Many of the headlines concerning America's health insurance woes focus on the fraught status of the Affordable Care Act and the ongoing battle among lawmakers about what to do with it. To be sure, whatever your opinion of the current law, it's clear that a simple solution to the politics of health insurance doesn't exist.
But health insurance is also one of the of the darkest clouds hovering over nearly all independent financial advisers. Here are the most common challenges advisers face due to a lack of affordable and reliable coverage.
Advisers under stress
RIA owners worry about providing health insurance for their growing staffs. Independent business owners need a loyal and motivated team to attract and satisfy a profitable client base. It's difficult to accomplish that unless you are doing all you can to provide your assistants and other advisers with quality medical care. Otherwise, you risk their leaving for a position somewhere else that does provide it.
Advisers at independent broker-dealers worry about paying for major illnesses and accidents among their family members. The cost of hospital stays for children or a spouse has been known to impose great financial strain on IBD advisers with subpar coverage, who then struggled to commit enough money to enhance their practice. This can be particularly troublesome for newer advisers who have yet to develop their books of business.
Would-be breakaway brokers worry about how they can afford health insurance coverage for both their families and staffers while also acquiring adequate technology and office space once they exit the wirehouse. Captive brokers have been known to give up on their dreams of independence because they could not find the coverage to persuade their most trusted teammates to make the leap.
Thankfully, there is a better way for many independent financial advisers to gain quality coverage than either relying on the government or funding a private plan largely on their own: professional employer organizations.
Professional employer organizations are third parties that use something called "co-employment" to outsource many of the functions a firm's internal human resources department would conduct. Under a co-employment contract, the PEO shares certain responsibilities with the advisory business.
The right PEOs can leverage the scale of a national network of participants to tap high-quality group health insurance plans at much lower costs than any single financial adviser could obtain by paying the insurer directly for the same type of plan. Good PEOs also can help advisers become aware of regulatory shifts, which enables you to focus on what you do best — serve clients — versus trying to interpret new health care laws.
Running your business as a successful independent financial adviser is hard enough. Stressing over how to find adequate health insurance for yourself, your family and your team does not have to be one of those challenges. In fact, with the right plan, your health insurance solution can be a value-add that helps your business stand as a role model for the industry.
Keith Gregg is chairman and CEO of the Chalice Financial Network, a provider of technology and business solutions to independent wealth advisers.