This means appreciating the clients that we already have. Further, we should respect those who are being appropriately serviced by another adviser enough to abstain from unethical means to obtain their business for ourselves. Perhaps it seems that these clients are there for the taking, but if we ignore the ethical considerations, we have failed not only our ill-begotten clients and ourselves, but also our industry.

The tenets of best practice dictate that we always put the interests of our clients — those who keep our businesses up and running — first.  Client education is one way of doing this; performing a benefits diagnostic is another. This not only helps our clients, but we help to better the reputation of our industry as a whole — in a sense, giving back to ourselves in the manner of ‘what goes around comes around’— something you might want to think about if you ever find yourself wondering what’s in this ethical behavior for you.

So, let’s venture into a scenario: an individual has just entered the employee benefits business. She immediately goes to her friends and relatives who own businesses to request an agent of record letter for those businesses.

Many times in this situation, the new adviser is not aware of, nor has she asked, how well her prospective client’s current adviser is serving the needs of his business. She might also neglect to ask if her potential client is happy with the level of professionalism and the advice that he is currently receiving. The potential client might also feel obliged to accept her services, given that she is his friend or family member, and he will not think to question the switch.

Therefore, it falls on the shoulders of the adviser to attend to the ethical considerations of signing a new client.

Unless we are acting professionally, that is, performing an initial diagnostic of a potential client, what right do we have to take away business from our fellow advisers, especially if we have not yet proven that we can act in a professional manner and enhance the valued services received by the client?

For those of you out there who perform benefits diagnostics and maintain an ethical approach to gaining new business, I applaud you! I offer you my gratitude for doing your part to raise the ethical bar for our industry and make the business world a better place.

As we come to the end of this month and give thanks, we should indeed offer our thanks to the industry that provides not only for ourselves, but also for those whom we love.

I wish all of my fellow advisers a bountiful and very happy Thanksgiving.=

Arnoff is the co-author of The Three R’s of Employee Benefits: Recruiting, Retention, Rewards. He will soon appear on the Wealth Channel at www.wealthchannel.com. Stay tuned!

Congrats! You’ve worked hard to position yourself as a valued adviser. No doubt you’d like to reap the fruits of your labor.

But your next action is extremely important. It may have not only ethical consequences, but legal ones as well. It is vital that you go forward with a “good karma” mindset — for both you and your client.

Since I don’t know you (or do I?), here’s the first of my two qualifying questions for you:

Are you both experienced and qualified to service your client’s retirement plan?

If not, take the high road! Tell your client you are grateful for the opportunity, but to service him/her better, you would like to bring in a colleague who specializes in this area. By doing so, you will probably save your health and welfare business, not to mention garnering your client’s further respect and appreciation.

If you cannot find a retirement specialist you know and trust, it is better to walk away from this scenario. Again, take the high road!

If you are properly licensed; if a retirement specialist sees no conflict of interest; and if the specialist has his/her broker-dealer’s approval; then you may receive compensation. Keep in mind that the broker-dealer will want proof of your licenses. Also, if the 401(k) is a registered product, the broker-dealer will insist that you are under its BD before any compensation may be granted to you.

Here’s another scenario: you have a handful of retirement plans that you are servicing. In this case, my question for you is: Have you asked your clients if they are looking for investment advice, or investment education as their adviser?

Listen carefully! There is both an ethical and a legal consideration here!

If your client wants investment advice for participants, are you an RIA? If you don’t know what that stands for, you’re not!

Please, please, for the integrity of our industry and to reduce your risk and the risk of the fiduciaries in this plan, say to your client, “I’d like you to consider engaging our services via the ‘certified computer education’ model versus the investment advice model. I would further recommend that if your staff needs investment advice, they use a fee-only CFP. This way, you are not endorsing me as an adviser and adding unnecessary exposure.”

By acting ethically, we find ourselves working well within the law.

The retirement plan may be delivered to you on the silver platter, but make sure your story won’t tarnish if the DOL comes knocking!

Are there any burning ethical issues that you believe our industry needs to address? Please let me know.

Arnoff is the co-author of The Three R’s of Employee Benefits: Recruiting, Retention, Rewards. He will soon appear on the Wealth Channel at www.wealthchannel.com. Stay tuned!

When I say Bernie Madoff, what do you say? Without more than a second, you might generate sinister synonyms such as “thief,” “crook,” “con-man,” or “man with no ethics.” The list could go on and on.

And as we all know, the sad fact is that the damage Madoff inflicted was not just monetary. He also crushed the public’s opinion of the advisery community. Those of us in his wake have been given the task of raising the industry’s ethical bar. However, the good news is that out of the wreckage, more efficient and transparent processes can be established.

Looking at our client relationships, we must take on the ethical challenges they present.

Despite the dismal economy, the employee benefits field flourishes. In fact, it is drastically more crowded today than it was thirty years ago. Not only do advisers provide services, but also non-traditional entities, such as payroll and accounting firms with corporate licenses and P&C agents. In this environment, the broker-versus-consultant discussion is rarely considered.

Nonetheless, benefits brokers must contend with the ethical dilemma of whether to act as brokers or consultants on the behalf of their clients. And so, the question I ask you is, when is it appropriate to go from a broker relationship with a client, to that of a consultant?

Clients must be treated as we ourselves would like to be treated in the same position. At some point, a certain conversation must take place. Here is how it might sound:

“As your broker, you are paying me (fill in the blank) for servicing your (fill in the blank). If I was to work as your consultant, you would pay me (fill in the blank). I estimate the average hours I have worked for you is (fill in the blank). It appears I could save you an estimated (fill in the blank) per month by switching our relationship from one of broker to one of consultant. Ethically, Mr./Ms. (fill in the blank), I want fair compensation for my expertise, but it seems you have grown to a point where we need to address how I am serving you.”

The key issue: Size matters

Okay guys, no crude jokes here . . .

Here’s the dilemma in numerical terms: If a client’s covered employees increase from 75 to 600, at what point do you say to them, “You’re paying me too much—you should fire me as your broker, and hire me as your consultant”?

It is vitally important that ethics be reintroduced into the minds of the public when it comes to employee benefits advisers. New consumer confidence means more business and a healthy foundation for our industry from which growth may continue.

Are there any burning ethical issues that you believe our industry needs to address? Please let me know in the comments.

Arnoff is author of The Three R’s of Employee Benefits: Recruiting, Retention, and Rewards

In today’s BeAdvised, Bob Arnoff blogs about ethical concerns for brokers and advisers around the new health care reform bill. How are you preparing for the switch? What do you plan to do about the dilemma he talks about?

In March 2010, the face of health care was changed forever when President Obama signed a brand new health care reform bill into law. This new law — which does not completely take effect until 2014 — would make it illegal for insurance companies to deny coverage to Americans with pre-existing conditions, charge those with pre-existing conditions more money to cover the extra costs, cover those with pre-existing conditions while denying treatment for the condition, or drop people with current policies when they get sick. So what does this mean for employee benefits advisers and businesses alike?

What it means is that when 2014 rolls around, insurance companies will be looking at new clients, many with expensive pre-existing conditions that they must now cover. This could equal potentially mega-millions of dollars worth of health care that insurance companies must now fund. For businesses, they must now make sure that every single employee is covered, with or without a pre-existing condition. If a company fails to cover an employee, they must pay the price, which in this case means a fine of $2,000 per uninsured worker. The fine is only waved for small businesses.

Having been signed a little over a year ago, the public has been inundated with information regarding this topic. Everyone from insurance companies to businesses to the average man on the street should be aware of this change and what it could mean for them. But perhaps there are still a few business owners out there who haven’t heard about this change.

While this may seem far-fetched, it is true that not everyone may have heard about the new health care reform. There may be small business owners too busy to read up on this change themselves and instead rely on advisers, who might not have provided all the information. There could also be business owners and advisers alike who want to live in the here and now and think 2014 is too far away to even begin to worry about the changes. This then gives employee benefit advisers a question that they must ask themselves. Do they inform their clients of this new change to health insurance laws and allow them to prepare themselves for what lies ahead or do they wait until 2014 when the law officially tells them everyone must now be covered?

Making sure a client is informed upfront might lead to losses if that client chooses to re-evaluate their situation in light of the health care reform. And yet waiting might alienate those clients who did not know what was coming and thus had no time to prepare. And so we ask you, what would you do? Would you do what some might deem the ethical thing and inform your clients of this change so that they can prepare themselves? Or would you choose the other path and wait until you had to make the change? Let us know what you think advisers should do and which path would be the most ethical one to take.

Do you have any employee benefits issues that raise an ethical question? Let me know and together we will raise the ethical bar in our industry.

Arnoff is co-author of The Three R’s of Employee Benefits Recruiting, Retention, Rewards

What do you think the biggest problem with healthcare is today?
Today’s healthcare has two big problems:
1) Cost
2) Uncertainty

How do you think we can solve this problem?
Well there’s not a magic wand solution, especially when everyone has their own opinion and input. However I feel there are three steps to the solution.
1)Make it affordable.
2)Make services accessible.
3)A promise of economic stability.
Roughly about 9 percent of the 45 to 50 million people in America are uninsured. Some states do have plans for the uninsurable where there’s open enrollment which they can go on to HMO’s or medicare. Perhaps if the government was able to create a pool of taxes for the uninsurable where they can be charged standard rates any healthy person could be charged when they go for individual health plans.

If you were the President of the United States, what would your official plan be to reform the healthcare system?
Primarily having an option for the uninsurable. And I’m not ready to run for President.

Would you place any type of limitations on private insurers? Any kind of new restrictions on how much they can charge or the ways they take advantage of people?
Well I don’t really think the insurance companies are taking advantage of people. I think they are looking at it from the standpoint of being like any other employer and trying to make a profit. Some health insurance companies have a profit margin of 25% which is actually low compared to life insurance. I do believe though that most people don’t realize that about 97% of all term insurance plans never pay off. Most people tend to drop their policies before the term insurance is ever used.
If President Obama’s proposed public option passes, what consequences do you foresee for our country and our economy?
I believe this change may be the downfall of the capitalist marketplace. This country did not become what it is overnight and growing business is important. Also with a public option the tax burden will strain both individuals and corporations.