Not too long ago, I asked three kids, ages 6-7, what they want to be when they grow up. They told me: a football player, a doctor and a teacher. “Not one of you wants to be a benefits broker?” I asked.

That earned me a befuddled look. Fittingly enough, I got the same look when I posed that question to a friend considering a career change. Just like it’s not a career kids dream about, neither is it the first consideration for recent graduates or those contemplating new jobs. And from the look of it, it’s not even a career brokers dream about. In fact, for some brokers, the field has turned into somewhat of a nightmare.

There’s the impossible uncertainty of the future, excessive heath care costs, the collective glum disposition at broker conferences held across the country, and the ever-present big brother watching in the wings, ready to snag their jobs. And of course, concerns over how they will make their profits after new regulations go into effect. So what does this mean for the broker business?

Maybe it’s a chance for rebuilding, for a new generation of bright-eyed, smart, capable young adults to dive in and embrace the unknown. Or maybe, what it is, is something to worry about.

When I grow up…
People don’t dream of becoming brokers; instead people turn out as brokers. “I wanted to be a firefighter or an astronaut,” says Jim Hettenbach, director of market development at Unum. Most brokers agree insurance isn’t some sexy career people dream about.

And now, the majority of brokers face retirement. According to a study from the Independent Agents & Brokers of America, the average age of an insurance industry professional is 54, with 60 percent of insurance industry professionals being older than 45.

“With the increasing number of retiring baby boomers, the industry is faced with shortages, leaving ample opportunity for young professionals to fill the gaps,” says Tom Rivers, an insurance industry recruitment specialist based in Vancouver.

“It’s likely there will be a shortage of brokers in the 2020s. People entering the field at this time will have time to develop their expertise, build a block of business and seize the opportunities that will remain in the market,” says Alan Katz, principal of the Alan Katz Group and past president of the National Association of Health Underwriters.

But the question is: Will a new, younger generation of brokers emerge to take their place? “If I’m a young kid coming out of school—and I have young kids coming out of school—I think for them it’s the uncertainty around the compensation.

With a lot of broker jobs being 100 percent commission-based [and with commissions likely going away as part of health care reform], that’s tough to swallow if I’m comparing roles,” says Beth Nadeau, director of broker development at Unum.

And with headlines like “Uncertain future of health insurance brokers” and “Health insurance brokers fight for their future” splashing news pages, the job of broker seems just about as appealing as becoming another one of Charlie Sheen’s goddesses.

A limited future?
Then there’s that tiny issue of health care reform, which may or may not make brokers obsolete (according to whom you ask, of course).

With health insurance exchanges being set up now through 2014, consumers easily will be able to compare the health insurance policies offered by different insurance companies. And since the information appearing in the exchanges will be regulated by the government, they’re essentially taking on the role that brokers have now. Additionally, there’s cost-cutting to worry about.

As part of reform, health insurance companies are going to be required to spend at least 80 percent of the money they get from the premiums they charge their customers on things that will actually provide medical care to those customers.

And there are very specific regulations that describe exactly what can, and cannot, be counted as something that provides customers with medical or preventative care, meaning that insurance companies are going to have to find a way to cut some costs, if they want to continue to make the profits that they made in previous years.

Perhaps the easiest, most-obvious cut? You guessed it—eliminating services provided by the insurance broker, so they don’t have to pay out commissions anymore. No brokers mean no commissions.

Not so fast
It’s not that simple, many brokers argue. To begin with, health care reform is causing all sorts of complaints and confusion from people on both sides of the political aisle, and all sides of the health industry. And it’s much too premature, and much too optimistic, to assume the health care exchanges will be so flawless and easy-to-read that brokers won’t be needed to explain them.

“If I were a broker, I would not despair at the prospect of the state-based insurance exchanges for one simple reason: administrative simplicity and efficiency is decidedly not America’s strong suit, in either the private or public health sectors,” Princeton economics professor Uwe Reinhardt wrote recently.

“So it’s a pretty safe bet that the state-based exchanges envisaged in the Affordable Care Act will be so complicated and bewildering that the services of brokers will still be needed.” And yet another provision of the Affordable Care Act —“coverage fact labels,” required by health insurance providers that aim to make understanding insurance plans simple for the consumer — is so confusing that it’s even baffling the drafters of the labels.

The problem with selecting health care plans is there are too many selections to make, too many options to choose from and too many chances for risks in getting to the end result. “There’s been a huge comparison that these exchanges are going to be like Orbitz,” Hettenbach says. “They say ‘Orbitz seems to do well, exchanges can do it well.’ The problem is if you have a bad flight, you have a bad flight; you pick a bad health care plan the downsides are a little more significant.”

Hence the broker to the rescue. “The world is becoming increasingly complex. But the needs [of employees] don’t go away as complexity increases,” Hettenbach says. “They need the role of the broker to craft the proper package and navigating that complexity makes them more valuable and more central.” “Everyone in the health care system needs to constantly be providing value,” Katz explains.

“Brokers who see their role as transactional — simply selling a piece of paper in exchange for a premium payment — should definitely be concerned. Computers and exchanges can fill this role at a far lower cost. Brokers working to improve the financial and health security of their clients, those who provide ongoing service and focus on problem-solving have little to worry about.”

What it offers
And new professionals entering into the field might have the biggest advantage of all. “There has never been a better time within our industry to do well,” Rivers says. “The shortage of talented people has never been more evident in our business.

Individuals who are committed toward their education and professional work behavior can move up the ladder of success quickly.” But with a lack of information and relevant education on the industry, those seldom young insurance professionals haven’t had a place to turn to for career advice and skill sets for success, Rivers says.

This is where the role of mentors should come into play. “Business mentors have never been more critical to the insurance industry as they are today,” he says. “Many steps can be taken by young or new insurance professionals to attract and maintain a mentorship relationship to their benefit.”

Hettenbach agrees. Change and evolution can make the insurance career more attractive and interesting than ever, but companies need to be proactive in making that point come across. “We need to go out and find those people and make them aware of the opportunities,” he says. “We need to continue to effectively recruit and train them.”

Unum, like the other big carriers, has a broker connection program that provides education and incentive for new brokers. Because the industry is in total flux right now, there’s potential to do great — and likely history-changing — things in the business, experts say. “This will be a niche business. Brokers can take on different sides of the business they might not have always done before. There may be more specialization on what they do now,”

Hettenbach says. But with any kind of change, there’s also the potential for disaster. There’s the potential that the next generation of brokers simply won’t exist like it does today. Really, what it comes down to is a wait-and-see game. “What you see now is uncertainty and once you see certainty, you’ll see more attractiveness.

I think going forward there is an opportunity to lay out, for the right types of brokers, a good career,” Hettenbach says. “But right now it’s in a period of transition and that transition and that uncertainty is making it difficult for motivated people in giving them an idea of what their future will look like.”

Instant Insights /

A look at the next generation of brokers

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