How should corporations balance cost and appreciation of fringe benefits
At some point most companies fall into one of two traps with their employee benefits programs, either by . . .
- Handling employee benefits like commodities.
- Ignoring the employee benefits function unless something breaks.
By definition a commodity has no added value, so price becomes the only decision factor. And as benefits costs are passed on from providers, companies naturally seek cheaper alternatives. But the fundamental value of your fringe benefit plan lies in your company's buying power as a tool to create favorable access to products and services for your employees. That buying power is a valuable corporate asset and deserves more than a commodity approach.
Breakdowns in employee benefits are more often due to a combination of service shortcomings, regulatory mandates, and communication failures-not simply higher cost. These are all measures of added value, and your Financial Advisor should be willing and capable to resolve them as proof of added value. But your Financial Advisor isn't there only to fix things that break. Added value means facilitating your goal-setting, anticipating your administrative needs, aligning your company and provider resources, and serving as your troubleshooter and go-between.
Questions CEOs, CFO, and HR managers should ask to test their Financial Advisors.
1. How complete is your Financial Advisor's understanding of fringe benefits laws? How deep is the firm's expertise in industry-specific programs?
2. Can the firm provide comprehensive analysis of financial stability of product resources? Insights to manage cost-sharing and soft-cost factors? Is your Financial Advisor willing to disclose compensation?
3. What is their administrative capability in-house? Through strategic alliances? Can they manage outsourcing of administrative and human resources functions for you?
4. Can the firm help enhance your investment in fringe benefits by providing employees services unavailable on individual basis? On a pretax basis? Can they develop supplemental retirement plans and executive benefits plans in addition to qualified plans? What creativity can they bring to small company qualified plans?
5. Can your Financial Advisor integrate corporate and personal income tax planning to achieve the owners' personal financial goals? Can they integrate the corporate retirement plan and our owners' estate plans to reduce transfer tax liabilities and avoid erosion of personal assets?
The decision process begins with the right questions.
Securities offered through Registered Representatives of NFP Securities, Inc., A Broker/Dealer and Member FINRA/SIPC Investment Advisory Services offered through Investment Advisory Representatives of NFP Securities, Inc. a Federally Registered Investment Advisor. Benefit Planning Services, Inc. is an affiliate of NFP Securities, Inc. and a subsidiary of National Financial Partners Corp., the parent company of NFP Securities, Inc. This site is published for residents of the United States only. Registered representatives and investment advisor representatives of NFP Securities, Inc. may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact the NFP Securities, Inc. Compliance Department at 512-697-6000