From the June 2011 issue of Benefits Selling Magazine •Subscribe!

Brokers face bigger problems than health reform

We’ve become so obsessed with mandates, exchanges and medical-loss ratios that we’re starting to lose sight of the forest for the trees. And we’re certainly not paying attention to all the other predators lurking behind every shadow. Now I realize those of us in the media are as complicit as anyone in this suffocating coverage.

(If it bleeds, it leads, right?) In any given month, health reform in some shape or form gobbles up as many pages as any other single topic in this magazine. So, at the risk of casting a cloying pall over your already tumultuous workday, it’s worth taking time out from wringing our hands over what’s going on in Washington to take a wider view of the landscape as it stands today.

(And don’t think for a second we don’t share your concern, because despite our roles as  journalists, observing and documenting what’s going on in the benefits business, without readers we’re no better than Nero fumbling with this fiddle while the rest of you burn. Like the proverbial tree crashing into the deserted forest floor, without an audience, our words don’t make a sound. Unread words might as well be blank pages.)

You think there isn’t a horde of other sources of friction or erosion shaping the landscape under our collective feet? You think the suits in Washington are the only ones trying to put you out of business? There are at least 50 other sets of regulators working every day to make your job harder.

And as if your commissions and client base hasn’t taken enough of a hit, do you really think carriers are eager to keep forking over a chunk of their profits to you? Oh, and in case you haven’t noticed, employers and employees alike have changed. These aren’t you father’s clients. We’re dealing with a consumer base far more technologically advanced, and yet still as uneducated as ever.

If anything, they’re more dangerous than ever, at least with regard to their unrealistic expectations and unsustainable lifestyles. So let’s look past the elephant in the room and spend the next few months looking at what else we should be worried about. This month we take a look at a couple of what might be called sacred cows in the employee benefits and retirement space.

Our first report takes a look at what was once considered a rock-solid investment for employees: state 529 plans, which allowed workers to set aside tax-free money for their children’s college educations. But something happened on the way to that American dream. The economy tanked, and revenues every governor expected – both red and blue – dried up faster than a politician’s promises.

State budgets across the country collapsed right along with the housing market, and now, for the first time in our history, we actually have a few seriously considering bankruptcy – if that’s even legal. What was once a sure thing now looks a lot like trusting the hungry fox to look after the hen house.

Meanwhile, while everyone decries health care spending outpacing inflation, everyone seems to forget that college tuitions costs leave them both in the dust. Now we have more than a few policy (and economic) experts whispering about the higher education bubble, which appears to be following a frighteningly familiar pattern.

What does this mean for states, employees and brokers who’ve committed to this niche of the business? Speaking of the American way, if you think a college degree is tough – if it’s even worth it anymore – retirement is almost the stuff of pipe dreams. And those anemic state budgets look like Precious next to the anorexic supermodel most Americans’ 401(k) plans have become.

Of course, the politicians are in full “Blame the messenger” mode. Don’t look now, but while we’re all wringing our hands over health reform, 401(k) reform is sneaking up behind you to take another bite out of your business. This month’s second feature takes a closer look at what the new rules are, what’s expected of you and what you need to do to survive. Good luck, and we’ll be back next month to talk about the future – and what this business will look a decade from now.

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