Are you leery of PEOs? Maybe you’ve lost clients to them at worst, or at best are staving off their staunch marketing campaigns. Historically brokers and PEOs haven’t played well together, largely thanks to what looks like an overlap in services that puts them at odds. And large PEOs with deep pockets and alluring offers are pretty enticing for tired business owners and managers navigating precarious HR terrain.

But what if that dynamic could change, and is changing, and what if that change could benefit everyone?

Real talk: where’s the breakdown in the PEO/broker relationship?

Here are a few of the top concerns from brokers:

  • I’ll lose my client’s trust and the relationships I’ve worked hard to cultivate
  • I’ll lose compensation
  • Not all PEOs are a good fit or will be truly beneficial

While these concerns are valid, some are a bit outdated. Originally, brokers felt like small business owners pitted against big chain stores that swoop in and take their customers. How can you compete with the convenience, price points, and one-stop-shop service?

What’s actually happening is a shift in your client’s needs.

HR, compliance, and risk management are getting more and more difficult to manage, especially for growing businesses that don’t have the necessary infrastructure and expertise to handle it all in-house. In our post-pandemic world, many employers are also dealing with compliance across multiple state lines, furloughs, remote work environments, COBRA subsidies, and more. Their pain points aren’t limited to health insurance benefits, but the whole scope of their increased HR needs and complexities.

That’s why when a PEO offers an easy way to maintain compliance, a lot of brokers’ clients are making a change. It’s not necessarily a want: it’s a need.

Why so many forward-thinking brokers are now leveraging PEOs

The pandemic was a catalyst, pushing companies to make rapid, fundamental changes. They had to since the world was rebuilding itself outside their window.

As the dust settled, a whole new opportunity emerged. Rather than be at odds or in competition for each others’ business, PEOs and brokers suddenly need each other. Each offers expertise, services, and client relationships that can benefit the other. Forward-thinking brokers are realizing the potential and leaning into the change. Here’s why:

  1. Put yourself in the driver’s seat by introducing the client to the PEO. While brokers used to feel that they were in a defensive position, waiting for PEOs to contact their clients, brokers are now actively making the introduction and controlling the narrative. It isn’t the right fit for everyone, but it is for many, and now you’ve secured your spot as a trusted advisor in a consultative role.
  2. Help your clients evaluate PEOs. Not every organization offers the same level of value. Understanding the landscape, what to look for, what to avoid, and helping your client find the right fit is a valuable position to be in.
  3. Increased earning potential. Brokers typically avoided PEOs, preferring to work directly with an insurance carrier because of the higher commission rate. That may be true, but the increased volume potential with a PEO, paired with the minimal time/oversight requirement, makes partnering with a PEO more attractive than ever. In other words, you can spend less time on the account, bring in more work, and quickly offset the lower commission rate.
  4. Greater client retention. With so much uncertainty and evolving complexities in our post-pandemic world, many businesses are actively looking for ways to shrink their budgets without sacrificing any value. Brokers are finding that they enjoy greater client retention by partnering with a PEO, offering expanded cost-savings opportunities and capabilities.

What’s next? Find a broker-friendly PEO

Just as brokers are warming to PEOs, PEOs are reciprocating. Brokers are trusted, have clients who need their services, and a strategic partnership can be beneficial for everyone involved. Keep in mind, however, that not all PEOs offer the same level of value or client attention, making it crucial that you find a partner who mirrors your commitment and will provide a positive experience. The better their services and focus, the better your return will be as well.