Benefits Brokers Posing As Consultants

By Darrin Tonsfeldt
The Village Business Institute 

Is your benefits consultant really a benefits broker? Would you know the difference, and should you care? I work with brokers and consultants as both a vendor and as an employer, and most have been upstanding and dedicated professionals. So I am cautious about the rant I am about to go on, as I would hate to see a broad brush applied to all benefits consultants and benefit brokers. Keeping that in mind, I do have concerns about brokers who try to pass themselves off as consultants.

First, let’s back up for a few moments and differentiate between brokers and consultants. Benefit brokers are representatives of particular benefit products—they are marketing the products and services they wish to sell. There is nothing wrong with this—it is the nature of commerce. A consultant, using Peter Block’s definition from Flawless Consulting: “is a person in a position to have some influence over an individual, a group, or an organization, but who has no direct power to make changes or implement programs.” By expanding this definition to benefits consultant, we get, “a person who neither provides nor manages benefit products or services, rather they are a source of objective advice on the products and services that will best meet management’s needs.”

Now here is the rant. Everything would be great if brokers and consultants stuck to the above definitions. The reality though is that a few players in the benefits market have been doing some serious blurring of the lines between what a consultant advises and what a broker provides. One such way the blurring takes place is when a benefits broker [vendor] presents their sales people as consultants. A second is when a benefits broker establishes within their organization a separate entity of business to provide benefits consulting. The third is when an independent benefits consultant only recommends products and services for which they earn a commission.

Let’s take each of the three and look at them more closely to see if they really are obstructions of vision, or maybe just reasonable business practices. In the first example, it is not unreasonable to ask what is so bad about a broker calling himself a consultant—particularly if the broker is truly transparent about any connections to specific products and services they get paid for selling. Part of a broker’s job is to advise clients on the products and services that will best meet an employer’s needs. Where the problem arises is when brokers hide or don’t declare their financial connections to products and services they sell, and then try to pass themselves off as objective consultants. Are they being transparent, are they being honest? Not really, and most of us would not feel too good about the advice we get from someone like this. Fortunately, I have not run into a lot of brokers passing themselves off as consultants, though they are out there.

The second example is somewhat more common, particularly among larger brokerages. If the brokerage’s consulting department is truly independent and has provided objective advice including recommendations to use products and services not vended by their brokerage division, this would seem to be a consulting service you can trust. Unfortunately what we see more often from these consulting departments is the rubberstamping of the products and services offered by their parent company. When we hire consultants, we expect them to be objective, so just rubberstamping their own products would seem to raise some questions about their integrity. How would you feel about trusting the well-being of your employees to a consulting department that only recommends products their parent company sells?

In the third example, our experience with independent benefits consultants is that most truly are a resource employers can trust to make objective decisions about health benefits. In other words, they work for the employer, not a benefits broker or vendor, and typically work on straight consulting fees. If they do have a financial connection, commission, with a particular vendor, they let their consulting clients know and most consultants make sure any commissions are clearly identified in any requests for proposals. Independent consultants who hide these financial relationships are inviting employers to doubt their objectivity, professionalism, and trustworthiness. Even with that said, some independent consultants have sweetheart deals with certain vendors. Before you hire a consultant, make sure you ask if they have any financial connections with vendors.

As I said in the beginning of this post, most of the brokers and consultants I have encountered have operated with integrity and full disclosure. If you are looking for someone to help you select the best health benefits for your organization and employees, do your research and ask the right questions so you find “one of the good ones.”

If you have questions about how you can provide health and wellness services for your employees, give us a call at The Village Business Institute 1-800-627-8220 or visit our website

Darrin Tonsfeldt
Darrin Tonsfeldt, The Village Business Institute

About the blogger
Darrin Tonsfeldt has a background of program administration, employee supervision, and clinical experience, as well as 20 years of experience in organization consulting and planning. He provides oversight of The Village Business Institute, Regional Counseling Services and Financial Resource Center programs along with consulting services that include: strategic planning; career, leadership, management, and executive coaching; corporate training and group facilitation; crisis response in the workplace; and organizational consulting.