This article is the fifth in aseries that we started in July with "A little less conversation a little moreaction." The collection will take you step-by-stepthrough the process of becoming an advisor of tomorrow, examiningthe challenges involved in so many of the non-intuitive issues youwill face, so you will be ready to tackle them headon. 

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

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

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

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

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

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

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

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

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You can both agree that your client can't afford double-digithealth care cost increases every year. Explain your solutions in afactual and unemotional way, then give the carrier the data to showhow the changes you've made in an independent environment havereduced cost for your clients. Let the numbers tell the story.

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You should ask if the carrier will agree to allow you toimplement those same cost controls, such as allowing you to put inyour own pharmacy carve-out or independent nurse case managementfor this 300-employee client. Understand your goal is and whatconcessions you want to ask for, should they have a desire toaccommodate your request. These should be specific, concreteexamples.

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They might say, "No, we won't let you do that unless the groupis above a certain size." Many times, carriers will make thesekinds of concessions for the biggest groups, but not for the middlemarket.

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

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

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

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

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

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In the next few years, carriers will have to become morereceptive to these conversations because nontraditional competitorsare entering the health insurance space. Carriers are rightlyconcerned that nontraditional competitors like Amazon, Walmart,Apple and Google are going to make significant changes to the waybusiness is done. Keep in mind that this competitive pressuredidn't exist even a few years ago, so the carriers were notmotivated to make concessions to brokers.

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

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

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

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