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Unveiling Hidden Compensation: How Employee Benefit Consultants and Brokers Profit from Plan Sponsors

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In this encore episode of 'Relentlessly Seeking Value,' Stacey Richter interviews A.J. Loiacono, CEO of CapitalRx. They delve into the hidden compensation practices of Employee Benefit Consultants (EBCs) and brokers engaging with plan sponsors. The discussion unveils the potential conflicts of interest and self-serving behaviors of these intermediaries, who sometimes prioritize their own financial gain over the best interests of employers and employees. With the enforcement of the Consolidated Appropriations Act (CAA), plan sponsors now have the power and responsibility to request full disclosure of all direct and indirect compensations being made. The conversation brings to light the murky and often unethical practices within the industry and emphasizes the importance of transparency and diligence for self-insured employers to avoid unreasonable and secretive fees that ultimately increase their total costs.

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07:09 Who can get in trouble for mismanaging employee funds?

07:48 \u201cWhen you talk about conflicts of interest, they\u2019re everywhere.\u201d

13:13 \u201cYou\u2019re paying for access.\u201d

13:34 Why is it important to request that they disclose direct and indirect compensation?

14:04 What are the layers to these hidden fees and compensations?

18:13 What is a reasonable fee for a good plan admin?

19:27 \u201cI think people need to take a step back and say, \u2018How many different ways are they getting compensated?\u2019\u201d

24:50 \u201cThe compensation is not just unreasonable, but if they were to move it, they would lose access to an entire column of revenue.\u201d

25:06 \u201cFor every good broker consultant, there\u2019s a horrible individual lurking out there and it\u2019s easy to figure out: Ask for them to disclose their fees.\u201d

28:08 \u201cYou can\u2019t win if you can\u2019t even pay the house fee to come in.\u201d

31:35 Why do you need to ask for disclosure, and what do you need to ask specifically?

32:21 What are some of the characteristics of a good plan consultant?

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