In honor of Charlie Munger, billionaire investor and partner of Warren Buffet, I'd like to explore inversion thinking when working through difficult problems. It places thoughts in reverse, forcing people to consider avoiding failure to highlight their best paths toward success.
I first used this process with our advisory's account-management team when we had a new executive start at
I then flipped my ask, "We just lost this client. Why did it happen?" Suddenly each person was able to consider at least plausible reasons, regardless of how slight, on how someone could start a negative conversation about our team, process or work. After brainstorming a list, we took the top four agreed upon reasons and established an action plan. Years later, we still
Read more:
Healthcare consulting is complicated. Solving for an answer to fix it is not straightforward. Even more difficult is getting multiple decision makers, sometimes with conflicting perceptions on value, to come together. So instead of asking, "How can I advise a great benefits package?" Let's reverse this thought process and think of the opposite:
"How did I lose my client this year?" or "How can I make it easy for my competition to start conversations with my clients?"
In the spirit of inversion thinking and looking at the situation from a new angle, I've listed seven things I would do to not progress the client's benefit package, strengthen my relationships or leave them with less than full confidence in my companies' abilities.
1. Timing
I would negotiate with the carriers first and communicate with my client after.
In order to lose my client, I would keep them in the dark during a high claims year as I work behind the scenes in an attempt to negotiate or find better alternatives.
We all know that in the bad years, carriers will delay an official renewal release as late as possible. Your competition knows this and will use your lack of transparency against you. As the adviser, you don't have to own their high claims, just your work on the remedy. By being honest and forthcoming about their current scenario and paths to move forward, you can't maintain your status as a trusted adviser.
Read more:
Tip: Mark it on your calendar, start your conversations with clients at least 120 days before renewal. In most cases, make it a condition on renewal with your insurance carrier that they will release at 120 days or sooner next year.
2. Activity
I would not go out to bid this year because of "___."
There are many excuses not to explore the market: "We did last year," "It's a small increase," "It's actually flat this year," "It's hard" and "It's because of X claims."
The test may be the same, but the answers have changed. If you believe the stock market is complex, it has nothing on healthcare. There are many variables that can affect your healthcare plan: interest rates, stock market, federal regulations, state regulations, local hospital systems, new drugs on the market, drugs pending approval, and most importantly, your members' actual claims. Rather than be reactive to a renewal percentage, look for improvements annually.
Tip: Benchmark the plan, find problems and go to market each year to solve the specific problems the plan is facing.
3. Financials
I would not measure any key performance indicators (KPIs) for my client.
An increased premium as a percentage on carrier paper does not tell a story. It certainly doesn't tell a story about your agency's value or role in advancing their health and welfare plan. Healthcare is a top-three P&L expense for the majority of our clients. Let's treat it as such by creating and measuring KPIs to teach and illustrate.
It's up to us to provide context to the cost and challenges of healthcare. You must synthesize the data in a way that gives them context to their state, competitors, other industries, historical costs, etc. Don't forget to add in some data from your stewardship reports!
Tip: Have no KPIs? Use annual reports from the Kaiser Family Foundation, Milliman or similar sources to provide ideas on metrics and annual benchmarks for comparison purposes. Also track internally different cost-containment strategies within your agency and measure the change that made for clients to illustrate real-life scenarios they can name.
4. Interests
I would not explain how and when my agency receives compensation.
The broker-client relationship is one of the few decisions businesses make with very little or no understanding of how compensation affects their cost. Clear this up by proactively disclosing all compensation received. Bonus points for trust if you include this bottom line into your spreadsheets comparing different plans and options. Have these hard discussions up front or your competition will have them for you.
The
Read more:
Tip: Try to get away from a percentage of premium compensation where you are awarded perverse incentives and put at least some of your compensation at risk with metrics that are aligned with the employer.
5. Focus
I would focus on premiums, not claims.
The problem is always explained as "the claims." Claims are high, this claim or that one, impending claims, old claims, etc. To solve the problem, you should be having discussions about claim solutions, not just the annual premium. The discussion instead should be about how to control the supply chain and improve pricing, as well as bring employees more solutions, transparency and choice.
Tip: The only question should be, "What is being done to reduce the frequency and severity of claims?"
6. Department
I would not bring in multiple departments, such as financial, human resources and executives, to make benefits decisions.
I think of any business decision as being triangular, taking into consideration how it will affect shareholders, employees and customers of the business. Strengthen your position by bringing in the sometimes reluctant parties to the benefits conversation (i.e., executives or shareholders). It's easy for HR to make a decision just for the employees, or conversely, a CFO making decisions just for shareholders.
Read more:
Your customer is the business, not just a single contact. A change of jobs by your current contact or an executive hire may shake up your position if you don't have multiple relationships and haven't shown how you, like the owners and executives, look for success for all.
Tip: Strive to bring in all parties and provide that synthesized data to speak to each department involved.
7. You
I would rely on the name of my agency rather than my name.
Your agency's name and reputation are important, but what about your own? Do you have a reputation in your industry? Do you also bring credibility and knowledge to the table? If your prospective client Google's you, will they find anything other than a LinkedIn page? Are you active on LinkedIn, keeping up with industry changes, legislation and updates?
I believe you don't understand something until you can teach it. Strive to be curious, subscribe to all of your industry's publications, and set aside time every day to read and translate these thoughts on your own LinkedIn page or blog.
Tip: Subscribe to all relevant industry publications and attend annual benefits conferences. You might be surprised how far it will take you.
