that this support from the insurers will grow, as they try and support intermediaries to grow the market.
- With a consistent and supportive consultant, the relationship between them and their client should be strong & open, which leads to the client being comfortable to bring up any concerns or issues as and when they arise.
To summarise, smaller employee benefit consultancies are not going to suit all businesses by any means, but there are perhaps far more positives to considering them as an alternative than there might first appear.
But then I would say that………