How Benefits Brokers Can Lead The PEO Conversation Early

A client brings up a PEO before you do and suddenly you are playing defense, walking into a story someone else already wrote. We dig into why that’s happening more often right now and how benefits brokers can keep their place as the trusted advisor when a professional employer organization enters the chat early. The big shift we’re seeing is not hype, it’s pressure: HR complexity, multi-state compliance, remote employees, and the constant strain of rising medical costs.

If you want to protect client relationships, expand your toolkit beyond the open market, and lead smarter HR and benefits conversations, hit play. Subscribe, share this with a broker who keeps getting surprised by PEOs, and leave a review with your biggest question about when PEOs truly make sense.

Check out more info from CRC Benefits Tools + Intel here! 

Transcript

Why PEOs Keep Coming Up

Michelle McCaw 0:00

Welcome back to the Black Fix Podcast. I'm Michelle McConnell and I'm Amanda. Today we're talking about a conversation that's coming up a lot more often. We are the two. And that's the PEO conversation.

SPEAKER_04 0:14

Yes, and it's not always because the broker refers.

Michelle McCaw 0:18

Exactly. Another laser for somebody else in the business. And by the time it gets back to the broker, the conversation already has a little momentum.

SPEAKER_04 0:28

Which is where things can start to go sideways. Not because a PEO is automatically the wrong answer, but because it's a lot harder to guide the process when you find yourself stepping into it halfway through. Exactly, exactly.

Michelle McCaw 0:41

And that's really what we want to get into today. How to stay in the lab role, how to bring this up earlier, and how to keep the conversation from turning into a reaction exercise.

SPEAKER_04 0:49

Because it really is not necessarily to push a PEO, it's to make sure that the client is looking at the right options with the broker still at the center of the conversation.

Michelle McCaw 1:01

And we've got two familiar voices with us for this one. Right and Harry Wayne from the CRC Benefits PEO team. We've shown this before, and we're really glad to have them back.

SPEAKER_03 1:11

This is the CRC Benefits Podcast from CRC Group.

SPEAKER_04 1:14

This podcast features news and insights from those working with our vast network of 20,000 brokers to deliver employee benefits to more than 200,000 small and medium-sized businesses. Plus, we give you the latest information on what is happening in CRC.

SPEAKER_03 1:29

This is the CRC Benefits Podcast. And now the host of the podcast, Mr. McCullough and Amanda Mmitt.

Michelle McCaw 1:36

Welcome back, gentlemen.

SPEAKER_01 1:38

Thanks. It's always fun. This is always a pleasure for us.

Michelle McCaw 1:42

Good. It's a pleasure for us too. We're gonna have some fun today.

Visibility And The Compliance Effect

Michelle McCaw 1:46

So we're gonna we're hearing more about PEOs earlier in the process than we used to. What's really driving that right now?

SPEAKER_01 1:53

Good question. I think it's all about visibility. You know, our PEO partners have robust direct sales forces. So the the subject is out there more than it used to be. So I think it's just it's just a matter of visibility. Uh the clients see them more often, so it it's a topic of conversation.

SPEAKER_04 2:13

And Ari, when this comes up before the broker has introduced it, what does that usually tell you?

SPEAKER_00 2:19

It tells us that we're not doing our job, right? So, you know, as a broker, you want to be a trusted advisor. You really have to explore all options, whether PO makes sense or another product or service. There's a lot out there in the marketplace. And, you know, when you look at, you know, what Rob said about the POs out there, it's really the consumer now that's driving the conversation more and more. Um when you look at penetration rates in many states, you know, those numbers are now approaching 20 to 30 percent in certain states. So as people are in networking groups, they talk amongst their peers, more and more groups are coming to the broker saying, Hey, what do you know about PEO? And that's where I think the broker needs to get involved sooner in the process, because when they go direct, you're not the one really helping the client in all markets. You want to be proactive to say this could be an option. And again, not a fit for every client, but for the right client, the right demographic, PEOs are really gaining a lot of traction in the

When Complexity Outruns HR Capacity

SPEAKER_00 3:28

marketplace.

Michelle McCaw 3:28

Yep, definitely. And and you wrote another article for us recently for Tools and Intel. Uh, and one of the things that stood out to me in that article is that it's not really about one market segment or one type of employer either. It's really showing up um anywhere that complexity starts to outpace internal resources. So, are are you seeing that too?

SPEAKER_00 3:48

Oh, absolutely. So when you look at a lot of groups that have remote employees and employees in multiple states, the compliance is one of the biggest stress points for a company from state registrations to the state unemployment to leave administration, certain states that have mandatory disability or paid family leave laws. So it's shifting a lot of that liability onto the PEO. But it's also because in a lot of the medical markets, not all carriers are in the small group marketplace. So having access to the national carriers and a PEO, having all the HR compliance resources and the technology, more and more clients are looking at as a very efficient way of managing their company from both payroll to HR to benefits.

SPEAKER_01 4:40

Yeah. I I would also add that uh I'm changing my answer. How do you like that? Uh so uh visibility is important, but boy, when you when you hear the magic word compliance, that's really right on the minds of most consumers at this point. So I think that's that's probably I changed my answer. That's my number one answer. Thank you, Ari.

SPEAKER_04 5:00

Well, and it sounds like you know, the issue isn't really that the client is considering a PEO, it's that the broker's getting pulled in after somebody else has maybe already framed the story.

Where Brokers Lose The Narrative

SPEAKER_04 5:12

So is where do you typically see brokers start to lose control of where that conversation is going?

SPEAKER_01 5:20

Yeah, I I I I would say the following, and I'll I'll let Ari respond, but I'm gonna use one of Ari's favorites. You know, a broker hates to get that phone call. You know, thank you for your past 20 years of of uh service to us. It's been great, but we've decided to go down another road. So, Ari, why don't you expand on that a little since it's actually your saying?

SPEAKER_00 5:41

Absolutely. So when you're a broker, you want to really understand your client, not just from the benefits perspective, what all their challenges are with their employees, HR, their manpower, what are their short-term, long-term plans? And that's really how you identify could a PO maybe be a solution for your client? And when you're not in first, someone else is getting to them, and they're controlling that narrative. And again, it might be the right solution, it might not. But with 500 plus PEOs in the marketplace, they're all unique and different, and they don't all solve the same problem. So when you're the one controlling that narrative and you understand your client, you want that control to at least say, hey, these are the ones that might make sense and walk them through a process. Because PEO is, and this is one of the hardest things for brokers to learn and understand. And I experienced it myself, you know, prior to really gaining my knowledge on PEO, is we always thought it was about saving money on Medicon. And yes, while that's a huge part of the PEO, it's not the most important part. It's the services and the technology platform that really drives who is the right fit for their client if a PEO makes sense.

SPEAKER_01 7:03

Yeah, and I would also add, and I'm sure we're gonna get to this later on in the conversation. It's not just a broker telling a client that they have PEO as a tool, they've got to ask questions. You know, they have to, you know, get in the mind of the of the consumer, of the client, and understand, you know, what their needs are. And if they don't do that, and they just mentioned that they have PEO as a tool, clients have very short memories. But if they probe and they find out, well, maybe it's a good solution, maybe it's not, they're gonna remember if they're ever approached by somebody else that, uh, you know, my my consultant does this already.

SPEAKER_00 7:41

And I will add one other thing to that comment, is most of our brokers, our first experience with PEO is when a PEO is in there directly or they're losing their client to a PEO, and we're always on the defense. But when you look at going through the process and understanding it and finding the right fit, you turn those experiences where, you know, we should we have challenges. But once you turn that corner and the broker really sees the value of what a PO can do, and it's not that mindset from 20 years ago, um, because POs are very different today than they were in the past. Now you start getting more proactive where you're starting to ask the right questions, like Rob said, to the prospect to understand more about them, to start recommending PO as an option. Again, doesn't mean it's the right fit. It just means it has its place in the market for at least 10 to 25% of groups out

Practical Triggers To Start Early

SPEAKER_00 8:38

there.

Michelle McCaw 8:38

Perfect. And that that leads me in uh to this next question um of making this practical, right? So so if someone's listening today and they're thinking, okay, I get it, I gotta lead this conversation earlier. What does that actually look like in real life? Like, what are strong brokers doing differently when they handle that well?

SPEAKER_01 8:56

That's a that's a great question. And probably if we had another hour, we could probably answer that question, but I'll try to make it as short as possible. But, you know, as as as you know, because we've discussed this on you know uh podcasts in the past, you know, we have different kinds of brokers. And you know, some brokers are familiar with PEO, and as Ari said, a lot of the brokers aren't. So it it's what the strong brokers are are doing in in you know my mind is they're just asking the right questions. They're asking those probing questions that lead us, you know, to a conversation, not to a conclusion, but to a conversation. And as we always tell you, you know, it's our goal as the PEO division to make sure that the broker wins 100% of the time. So, you know, we've often said that you know, PEO is not the solution to everything, but it when it is the solution, it's a really good solution and we have the proper resources.

SPEAKER_00 9:53

It's really when you're proactively engaged in managing a relationship with your client as a broker, it's really again goes back to what's important to that client, where are their pain points, and identifying is PEO a solution to solve some of, if not all, of their problems, and kind of encouraging that process to have a conversation, to do some discovery, really diving deep into you know what the companies do, right, from an employee standpoint. If there's any complexities with time and attendance or HR compliance, um any kind of custom reporting or integration to other systems they may use, that's where the light bulb goes on and say, you know what, if this makes sense financially, this could be a great fit. So it's bringing it to the table first to evaluate it. Does it make sense or not? And again, not for every client, but for the right clients, you want to have that conversation. It still amazes me, and I'll share a little story from last week. I had a broker that has called me for the third time in the last month of what do I do? I am losing my client to a PO that does their payroll, right? Still can't get the light bulb to go on. Maybe you should start talking to your clients and maybe just asking the simple question who do you process your payroll with? Because guess what? If you're processing your payroll with a PEO that does payroll also, 100% they're reaching out to that client every single year, multiple times, trying to move them to their own PEO. So it's being proactive in the conversation to explore it, right? Everyone says to me, these rates are too good to be true. There's no way these can be valid. Guess what? They can be, and they are. Right? And again, it just takes time to get that broker over the hump to understand PO's not the enemy. They're very, very good partners to our brokers and us. We work hand in hand with them to show the value to their client and help them manage the relationship, the process, and keep the broker involved every step of the way.

SPEAKER_04 12:05

Absolutely. And you answered a couple of our following questions, Ari. Good job. You anticipate, we were gonna ask, you know, if I'm a broker, what am I, how do I know? What are my triggers to start that conversation? So, you know, but then sometimes the best answer is not a PEO. So when you do look at a case and say this this may be better served by open market or maybe a hybrid approach, um, how do you know when it's time to maybe consider that?

Discovery Calls And When PEO Fails

SPEAKER_00 12:33

Yep, no, that's a good question. And and by the way, Rob knows this. I don't read questions in advance. So I apologize if I'm answering questions that are coming up later.

SPEAKER_04 12:43

No, you did great. This is that tells me you know what you're talking about.

SPEAKER_00 12:47

So when one of the most important things in our process is having a discovery call with the client to one identify are they a prospect or not, and what their needs and goals are. And I'm gonna tell you about 50% of all those discovery calls, the group does not belong in a PO for various reasons. And that enables the broker to pivot to other products and services. You know, whether it's PEO, small group, large group, level funded, self-funding, ICRA's, reference-based pricing. There's a lot of products out there to solve clients' needs. But one of the biggest pain points, and this is where the door opener is, I've yet to meet too many clients that are happy with their medical increases. Because medical trends are skyrocketing. There aren't certain markets, there really aren't a lot of solutions for the broker or the client to look at. This is an alternative way of getting in the door. And, you know, one of the things I'll say, and Rob probably has the statistic better than I do, is almost all of our business that we get on the PO side is brand new to the broker. So it's using it as a prospecting tool because, again, in certain markets, it's primarily one insurance carrier. So they might have a broker for years that aren't exploring other options. This is a way to get in the door to explore is there an alternative way of you buying benefits and other other needs the POs can solve at the same time.

SPEAKER_01 14:20

Which is an amazing statistic, Ari. Uh what Iri's referring to is that almost 90% of our business is new to the broker. So it's not like we're replacing business. They're finding, you know, the brokers that are doing a good job of finding new prospects and you know and new sources of income, you know, to the broker. So extremely important that you know they stay focused and they understand that you know PEO is not always the answer, but when it is the answer, it's a good answer, and we have the proper resources to fill

Consultative Process Not A Hard Sell

SPEAKER_01 14:51

that need.

Michelle McCaw 14:51

Definitely. Well, and that's important too, because clients you know can tell the difference when they're being guided and when they're being sold to, right? And and so how do you help brokers keep that distinction clear?

SPEAKER_00 15:05

I'll take that one first, if you don't mind, Rob. So our approach to working with our brokers is a very consultative approach. And in many cases, work working side by side with someone on the open market from our team and the broker to really evaluate what makes sense for the client. We never know going in, and you never have to sell a PEO. It's really following the process of discovery. Is it worth a conversation and exploring to see if PO is an option? And guess what? If financially, because the insurance carrier is right for the group, so there's a good network of doctors for the employees, the benefits, the price makes sense, that's where you really get into the heart of the PEO's value proposition of let's look at their technology platform, let's understand their service model, and then you kind of tie it back up. So one thing I could say is we never ask someone to buy a PEO. If we take them through our process, it's very clear to them it makes sense. And listen, there's groups that we look at where we're saving them a lot of money, where you would look at it transactionally saying, this really is a good fit, but it's not because maybe it doesn't help them run their business the way they need it to. And on the flip side, there's many groups that go to a PO. We're not saving any money, but we're giving them the value they need. So that's where as a broker you want all these tools because you want to be able to help your client a hundred percent of the time, regardless of the product or the service.

SPEAKER_01 16:43

Yeah, and I I always ask our ego, when's the last time you asked for a sale? And he gives me the same answer all the time. I never ask for a sale. You know, we we make sure that we're addressing what we need to address, and that the client sees what the right solution is if it's presented to them properly.

Michelle McCaw 17:00

That's great. Excellent. Um, what do you think is one thing that people still tend to get wrong with PEOs?

SPEAKER_01 17:07

Again, yeah, yeah, do you have another hour? Uh you know, it's it's all about education. You know, PEOs, you know, although they become a you know certainly a big force within the industry, it's still almost in its infancy, right? So at the end of the day, it's just extremely important that you know people stay focused and they they understand the concept of PEO and let us do what we need to do, being the experts in in the field.

SPEAKER_00 17:37

And you know, to add to that, it's really two things that really is that misconception. One is it's all about medical pricing because it's not. Um, and the other big misconception is the PEOs are not broker friendly. And I'm gonna tell you, a decade ago I felt that way. But our brokers uh and our PO partners have really up their game. They realize the broker is very important to the sales process because we're unbiased, we're the trusted advisors in this conversation, and that's where we've seen it from getting renewals to being able to help service the client on certain needs. The PEOs are great. Now I can say I sit on many broker advisory boards for several of our PEO partners, and as much as I hate a meeting to go to a meeting, they're very valuable for everybody because they want that feedback, they want to know what's working and what's not working, because they're truly trying to find solutions for the broker to make them do a better job with their clientele and keep them involved because those days of right, the POs are out there just selling direct and they're competing against the brokers, they need the brokers as much as we need the POs to deliver on their services that they

Make PEO Part Of Discovery

SPEAKER_00 18:57

deliver.

SPEAKER_04 18:57

And is there one filter or one thing that brokers should always keep in mind when starting that conversation early, especially when they're trying to protect both the client and their own role in the PEO process?

SPEAKER_01 19:14

Yeah, I mean, I'll take that first. I mean, it's gotta be part of what they do, it's gotta be part of the initial conversation. Just like, you know, to most brokers, medical, you know, or ancillary is, they have to make it part of you know what they what they say to a a prospect when you know they're they're trying to come up with the right solution. And you know, as we always say, it's all about the discovery call, right? If we don't have a discovery call, you know, our closing ratio, Ari, I think is I don't know, you always tell me it's it's less than 1%, whatever that percentage is. If we have a discovery call and it's a good prospect, our closing ratio is north of 50%. So that has to tell you something in its own right. It's just it's so important that we have that discovery call to find out what their wants and needs are. Um, because if we do, and we are the right solution, we'll find the right solution. But if we're not, and open market's the right solution, we can help support the broker in that endeavor to sell that open market solution.

Medical Trends And Sustainability Checks

SPEAKER_04 20:18

And before we wrap up today, is there anything or or one thing that you're paying especially close attention to right now in the PEO space?

SPEAKER_00 20:28

Absolutely. Um, one of the most important things is medical trends. Um, even though the POs do a great job consolidating many employers to get pricing that's stable between the GLP ones and prescription usage as a whole, when it's about 40% of all claims, that's something we're monitoring very closely. Um, in certain markets, more with hospital negotiations and Medicare reimbursement, medical insurance is inflating at a very high rate. And that's where it's understanding each PEO on how they underwrite, how they renew a group, what their risk tolerance is, because as you're advising your client on who might be the right fit, you want to know that it's sustainable. So when we look at our PEOs, we look at sustainability models and we look at them multiple times a year because we want to make sure that the clients insulated from liability on the insurance end, as well as everything else that the PEO does for them.

Michelle McCaw 21:33

It's not just a quick fix, right?

SPEAKER_00 21:35

No, and and I'll say PEO is very, very complex. And it's not about a spreadsheet and numbers, right? Well, dollars and cents always m matter to somebody. It's really about what are the differences, what are the strengths and weaknesses of the PEO, right? I'll know I'll say there's no perfect PO that I've met. I think they all have their strengths and weaknesses. And that's our job to really highlight the pros and the cons as we go through that evaluation. If PO does make sense, who is the right PO fit for that client?

Fast Three And Personal Favorites

Michelle McCaw 22:11

Well, gentlemen, I that was great. Um, before we let you go, though, we're gonna do what we always do. If you remember from last time, we do this at the end of every episode. We shift gears just a little bit.

SPEAKER_04 22:22

That's right. It's time for the fast three. Same rules as always, three quick questions. Just your first instinct, nothing overthought, just a great way for our listeners to get to know you both a little bit. So, Michelle, you want to take question one? I'll do question one.

Michelle McCaw 22:38

I know this is your favorite part, guys. Uh, what is something people are always surprised to learn that you like?

SPEAKER_01 22:46

Oh boy. This is supposed to be the fun part. This is supposed to be the fun part, right? This uh this is the fun part. Okay, I'll throw this out. Uh most people don't know that I'm a ballroom dancer. And the reason behind that, the reason behind that is my wife is a competitive ballroom dancer, and I really didn't feel like being a uh ballroom dancing widow. So about 10 years ago, maybe it's more like 15 years ago, uh, I decided I I I had to learn. And I honestly I have fun. Yeah, it's fun.

Michelle McCaw 23:19

I love that.

SPEAKER_04 23:20

You're I was amazing. Yeah, I wouldn't know. I don't remember if it was late 80s or early 90s. The movie Strictly Ballroom was good. Yeah. So I'm just saying, listeners, if you haven't watched it, now's your chance.

SPEAKER_01 23:34

And by the way, I'm not as good as I'm not as good as her, so I just want you to understand.

SPEAKER_04 23:41

That's a good answer. Ari. Anything that we would be saying about it.

SPEAKER_00 23:46

I don't have ra I don't have Rob's talents when it comes to dancing. Uh one thing I'll say is I l it's a new hobby of mine over the last three years where I really have a passion for playing golf, where I think it surprises people that it didn't start earlier in life. And that's because my kids played travel sports and had no time. The other thing is I don't have enough time to play golf. So people know we're there, we're working hard for them every day. They're amazed that I could squeeze it in. But that's where I spend my weekends on a golf course, especially on a nice day.

Michelle McCaw 24:19

Even if you're not a pro golfer, it's not a bad place to be, is on the course on a weekend, right?

SPEAKER_01 24:25

Absolutely not. Nothing like chasing a ball uh a ball with a stick and yelling, uh yelling at it. So I'm not a golfer.

SPEAKER_04 24:35

That's all right. Second question. Are you more of an advanced planner or a figure it out as you go, fly by the seat of your pants kind of person?

SPEAKER_01 24:45

Well, God. Um I would say that I like to give the appearance of a figure it out as you go person, but it all comes with preparation and experience.

SPEAKER_04 24:58

That's very true. Fair. You can wing it after a while. Because you already know it. You know, you know a lot at that point.

SPEAKER_00 25:06

How about you, Arthur? I live my life, I live my life on a calendar. So I'm a little of both, right? So I plan everything out. If it's not in my calendar, it'll never ever get done. So I do prepare for what I know is coming, but I am truly I'm gonna figure it out as I go because life and business and everything else faces you challenge, and I consider myself a problem solver in life. So you can't solve a problem when you don't know it exists. So that's right. I am forced to figure it out as I go.

SPEAKER_01 25:39

And I will tell you that I work alongside of Ari, so that is absolutely true, but it all comes from its food, quite frank. Yeah.

Michelle McCaw 25:49

Perfect. Well, last one. Uh, what does your ideal Saturday look like? Ari, does that mean you're on the golf course, or or what's an ideal Saturday?

SPEAKER_00 26:00

So my ideal Saturday is typically getting out of bed about 4 a.m., um, getting some work in because you have to wrap up your week and start planning, because I am a planner at the end of the day. Um, getting ready for the following week. So I will work, I will get on the golf course, I will play my golf, and then I am rushing home to jump in the shower and go do something Saturday night. So I have a very packed Saturday day, and in the nice weather, it's great. In the winter, I probably spend too much time in my office on a Saturday, but I'm still gonna get some practice of golfing, take a lesson, do some practice, work, go out Saturday night, and start it all over again.

Michelle McCaw 26:45

Sounds ideal. How about you, Rob?

SPEAKER_01 26:48

My answer to that would be that I've been an avid sailor all my life and I I enjoy it. It's the only place on earth that I can escape to and not think about anything else. Just the you know, the beautiful day and the scenery, and you know, just you know, kind of sit back and kind of relax and uh tune out the rest of the world.

Michelle McCaw 27:12

Sounds ideal indeed.

SPEAKER_04 27:13

Sounds glorious.

Michelle McCaw 27:14

Yes, it is.

SPEAKER_04 27:16

Well, Rob and Ari, thanks again for being here. This was a great conversation.

Michelle McCaw 27:21

And if this

Article Link And Closing

Michelle McCaw 27:22

topic is already starting to come up more often in your client conversations, the article that goes with this episode is worth a read, and we'll link it in our show notes uh so you can spend some more time learning a little bit more.

SPEAKER_04 27:31

Rob and Ari, thanks again for joining us.

SPEAKER_00 27:34

Thank you, ladies. Thank you guys, as always.

SPEAKER_04 27:36

Yeah, and and thanks again for listening to the Benefit Check podcast, everybody.

Michelle McCaw 27:40

We'll see you next time.