Producers who focus exclusively on the executive benefits market would do well to consider a comprehensive approach that includes estate planning, financial planning and executive benefits. They thereby can bolster their bottom line and better serve their clients.
I use this comprehensive approach and when I meet with employers, I offer to conduct an extensive study of their benefits program and provide feedback on how their key employees value their benefits.
I also offer to provide financial planning for their executives. The employers are more receptive to a benefits review, analysis and financial planning program than they are to the suggestion that they consider giving executives a benefits upgrade.
Many business owners don’t know enough about executive benefits to make an informed decision. They are too busy running their company. If they don’t know the terminology or have a clear understanding of what you offer, they will immediately say ‘no.’
Many, due to experiences with other producers, also mistake executive benefits as simply an insurance program and miss the big picture. I’ve found that it is best to appeal to the business owner or benefits manager from their comfort level.
They may not understand all of the nuances of qualified plans vs. nonqualified plans or know that plans can be designed with great flexibility. But they do understand the importance of recruiting, rewarding and retaining top talent.
And they know that salary is not always enough to build the right team. Executives value their benefits offerings, especially when they are tailored to their concerns and needs. Employers want to ensure that they offer competitive benefits and know how their employees, especially their key talent, view their packages.
I provide four services:
1. Comprehensive review of the executive benefits package;
2. Analysis of qualified plans;
3. Nonqualified executive benefits sales; and,
4. Financial planning for executives.
The employers understand that I help them to compete by evaluating how their programs stack up. More than half of my employer clients are interested in offering financial planning to their executives.
The employees appreciate that the employer is providing financial planning services. And the planning process often reveals what the employees like about their benefits, plus areas of weakness or concern.
The approach required for the executive benefits market is different than that of the general market. With the latter, I usually help my clients understand a problem that they do not know they have. A couple, for example, may be unaware that they are underinsured for disability or life insurance or that their assets may be vulnerable if they don’t have long term care insurance.
In the executive benefits arena, most of my clients know they have problems, but they are unsure how to address them. More often than not, they are unaware of the flexibility and range of case designs available to resolve the challenges they face.
They don’t know what they can and cannot do. That uncertainty often leads to inaction. A big part of my work is helping them to explore the different ways their needs can be satisfied.
Benefits of Working with this Market
Before you break into the executive benefits market, it is important to work with a seasoned advisor and learn the ropes. Veteran advisors will take you under their wing because they need the support of a solid team.
Back office support is also critical to a strong practice. In addition to my staff, I can access lawyers and other professionals who help me to develop customized solutions for my clients and stay abreast of the ever changing laws, regulatory environment and tax codes.
Despite the challenges of working in the executive benefits market, there are many rewards. Most notable is the fact that compensation on products is paid out over a long period of time, permitting established producers to build a consistent income. Renewals represent about 30% of my executive benefits commissions compared with 8-10% for my general market business.
Opportunities are very consistent in executive benefits and it is a largely untapped market. According to MetLife’s Employee Benefits Trend Study (2004), 61% of employers do not currently offer executive benefits.
Many of the companies I work with are in growth mode. They add executives on a regular basis. My business grows with their business. It is truly rewarding to help people build their business by helping them invest in their most important asset: their top talent.
Bernard Audet is president and CEO of Executive Solutions, an affiliate of the Creative Financial Group, an office of New England Financial. You can e-mail him at [email protected]
Many business owners don’t know enough about executive benefits to make an informed decision