Related: Where do benefits brokers fit in Amazon's new health care venture?

Don't make the mistake of thinking that the industry only gets disrupted if one of these new ventures becomes successful enough to take out a major insurance carrier. What if instead, they could simply prove that a broker distribution channel was unnecessary or brokers are overcompensated in highly regulated and commoditized markets? How long will a major carrier continue to pay these higher distribution costs if their competitors'costs are far less? And what if that reduction of distribution costs from the carriers also happens to represent 50 or 60 percent of your annual revenue today?

If your business is going to survive this forthcoming onslaught from non-traditional competitors, you will have to adopt a fee-for-service model, just as you will need to add more value for your employer clients.

Among other things, the fee-for-service model gives you true freedom from insurers threatening to pull your appointment, brings diversification to your revenue streams, and allows you to tie your compensation to results or value. Most importantly, it allows you to do what's best for your clients.

Key steps

Here are some of the steps you will need to take to safeguard your business, so you can continue to serve the best interests of your employer clients:

• Get a clear, precise picture of your revenue streams. Find out exactly how much annual revenue you would stand to lose if you lost a particular carrier. A lot of firms don't have an easy way to quantify their top revenue streams, and they don't do a great job of tracking their commissions. One of the biggest complaints from brokers is how hard it is to track commissions. This becomes much easier when you switch from commissions to fee-for-service.
• Decide how fast you want to convert your business to fee-for-service. Ideally, you should aim to convert your entire business within three to five years. Develop a plan at the start and pay attention to the changes in the marketplace that may tell you to move faster or slower. Adjust your marketing messages based on how fast you want to convert your business. Think in gradual terms, such as "what would it take for my firm to go from 90 percent commissions today to 60 percent commissions a year from now?"
• Start with your biggest clients first and keep working your way down. Your largest clients are used to this model already from working with other advisors and consultants.
• When adding new clients, only take them on a fee-for-service basis.

With most clients, the switch to fee-for-service will be well-received. The conversations don't have to be hard. There's no reason to expect a lot of pushback and confusion from clients. Clients and prospects are more inclined to work with brokers who are transparent and have more skin in the game.

You can charge a per-employee amount, a project fee, a monthly retainer, or an hourly fee. One word of caution: With regulated market business, it can be difficult to switch to the fee-for-service model. The laws vary by state regarding what you can and cannot do with your fees. The licensing varies, too. In some states, you may need an advisor license. Check your state's licensing requirements to understand what you are allowed to do with your regulated market business.

Make sure your clients are not double paying the premium and your fee. Broker fees must be fully disclosed to the buyer, and they must be reasonable. Some states treat broker fees as surplus lines premium and subject those fees to a separate tax.

Do you have the staff and technology to implement the transition internally? If not, you will need to outsource it. It doesn't need to be complicated. You can easily get accounting software that will probably be more accurate than the system you're using now to track commissions.

Regardless of how you structure the fees, becoming an advisor of tomorrow will make you better prepared for the disruptions that the big non-traditional competitors will bring to the health insurance marketplace.

The next three articles in this series will take you step-by-step through the process and examine the challenges involved, so you will be ready to tackle them head-on. The articles will focus on:

•     Now that you are ready: Transitioning your clients
•     Now that you and your clients are ready: Managing your carrier relationships
•     Conclusions and looking ahead