The Ultimate Guide to Hiring a Benefits Broker

The Ultimate Guide to Hiring a Benefits Broker

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SHRM BrokerFinder Powered by Elevate Benefits

​Your Employee Benefits Broker: An Essential Hire

An effective benefits strategy gives employers a competitive edge, yet too many companies fail to take the crucial first step: choosing the optimal benefits broker for their company.

Your choice of employee benefits broker has far reaching effects. Your broker helps you manage a budget of 25-40% of payroll. Even a small difference in capabilities and results can have a dramatic difference on costs.

A broker’s work doesn’t only impact the financial wellbeing of your company. It often has a profound effect on the health and welfare of employees and their families. A child has cancer. A mom needs a nursing home. Retirement is approaching. When these moments arrive, will you and your broker have worked together adequately to ensure employees have all the coverage and support they need?

Our experience indicates that less than approximately 10% of employers use all five steps outlined in this guide when hiring a broker. However, we estimate around 90% of companies use hiring practices similar to these five steps when hiring internal employees. This includes even those at entry level who don’t have nearly the strategic and financial impact a broker has on their business.

Why do so many employers fail to properly select a broker? There are three primary reasons. First, employers don’t select brokers very often, so they are not up to speed on the latest skills and capabilities expected of brokers that are continuously evolving and improving. Second, it is often hard for employers to understand how different brokers deliver different results because historically good tools for broker comparison were not available. Third, they don’t see a measurable difference in broker options clearly enough to warrant change from a broker they “like.” 

So how can you properly take the crucial first step and select the best broker for your company? Before we dive in, let’s clear up a couple of common questions about broker types and timing of broker selection.

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What is the difference between benefits brokers, consultants and advisors?

All three of these terms are used in the marketplace to describe employee benefits professionals that provide benefits advice, products and services to employers. For simplicity and consistency, we always use the term broker to describe the services the market refers to as an employee benefits broker, consultant or advisor in this document.

Historically, a consultant worked on a fee for service basis and a broker worked for commission. However, many brokers now work on fees and many consultants will work for commission. “Advisor” has become a popular moniker for brokers; it connotes a strategic, advisory orientation towards clients. When considering hiring a broker, consultant, or advisor it is best to ignore the title and instead focus on what they do, how they do it, and how they get paid.

When should a company shop for a new broker?

We highly recommend you go through a broker selection process as far in advance of your plan renewal date as possible. Employee benefits brokerage has become a complex profession and process, regardless of company size.

Optimizing benefits isn’t just about shopping for coverage from carriers. It involves a holistic approach to your overall company strategy, budgets, benefit plan design, HR strategy and even IT concerns. If you are hiring a broker only to shop your plans, you probably aren’t maximizing the broad spectrum of results top brokers deliver to employers. There are several specific scenarios requiring a broker selection process:

  • You question whether your broker is keeping up with the myriad of regulatory and technological change in the marketplace
  • You aren’t clear on the value you are getting from your broker for the commission or fees you are paying
  • You haven’t shopped in more than 3 years
  • You aren’t sure you are getting the day to day service you need or deserve

Five Steps for Optimal Broker Selection:

Here is a summary list of the five steps we recommend any size employer take when undertaking a broker selection process:

5 Steps.JPG

It’s important to reflect on how these steps compare to the level of scrutiny you apply to other hires your company makes. Should you do more to find the right resources to help you save time, reduce spend and ensure compliance of your benefits plan?

Below, we provide more detail about best practices to help you in your broker selection process achieve their goal.

Step 1: Build a Strong Candidate Pool

Having options to compare and contrast makes you a savvy buyer, but finding the brokers best for you is not easy. The challenge is not in the quantity of brokers available. There are dozens in any given area. The challenge is creating a cultivated list of brokers specializing in companies of your size, in your geography, who understand and can address your specific needs, goals and objectives.

We recommend you do a preliminary review of at least 3 and perhaps as many as 6 brokers to learn about different skills, capabilities, resources and approaches to managing your benefits plans. This list is for initial exploration only to ensure that you see a range of options. You’ll need to go through a comprehensive interview process with a smaller list to see the differences so that you know whether you should bring on a new broker, stay with your current broker, or simply continue expanding your candidate pool and continuing the interview process.

How SHRM BrokerFinder can help:
Our broker database and free online search tool allows you to build a sound candidate pool from your desk. On the platform you can find brokers who:
1. Specialize in working with companies of your size in your geography
2. Work in local boutique firms, regional and/ or national firms
3. Are verifiably licensed and have appropriate liability coverage (don’t take this for granted with any candidate)
4. Have specific expertise in areas such as compliance, executive benefits, wellness, HR support and other specialized areas

You can contact firms in our database directly from the search results. Additionally, you can invite any brokers you know to join the platform to participate in your hiring process in a common format.

Step 2: Develop a Request for Proposal (RFP) for candidates

We recommend all employers use an RFP or written questions as a component of the hiring process. Why? Creating an RFP requires you to think about what you are looking for and requires the respondents to document what they can deliver. This does not mean or imply you should select a broker via RFP. Quite the contrary, unless you require a written bid win an RFP must only be a supporting tool. 

Many of the best brokers will not want to reply to an RFP or even a simple questionnaire if they don’t believe they have a chance to adequately tell their story. Good brokers are successful, busy professionals. Many want new customers, but they don’t need new business, especially from employers who may be more transactional than relationship-oriented. 

You can attain a robust candidate pool and use an RFP to effectively communicate your needs and the hiring process to candidates. This goal can be accomplished with a simple but comprehensive cover letter to the RFP that explains:

  1. Who you are. 
  2. Why you are considering a new broker.
  3. How the broker can reach you with questions and to learn more as needed. If the broker has to operate in a “black hole”, it is unlikely they will reply.
  4. The RFP supports the rest of the process, which includes other communication such as phone calls, emails and meetings at your discretion.

We have separated brokerage services into eight core components you will want to understand when interviewing and comparing candidates. Understanding how each candidate performs in each of these areas ensures that you are going to be working with an excellent broker who will add value to your business.

Here are core RFP/Questionnaire topics we recommend employers use:

1. Broker Overview

Getting a comprehensive picture of the fundamentals of broker’s business will ensure the basics are in place before taking your time, or the broker’s, for a more thorough review. A good broker overview has 4 components:

  1. The company’s ownership structure. This is important because you may find you prefer a local, regional or national firm. 
  2. Biographies and experience levels of the team that will serve you.
  3. Fees and/or commission schedule. Also make sure they agree to transparency of payments from 3rd party carriers and vendors they represent.
  4. Verification that the broker has proper licensing and adequate E&O coverage.

2. Employer Service Model

What are the services the brokerage firm provides to your company management or HR/Benefits department in your effort to build and manage your employee benefits program? What is the calendar of interactions supporting the broker service model for your team and company?

3. Employee Services

Some brokers offer comprehensive levels of employee support while others offer almost none at all.  What are the specific services, if any, the broker offers to the employees of the company? For example, does the broker offer employees support at claim time? Other concierge services or other advisory services?

4. Health Plan Cost Control 

This is an area where brokers differ dramatically in skills, resources, capabilities and results. In recent years, new products, analytical tools and consultative approaches have exacerbated the difference between benefit brokers. Regardless of your company size, it is crucial you gain a full appreciation of each candidate’s capabilities in these areas during your broker selection process.

5. Wellness 

This is an area that has exploded. Today, hundreds of wellness companies provide a myriad of approaches to overall employee wellbeing, financial wellbeing, population health management, employee health and productivity and more. For purposes of selecting a broker, you’ll want to understand what knowledge, experience and resources the broker has in the wellness arena.

6. Compliance

Legislation at state and federal level is complex and continuously evolving. Whether it is the Affordable Care Act (ACA), a.k.a. Obamacare, HIPAA, ERISA, Privacy rules, COBRA or other regulatory requirement, you want to know that your broker has tools, resources and strategy to support you in your effort to stay compliant. While brokers can’t guarantee you will be compliant, there are major differences in the support brokers are able to give an employer.

7. HR Systems and Support

Many brokers now have access to, and some even own, human resources (HR) software that can help you manage portions of (and sometimes the entirety of) your HR processes. Depending on your company’s level of HR sophistication, you may want to ensure your broker understands the HR technology landscape. You’ll want to know whether they can assist you in building and maintaining streamlined, efficient and high-quality HR processes.

Some brokers offer ad-hoc, project based and even full time, on-site HR consulting services across a wide range of strategic and tactical HR issues.

8. Enrollment and Employee Services

Communication and ease of enrollment and the quality of communication impacts your employees’ feelings about the plan and your company’s brand. You can have the best benefits plan out there, but if employees can’t enroll with ease and don’t understand the benefits, you may be wasting money. Successfully communicating cost increases and plan changes, which are common occurrences, can impact your brand as an employer and future ability to recruit talent.

How SHRM BrokerFinder can help:
Our free, online customizable RFP Cover Note and Question Template enables any size employer to ask great questions and help them understand broker capabilities. You can send broker candidates questions online and they can reply online. This allows you to line up each answer for comparison and scoring.

Step 3: Compare and score answers from your candidates and pick finalists.

It is easy to let personalities infiltrate the hiring process. That is not all bad, as a strong rapport with your broker is crucial. However, side-by-side comparison and scoring your broker RFP or questionnaire will ensure you maintain objectivity and keep capabilities foremost in your mind.

How SHRM BrokerFinder can help:
By using our online RFP you can align each broker’s reply, reading and scoring them all side by side. Subsequently, each category of the RFP is subtotaled so you can compare how candidates perform in each category. Finally, you can add points manually as part of your finalist interview process.

Step 4: Conduct Finalist Interviews

After you have built your pool of candidates, asked a preliminary panel of questions, and narrowed down your broker choices to a few candidates, it is time for finalist interviews. By meeting in a consistent, formal setting with each candidate, you create a level playing field fair to the candidates looking to earn your business, and fair to employees counting on you for benefits.

We recommend you review the RFP or questionnaire answers for each candidate and use the answers to create follow-up questions for your meetings. When these meetings conclude, you should have a strong sense of the fit that each broker team offers and how you would feel working closely with the candidates – possibly for years to come. A cultural mesh with your broker is a big advantage that ensures open communication and teamwork as you seek to build benefits plans and serve employees.

How SHRM BrokerFinder can help:
We’ve built a ‘Broker Finalist Best Practices Guide’ specific to running impactful finalist meetings. By creating a free employer account at elevatebenefits.com, you can download the guide or follow recommendations embedded in our online tools. We also provide side-by-side comparisons of your finalist brokers to refer to in your final evaluation process.

Step 5: Archive materials from your selection process, and any broker agreements provided to you.

After selecting your benefits broker, you need to take some final steps to make the hire and get off to a great start. Consider signing a services agreement that governs the relationship, so there is no confusion about rules of engagement. If the broker prepares the agreement, be sure to have your attorney review the terms and conditions.

Your broker should also provide a Business Associates Agreement (BAA), a copy of their privacy policy, and a statement on commission and fee transparency. Getting these documents makes sense, as managing employee benefits programs is fraught with regulations and exposure to risk.

How SHRM BrokerFinder can help:
We offer a free, secure document center where you can store all documents related to broker selection, compliance, and your plans. Folders can be added and customized, making this your one stop location for documents related to your benefits plans.


We hope this guide has given you a clear perspective on the broker selection process and is useful as you leverage employee benefits to build a great company. SHRM's BrokerFinder can help you find and hire the right employee benefits broker for your company. The online platform provides a national, searchable marketplace of broker candidates and an easy-to-use request for proposal (RFP), so companies can score and assess candidate responses as part of their evaluation process.

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