The next year will be tough. But don’t let it be tougher than it needs to be. When the financial director comes knocking on the door demanding budget cuts, benefits professionals must be prepared to show they have done everything they can to provide an effective employee benefits package at the best possible price.
This will entail reviewing core perks to determine whether or not a better deal can be obtained elsewhere. However, before embarking on a full-scale review, it is worth considering how any advisers involved in the process are going to be paid.
Historically, many have received commission from the provider of the product concerned, whether it is income protection, private medical insurance or a pension. Providers and some advisers maintain that this works for employers because they do not have to pay up front. But not all commission rates are the same, and whatever is paid invariably ends up being worked into the overall cost of the perk. So if you are an employer looking for the best underlying deal, how do you know whether the adviser has been unduly influenced by the promise of a fatter commission payment from one provider over another, or what the true value of the benefit being offered actually is?†
In an ideal world, it would be better for advisers to be paid fees for the work they do, as this would remove any possibility of bias, but for some employers, such upfront costs could be offputting and, in any event, some providers insist on paying commission.
The least benefits professionals should do is to insist that true transparency is maintained and that they are told the commission rates at the outset. However, they can go one step further in trying to ensure a level playing field for comparisons between products by pushing their advisers to ask for quotes based on zero or level commission. That way, they stand a better chance of working out which product represents the best value for money.