This article is the fourth in afive-part series that we started in July with "A Little Less Conversation a Little MoreAction", that will take you step-by-step throughthe process of becoming a next-generation advisor examining thechallenges and many non-intuitive issues you will face, so you willbe ready to tackle them head on. 

The advisor of tomorrow wants a better way to contain healthcare costs for clients. That means adopting a fee-for-servicepayment model and building independent, high-performing healthplans.

Not all of your clients are ready for a transition like this andthat's OK. The first step in this part of the process is figuringout which clients are a good fit for the direction you want to go.We classify companies into two distinct buying styles: the pricebuyer and the strategic buyer.

Price buyers are not a good fit for something like this becauseall they want is the plan they had before at the cheapest possibleprice. Every single year, they want you to run an auction,demanding that you get as many carriers to quote the business aspossible. On the off chance a competing advisor presents a cheaperoption, they will likely leave your firm. The relationship iscompletely transactional and the strategic horizon of the buyerdoesn't extend beyond the current price of the renewal.

Strategic buyers, on the other hand, are already looking threeto five years into the future and understand how to successfullymanage change. These are the clients that you want to target inyour first wave of transition, because they are willing to workthrough any challenges knowing there will be a payoff in the longrun. They are collaborative partners, and they want to know howthey can improve the plan with you. These client relationships willlast longer, be easier for you to work with, and it's a warmaudience of people who already trust you.

Here is something that nobody wants to talk about: Bytransitioning your business model to deliver high performing healthplans, you will lose some clients that are price buyers (ortraditional auction buyers) because all they value is the price.That is worth repeating:  A transactional buyer onlyvalues the price of the renewal and will never understand thestrategies you need to implement in order to really helpthem.  Rather than worrying about that, focus on growingyour client base by gaining new clients that are strategic buyers(and refusing to work with any more price buyers) to replace thenot-so-solid relationships of the clients that won't ever come onboard.

This transition can be unnerving, but over several years, youwill end up with a much stronger client base as you lose some pricebuyers and bring on new strategic buyers. It's a natural, healthyturnover in your book of business. And keep in mind, the processyou are suggesting to your clients may not be what they originally"bought into" when they hired you several years ago.

Offering an independent, high-performing health plan is theright thing to do for your clients. In order for it to besuccessful, you need to engage them and explain to them what thatthe execution looks like while assuring them that it's not going tobe more challenges, just differentchallenges. 

Timing matters

In our earlier article, "Suspicious minds: Prepping your team forhigh-performing health plans" we discussed the importanceof preparing and educating your internal staff before you bringthese solutions to your clients. Beginning with your staff is themost logical place to start and a great place to pressure-test thepartners, messaging and strategies. The execution will fail if youtry it when your team isn't ready.

After your staff is ready, they should bring this new model toyour existing clients first and convert your relationship to a feefor service arrangement before you talk to prospects about it, aswe mentioned in the article, "It's now or never: Converting to fees andperformance-based compensation."

This is a step that most brokers are doing in reverse, sellingprospects on these processes first, then rolling through theirclients if it works. But why would you start a newprospect relationship with a concept that's new to your firm andyour team? The last thing you want to do is try to gain someone'strust by using something you have never delivered or don't intendto ever deliver. People are already skeptical, because they havebeen burned in the past by others who promised them solutions thatdidn't work.

That doesn't mean you should keep doing business as usual. As anindustry, benefit brokers can't afford to do business the way thatit's always been done (the traditional producer model andauction-based solutions). Although it may have been fine in thepast, it's not effective anymore because the major carriers have noincentive to lower your client's costs and there are an increasingnumber of firms delivering better benefits at a lower cost to theirclients.

Educating clients

Much like you had to do with your staff, you need to educateyour clients so that they understand what's not working and wherethe process that they are in is broken. We've found that thestrategic buyer respects when you admit that something is notworking. It builds credibility and you'll be hard pressed to findan employer who is happy with the traditional markets. Once you'veclearly articulated the problem, you can explain how anindependent, high-performing health plan will work better tocontrol their health care costs over time.

After talking theory, show them available benchmarks to build asolid numbers case, starting with the plan's current per employeeper year cost. Teach them about the measurements that they shouldbe using, the level you are trying to reach, and show themlong-term measurements of those who have taken a similarjourney.

If you are just getting started, you can ask colleagues in theindustry for examples, but only if you plan on executing thestrategies that will produce those results. Leverage thepresentations that others will share with you until you are able tobuild your own.

Education is the way to lessen resistance. If possible, offerworkshops or seminars to educate your clients in a group setting.These seminars foster a collaborative culture and will help yourclients see they're not the only one in the room making this typeof transition. It also builds your credibility as an expert.

You'll need a few external champions within the client's staffto promote the transition. Build cases for why the journey they areabout to embark on will help both the C-Suite and HR staff bydelivering better benefits and lower costs.  Try toidentify who will be supportive and who will be resistant up frontand address challenges proactively.

Right now, nontraditional competitors such as Amazon, Walmart,Apple and Google, are reshaping the business landscape. The lastthing you want is to give them a chance to convince employers thatthe broker distribution channel is unnecessary or obsolete, likethe taxi industry or public phone booths. If they put some of thelarge traditional health insurers out of business, you don't wantyour business model relying on a few insurers to supply 80 percentof your revenue stream.

The next two articles in this series will guide you through thefinal steps of the process and examine the challenges involved, soyou will be ready to tackle them head-on. The articles will focuson:

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

Mick Rodgers is the managing partner at Axial Benefits Group, which is based inBoston. Mick has been called a pioneer, a disrupter andhas always had a focus on disintermediation.

Bob Gearhart Jr. is the third generation to lead DCW Groupand is responsible for helping clients manage the healthcare supplychain to improve benefits and increase their earnings.