This article is the fifth in a series that we started in July with "A little less conversation a little more action." The collection will take you step-by-step through the process of becoming an advisor of tomorrow, examining the challenges involved in so many of the non-intuitive issues you will face, so you will be ready to tackle them head on. 

To better meet their clients' needs today, advisors of tomorrow are building independent, high-performing health plans for their clients. When you do that, it can ultimately put you in the position of competing directly with the major carriers, and that means some difficult conversations are probably in order.

At one time, these carriers probably represented the majority of your firm's revenue and will likely call to ask why you moved a certain group, or even threaten to pull your appointment. We are hearing this from all over the country from advisors we know. Before you have these conversations with the carriers, you need to be ready.

As we covered in the earlier articles "All shook up"and "Suspicious Minds":

• You should educate and prepare your team and your clients for the transition.
• Equally important is making sure your firm's financials are in order by converting to fee for service.
• Along with using a fee-for-service model, you need to know how much commission-based revenue you would stand to lose if a certain carrier pulled your firm's appointment.

You may lose some carriers over this, and that's OK, as long as you're well-prepared beforehand.

To be prepared, you need to get a good handle on the key points you're going to make in the conversation with the carrier. Try to understand the carrier's perspective. Given the history of our industry, they may be thinking that your objective is to maliciously move as many groups as possible away from them.

Start the conversation by telling the carriers, "I don't want you to get the impression that my sales strategy is to pull groups away from you. I probably haven't done a great job communicating that to you."

Right now, too many brokers are giving lots of empty lip service to next-generation strategies, but not taking any real action on them. Keep in mind that despite what your LinkedIn feed looks like, your firm might be the first firm this carrier has dealt with that's truly committed to these strategies. Make sure your words and actions deliver the message that you're serious about this new direction and that it's not just a marketing spiel. It's a fundamental change in your business model.

You can both agree that your client can't afford double-digit health care cost increases every year. Explain your solutions in a factual and unemotional way, then give the carrier the data to show how the changes you've made in an independent environment have reduced cost for your clients. Let the numbers tell the story.

You should ask if the carrier will agree to allow you to implement those same cost controls, such as allowing you to put in your own pharmacy carve-out or independent nurse case management for this 300-employee client. Understand your goal is and what concessions you want to ask for, should they have a desire to accommodate your request. These should be specific, concrete examples.

They might say, "No, we won't let you do that unless the group is above a certain size." Many times, carriers will make these kinds of concessions for the biggest groups, but not for the middle market.

But why are they doing it with the largest groups? Because it works, even if they have to agree to certain compromises, such as a higher administrative rate to allow carve-in pharmaceutical benefits. It can work for the smaller groups, too.

If you've clearly articulated to the carrier that your proposed solution is the right thing to solve this client's problem, substantiated that with summary data (it's not your job to educate them on the exact process or vendors), and if they're still not willing to make any concessions, then it should be self-explanatory why you moved the group.

The reality in this situation is that the client is asking for a solution that the carrier doesn't offer. It's important to say this in a nonthreatening, matter-of-fact way, but also vital to have the data to support your position. Make it clear that you're still more than willing to work with the carrier if they will permit the changes you described or with other clients that fit their criteria.

If other carriers are allowing you to make the needed changes, then you can mention that. Or you can say, "We're having these same conversations with other carriers."

Your goal is to have them leave the meeting with a better understanding of the problems facing your clients and what changes are required to maintain a working relationship for your mutual clients. Even if you do it perfectly, you still won't be able to make everyone happy. Don't panic.

In the next few years, carriers will have to become more receptive to these conversations because nontraditional competitors are entering the health insurance space. Carriers are rightly concerned that nontraditional competitors like Amazon, Walmart, Apple and Google are going to make significant changes to the way business is done. Keep in mind that this competitive pressure didn't exist even a few years ago, so the carriers were not motivated to make concessions to brokers.

The tougher meetings will go better if you always remember the biggest reason for your firm's transition: to serve the best interest of your employer clients.

The next and final article in this series will focus on high-level conclusions and looking ahead.

After many years of frustration looking for resources in the marketplace regarding practical innovation developed by producers actually implementing change for their clients, Mick Rodgers and Bob Gearhart co-foundered Advisors of Tomorrow in 2018.  For more information on the Advisors of Tomorrow initiatives for real change or their annual event, visit http://AOT.live.