Benefit advisers are prepared to make significant investments in internal systems in 2015 to better manage their workload, improve existing client relationships and better market themselves to prospects, according to findings from the first-ever EBA technology survey.

And they’re going to devote large sums of money to these technology updates. Nearly two-thirds (63%) of respondents said their benefit agency increased spending on technology in 2014 and 54% said their firm will increase spending on technology in 2015.

A majority (56%) of large agencies reported spending more than $1 million on technology in 2014, while mid-size agencies most often (44%) reported spending between $50,000 and $99,000. At small agencies, 87% reported spending under $50,000 on technology.

But advisers are realistic about what’s ahead, with many saying their greatest technology challenge is staying up to date with emerging technologies.

The No. 1 technology investment readers plan to make is with their client management system. Nearly 60% of respondents said their firm plans to increase spending on a client management system, but only one in 10 plan to completely change or replace their system in 2015.

The majority of those who plan to switch client management systems are small agencies with one to 25 employees, a move which, according to Joe Markland, president and owner of HR Technology Advisors, could be attributed to contracts ending with outsourced management system providers.

Other technologies that respondents plan to invest in consist mainly of client acquisition tools:

• websites (45.6%)

• social media platforms (40.5%)

• email marketing (39.2%)

Respondents also said they plan to invest in data analytics (41.8%) and client survey tools (25.3%), which Markland says is consistent with a trend he sees in the benefits industry — advisers investing in tools for their clients to remain competitive. 

“There’s definitely a need, because of market pressure, for advisers to pay for more things for their customers,” Markland says.

Client focus

Brokers are not spending as much money on themselves in today’s market, Markland adds, but rather spending more money to remain competitive through the technology they deliver to their customers.

Such tools include data analytics, which can help advisers identify and tackle an employer’s high health care costs, or survey capabilities that allow employers to find out employee wants or needs.

Benefits enrollment systems, for example, are moving past the core competency enrollment system that advisers are currently used to and now incorporating an administration system that offers employers HR tools such as payroll deduction and timesheet tracking, Markland says.

These technology adjustments are “moving the broker to the HR area” in the process, he adds.

Respondents to the EBA technology survey listed the following goals as most important when making a technology purchase decision:

• It helps the company gain greater control/oversight of its operations (24.7%)

• It will boost revenue generation (23.3%)

• It will improve the client experience and add more value to the relationship (23.3%)

• It will make the delivery of our value proposition more efficient and effective (15.1%)

• It helps cut administrative and other costs (9.6%)

• It creates strategic differentiation from competition (2.7%)

With all the confidential client data advisers are storing on their systems or transferring between the carrier and the employer, it’s no surprise security is another big technology challenge agencies say they face.

Thirty-five percent of respondents from large firms said their agency plans to increase spending on computer security software and 41.2% said their large-scale agency plans to increase spending on data and file backup systems.

Small and midsize firms are not as focused on computer security software. About a quarter of these agencies plan to increase spending on computer security software.

More than half (55%) of mid-size firms and a third (34%) of small benefit agencies, however, said they plan to move more of their applications to a cloud-based system in 2015, where security is often a built-in component offered by the cloud service provider.

Future technology needs

Markland predicts future technology needs facing benefit advisers will include client tools that help employers track data necessary for compliance with the Affordable Care Act.

George Reese, founder and CEO of Employee Navigator, agrees. He told attendees of EBA’s Workplace Benefits Summit in Boca Raton, Fla., last month that the complex and time-consuming ACA requirements, including tracking employee hours, “will force the need for automation” at benefit agencies.

In the process, many benefit administration systems are now integrated with mobile technology, offering employees a way to check their pay stub or request vacation days via a smartphone.

Markland says one of the biggest technological challenges facing brokers and agents is that move to mobile technology. Benefit advisers who want to stay relevant will need to find a way to service their clients’ employees using mobile technology, he says, and that starts with being familiar with it themselves.

While the majority of respondents to the EBA tech survey report using smartphones themselves (77.4%), the smaller firms seem to have caught on a little quicker than large ones. Approximately eight in 10 brokers and advisers at small and midsize firms report using a smartphone, while just 66.7% of those at large firms currently do so.

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