[S2E5] Vincent Catalano - Benefit Brokers 101 (Part 2)

Skip the RFP Theater: What HR & Brokers Really Need to Know About Switching Benefits Partners

In this candid episode, Vincent Catalano pulls back the curtain on one of the most misunderstood processes in employee benefits: the broker RFP. Drawing from decades of experience on both sides of the table, Vincent challenges HR professionals to get honest about what they actually want before launching time-consuming RFPs that often lead nowhere.

Vincent breaks down the uncomfortable truth that 80% of HR teams claim they're happy with their current broker, yet many still feel compelled to run RFPs every few years "just to see what's out there." He walks through the critical questions HR should ask before sending out that 100-question RFP to a cast of thousands: Are you really looking for a change, or just going through the motions? What specific gaps need filling—technical capability, innovation, day-to-day support? And perhaps most importantly, could an honest conversation with your current broker solve the problem faster than starting from scratch?

For brokers, Vincent offers equally direct advice about qualifying opportunities before investing countless hours in RFP responses. He shares insights from his unique experience evaluating finalist presentations as a consultant rather than a pitcher, revealing what separates winning proposals from chaotic disasters. Whether you're an HR leader considering a broker change or a broker deciding which RFPs deserve your time, this episode delivers the strategic clarity both sides desperately need.

In This Episode:

• Why 80% of RFPs are a waste of everyone's time—and how to know if yours is the exception
• The "benign neglect" trap: When to fix your current broker relationship vs. when to move on
• What your company's 5500 filing reveals about what you're really paying your broker
• Commission vs. fee structures: Understanding the hidden costs in "free" broker services
• The CFO, CHRO, benefits manager power dynamic: Who really decides which broker wins
• How to decode whether you have a real shot at an RFP before investing the hours
• The finalist presentation mistakes that torpedo otherwise strong broker proposals
• Why breaking up with your current broker directly is more respectful than including them in a sham RFP

About Vincent Catalano:

Vincent Catalano is the CEO of CLEAR Healthcare Solutions and host of The CLEARly Beneficial Podcast, where he delivers unfiltered insights on healthcare innovation and employee benefits strategy. With over 21 years of experience in healthcare and employee benefits consulting, Vincent brings the perspective of an independent consultant who can speak freely about the industry issues that corporate-employed professionals often can't address. Learn more at www.clearhcs.com.

This episode is sponsored by HealthNEXT, empowering benefits advisors and employers with innovative healthcare solutions.

Disclaimer: The content provided in this podcast is for informational purposes only and does not constitute legal, financial, or professional advice. Listeners should consult with qualified professionals regarding their specific situations.

Transcript

(00:00:02):
Welcome to the Clearly Beneficial podcast,

(00:00:05):
the show where we rip off the Band-Aid and explore the future of healthcare,

(00:00:09):
benefits,

(00:00:09):
and the people driving innovation in the industry.

(00:00:14):
This episode is brought to you by Health Next,

(00:00:17):
the company leading the way in helping employers build enduring cultures of health

(00:00:20):
and well-being,

(00:00:21):
reducing medical cost trends,

(00:00:23):
and increasing organizational performance.

(00:00:26):
To learn more how they can help you, visit healthnext.com.

(00:00:32):
Hey there, Vincent Catalano with you talking about benefits brokers.

(00:00:36):
So we're gonna call this Benefits Broker 101, part two.

(00:00:41):
And where are we gonna start?

(00:00:43):
Well, I think we should start with

(00:00:45):
HR people and what they think they need to do to pick a new benefits broker.

(00:00:53):
Well,

(00:00:53):
let me tell you,

(00:00:53):
the first thing you shouldn't do,

(00:00:55):
my friendly HR friends,

(00:00:57):
is to run an RFP for the sake of running an RFP.

(00:01:01):
I've been through these things over the years and they're not pleasant, okay?

(00:01:05):
They're not pleasant.

(00:01:06):
They're usually a waste of time because let's run this down for a second.

(00:01:12):
I'd say 80% of HR teams,

(00:01:16):
and we're gonna have other episodes about this,

(00:01:18):
80% of HR teams will tell you,

(00:01:21):
oh,

(00:01:21):
I'm happy with my broker.

(00:01:23):
Then there's a 20%, the other 20% will tell you, yeah, I'm pretty happy.

(00:01:28):
And maybe 1% of that group will actually decide to pull the trigger and make a

(00:01:35):
change if they feel a need for changes.

(00:01:38):
But a lot of times HR people feel the need to run an RFP every couple of years.

(00:01:44):
So they put together a bunch of questions,

(00:01:46):
they send the RFP to the incumbent broker,

(00:01:49):
they send it to,

(00:01:50):
you know,

(00:01:51):
a cast of thousands.

(00:01:53):
They send it to the big houses.

(00:01:54):
They send it to the small local shops.

(00:01:57):
And everybody gets all wound up about, oh, we got to do this RFP.

(00:02:00):
Oh, my God.

(00:02:02):
And those start to generally come out in the April-ish time frame,

(00:02:06):
maybe even earlier for a 1-1 of next year type of renewal situation.

(00:02:10):
And so think about what happens when you send out an RFP that has...

(00:02:18):
a hundred questions, okay?

(00:02:20):
These days,

(00:02:21):
the brokers are probably filling it in with AI,

(00:02:23):
but at the end of the day,

(00:02:25):
someone is taking ownership on that RFP and they are taking pride and working on it

(00:02:31):
to please you,

(00:02:33):
to come up with some solution that you think you need.

(00:02:37):
This is a messed up process, okay?

(00:02:40):
I think the best process that you can consider is really decide what it is you want.

(00:02:46):
Okay, HR, love you, but I don't know that you ever know what you want.

(00:02:51):
You know, I think in a lot of cases, you love the one you're with.

(00:02:56):
The brokers you have are usually pretty good.

(00:02:59):
And unless they've done something egregious or you realize that they're

(00:03:02):
overcharging you,

(00:03:03):
which is a thing,

(00:03:06):
you,

(00:03:06):
many cases,

(00:03:07):
stay long-term with you.

(00:03:08):
I had clients, I tell you, in a lot of small businesses, I had clients for over 20 years.

(00:03:15):
You know,

(00:03:15):
one of my largest clients I had for 10 years until I moved on from one brokerage to

(00:03:19):
another.

(00:03:20):
So having a broker for a long time may not be a bad thing.

(00:03:26):
And the excuse sometimes you get is, oh, we got to see what's out there.

(00:03:30):
Now, if you're going to see what's out there, make sure you know what you're looking for.

(00:03:35):
OK, is it technical savvy?

(00:03:38):
Is it innovation?

(00:03:40):
Is it better day to day support?

(00:03:42):
Is it free stuff?

(00:03:45):
Well, let me tell you, let's talk about free stuff for a second.

(00:03:47):
And a lot of brokers come to the table,

(00:03:48):
oh,

(00:03:48):
we'll do this for you for free,

(00:03:49):
we'll do that for you for free,

(00:03:50):
we'll do that.

(00:03:51):
Nothing is free, okay?

(00:03:57):
Broker gets paid a commission,

(00:03:59):
or if they're smart,

(00:04:00):
we'll talk about fees,

(00:04:01):
broker charges you a fee,

(00:04:03):
and all the services they provide to you come out of that fee,

(00:04:07):
okay?

(00:04:07):
There's nothing for free.

(00:04:09):
Someone's paying somebody something.

(00:04:11):
for all these per employee per month things that the broker provides to you,

(00:04:15):
whether it's Cobra or whether it's any number of services that they can provide to

(00:04:21):
you.

(00:04:22):
The question really is, what am I looking for?

(00:04:24):
And if you come to the conclusion that you're really not looking for anything,

(00:04:28):
save everybody the time and keep the RFP in the file.

(00:04:33):
Or instead of doing an RFP,

(00:04:36):
have that deep,

(00:04:37):
honest conversation with your incumbent broker to see if it's worth retaining and

(00:04:42):
saving the relationship.

(00:04:43):
Brokers get lazy, okay?

(00:04:45):
If they've had you as a client for a long time,

(00:04:48):
there's definitely a notion of sometimes benign neglect,

(00:04:52):
that they're not doing the job for you they could be doing for you.

(00:04:55):
But is that the reason to kick them out rather than having a deep conversation and

(00:05:00):
saying,

(00:05:00):
listen,

(00:05:02):
We follow the industry, we look around and we want better service in these five areas.

(00:05:10):
And then you have to assess whether they're capable of delivering those services in

(00:05:15):
those areas that are important to you.

(00:05:18):
So at the same time,

(00:05:20):
What is always interesting is to see what the market will bear from a fee and or

(00:05:27):
commission point of view.

(00:05:28):
Remember, brokers get paid something.

(00:05:30):
OK, and I'm going to challenge you, those people listening who are CHROs or VPs of HR or CFOs.

(00:05:39):
Go take a look at your company's 5500 filing.

(00:05:43):
OK, it gets done every year.

(00:05:46):
Your broker is probably filing it through a through a third party named Wrangell or

(00:05:50):
some of the other services that you can file your 5500.

(00:05:53):
But you get these schedule A's.

(00:05:56):
You send them to the broker.

(00:05:57):
The broker uploads them to Wrangell and that develops your annual 5500.

(00:06:01):
What's on the 5500?

(00:06:03):
Any commission that they receive on your behalf.

(00:06:06):
OK, so it could be that you're paying them a combination of things.

(00:06:10):
Okay,

(00:06:11):
it could be straight up commission for all lines of coverage,

(00:06:14):
medical,

(00:06:14):
dental,

(00:06:14):
vision,

(00:06:15):
life,

(00:06:15):
disability,

(00:06:16):
anything.

(00:06:17):
Full commissions all the way around.

(00:06:20):
And then,

(00:06:20):
you know,

(00:06:21):
or you can say,

(00:06:21):
okay,

(00:06:22):
well,

(00:06:22):
we're going to charge,

(00:06:22):
they'll charge you a fee for X,

(00:06:25):
all those things where they net the commission out.

(00:06:27):
So you're paying zero commission and you've agreed upon a monthly fee.

(00:06:31):
And that's not to say they're still not getting paid commission, right?

(00:06:35):
There may be commissions in things like voluntary benefits.

(00:06:39):
There may be back-end retention commissions that they're receiving for keeping you

(00:06:43):
on as a client every year.

(00:06:45):
And those should be disclosed to you, okay?

(00:06:47):
So again,

(00:06:49):
What are you doing when you're doing an RFP?

(00:06:51):
Are we doing a check bid?

(00:06:52):
Are we really trying to get rid of the broker we have?

(00:06:56):
And if you are really trying to get rid of the broker you have, don't send them the RFP, okay?

(00:07:02):
Have a breakup conversation with them so they don't waste their time on the RFP and

(00:07:07):
they know they're moving on,

(00:07:09):
right?

(00:07:09):
So those are some things I believe HR,

(00:07:11):
my friends in HR,

(00:07:12):
should really take to heart because there's no sense,

(00:07:15):
you don't want someone...

(00:07:17):
throwing a hundred page report on your desk and saying, I need this in 30 days.

(00:07:22):
Okay.

(00:07:22):
No one wants that.

(00:07:23):
And when you're running an RFP on six different brokers,

(00:07:27):
that's exactly what you did to these six different brokers.

(00:07:31):
Okay.

(00:07:32):
Now let's flip this on the other side to the broker side of this.

(00:07:35):
Brokers,

(00:07:36):
you should definitely,

(00:07:37):
you know,

(00:07:38):
if you're going to be serious,

(00:07:39):
you should understand the needs of that client,

(00:07:41):
even before you energize some time to respond to that RFP.

(00:07:46):
OK, you should know whether you have a shot.

(00:07:48):
OK,

(00:07:49):
a real shot,

(00:07:50):
not some pie in the sky,

(00:07:52):
you know,

(00:07:52):
BS shot that you're like,

(00:07:54):
oh,

(00:07:54):
I'm going to win this.

(00:07:55):
You know, you need to decide by talking to the prospect whether this is a real shot or not.

(00:08:02):
OK, and you got to go with your gut on these things.

(00:08:06):
I mean, you're taking a swing.

(00:08:08):
It's a big client.

(00:08:09):
It's a marquee client.

(00:08:12):
You're going to take a swing, whatever it might be.

(00:08:14):
But do you have a relationship with the people?

(00:08:16):
And the larger the organization you go after, the more people are involved in the decision.

(00:08:22):
So it's the CFO.

(00:08:23):
It's the CHRO.

(00:08:24):
It's the VP of HR.

(00:08:25):
It's the benefits manager.

(00:08:26):
It could be the CEO.

(00:08:27):
It could be, you know, the admin assistant.

(00:08:30):
I mean...

(00:08:31):
The admins sometimes wield more power than you want them to, but they wield power in this.

(00:08:37):
And so everybody wields power.

(00:08:39):
So you need to find champions inside those organizations to give you the straight story.

(00:08:45):
Because again,

(00:08:45):
investing the hours it will take you to deliver an RFP and then get ready for the

(00:08:54):
finalist presentation.

(00:08:55):
And...

(00:08:58):
I've seen,

(00:08:59):
I mean,

(00:08:59):
I've been involved in tons of finalist presentations and won my share of them,

(00:09:03):
lost my share of them,

(00:09:04):
God bless,

(00:09:04):
right?

(00:09:05):
But a couple of years ago, I helped a client in this region do a broker RFP.

(00:09:11):
So I watched this process.

(00:09:13):
They asked me, Vinny, can you find us a new broker?

(00:09:15):
We're gonna get rid of the one we have.

(00:09:16):
So they'd already decided to get rid of the one they have.

(00:09:18):
And they asked me to use my network to find some brokers.

(00:09:21):
And I did.

(00:09:22):
And we whittled it down to two.

(00:09:25):
And we had these two brokers come in and do a finalist presentation.

(00:09:28):
And it was kind of the first time in my career that I was not pitching.

(00:09:33):
I was the one on the evaluation side of the table.

(00:09:38):
I was amazed.

(00:09:39):
I was amazed at how one of those groups came rehearsed, professional, and showed up.

(00:09:47):
The other group showed up chaotic.

(00:09:51):
There was not a thread of a story they were telling.

(00:09:59):
And the lead person in that conversation was co-opted by the person who played the

(00:10:04):
role of account manager.

(00:10:06):
So again, there's a lot of stuff that we can unpack here and we will unpack.

(00:10:11):
But let's suffice to say that this was, you know, Benefits Broker 101 Part 2.

(00:10:18):
And hope you look forward to Part 3.

(00:10:20):
This podcast reflects the personal views of the host and guests,

(00:10:27):
not their employers or sponsors.

(00:10:30):
See you next time.