Independence Has A Cost – When It Comes To Benefits

With Benefits And Insurance Costs Rising, Independent Advisors Need An Affordable Solution For Themselves And Their Employees

As small business owners, long-time independent advisors know all too well that affordable group insurance benefits can be elusive. And, when an employee advisor decides to take the plunge and break away, while their head and heart compel them to do so, they walk away knowing they’re leaving those large, subsidized company benefits behind.

Next year marks the 10th anniversary of the Affordable Care Act (ACA) going into effect. A decade of more Americans covered, to be sure – but 10 years of increasing costs, especially for successful small business owners, including independent financial advisors who typically do not qualify for subsidies.

While 2024 individual rate increases will vary by state, many WSR readers will see both significant premium increases and diminished benefits.

Significant premium increases

For example, individuals covered through the ACA in Virginia will see a 28% premium increase next year, according to its State Corporation Commission. Even if your state sees a lesser increase, plan features are likely to change, and not the way most hope. Many drug formularies will shrink and shift more costs to the individual.

In a way, these increased costs and diminished benefits have actually united two very different political factions. Ten years later, those left of center still want a public option for healthcare, and those right of center still want to repeal and replace the ACA.

Wherever you fall on the political spectrum, the main thing to know is that, as of today, the ACA is here to stay. Consensus to come up with another plan is nowhere on anyone’s political radar in Washington.

At the same time the ACA was going into effect, the Financial Services Institute (FSI), the only trade association advocating solely for independent financial advisors, launched the CoveredAdvisor Benefits Program. The innovative new offering rapidly grew to cover over 14,000 of its individual members in true group long-term disability, term life/AD&D, critical illness and accident insurance, as well as benefits plans for staff of advisors.

CoveredAdvisor then launched its newest benefit: a professional employer organization (PEO) business solution that includes medical, vision and dental plans, along with payroll and HR services, an optional 401(k) and more. Interest has been strong, with hundreds of financial professionals now enjoying the benefits of the PEO solution.

When it comes to advocacy, advisors can move mountains in Congress and their state capitols when they come together and speak with one voice. Benefits are the same. When advisors become members of FSI, whether they’ve been independent for 20 years or are just thinking about taking the leap to owning their own business, the lack of benefits or – if they find them –  the extreme sticker shock for many, can now be a thing of the past.

Whether you are a long-time independent advisor, an employee advisor considering going independent, a solo advisor with no staff, the owner of a large practice with many employees, or a recruiter doing your best to help ease the transition to independence for an advisor client, should be your first and frequent destination.

Chris Paulitz is the Head of Strategic Initiatives for the Financial Services Institute (FSI).

This article is part of WSR’s Sponsor Partner Content series.

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