The Top 3 Myths Benefits Consultants Hear About Partnering with a PEO

The PEO industry is growing every year. According to the National Association of Professional Employer Organizations (NAPEO), there are 523 PEOs operating in the US right now. As PEOs gain popularity, benefits advisors have a lot of potential PEO partners to choose from. Many benefits consultants have found partnership with a broker-friendly PEO to be highly rewarding.

Broker–friendly PEOs create an ecosystem in which the broker, their clients, and the PEO can all succeed. Rather than exclusively selling directly to small businesses, these PEOs are built on a foundation that puts the broker partnership first. Because of the services and HR solutions they provide, partnering with a PEO can be a huge value add, both for the employee benefits advisor and their SMB client.

Even though broker-friendly PEOs do exist, misconceptions about the industry at large still give benefits consultants and employee benefit advisors pause. Let’s clear up some of the most common myths brokers tend to hear about PEOs.

This is a foundational value at PrestigePEO, which is why we never compromise on the measures we use to safeguard our broker partners:

• No broker of record letters (BORs)
• Broker partners are included in all PEO-SMB client communications
• Elevated renewal process: employee benefits consultants work directly with their clients to customize their benefits packages and choose service offerings
• Transparent pricing on proposals and quotes so the benefits broker can see what their clients are being charged, line by line
• PEO partnership enhances the benefits consultants’ portfolio so they can offer their SMB clients Fortune 500-level benefits at large group rates, plus additional benefits that keep clients competitive in the job market

Broker-friendly PEOs keep benefits consultants and employee benefits advisors actively involved throughout the lifetime of their client’s relationship with the PEO.

• Broker partners and their clients get dedicated human support with direct lines to their support team
• Some of the best PEOs also have greater reliability for renewal costs
• Broker partners have access to web-based HR software solutions that provide a smoother experience for benefits consultants and their clients during Open Enrollment season and specialized software that provides year-round support for benefits consultants, their clients, and their clients’ employees

Broker-friendly PEOs keep benefits consultants and employee benefits advisors actively involved throughout the lifetime of their client’s relationship with the PEO.

• Broker partners and their clients get dedicated human support with direct lines to their support team
• Some of the best PEOs also have greater reliability for renewal costs
• Broker partners have access to web-based HR software solutions that provide a smoother experience for benefits consultants and their clients during Open Enrollment season and specialized software that provides year-round support for benefits consultants, their clients, and their clients’ employees

It’s true that this is a large and growing industry, but no two PEOs are the same. Although brand and name recognition were once synonymous with dependability, employee benefits advisors now have to dig much deeper to get an accurate read on a professional employer organization they may be considering.

If you are brand-new to the PEO space, it can be hard to know which professional employer organizations can make or break your client relationships. Fortunately, those who are looking for an honest, responsible organization can look for several indicators that will help them identify a trustworthy PEO.

Not all PEOs compensate brokers the same way. Broker-friendly professional employer organizations, such as PrestigePEO, can have ways for benefits consultants to generate multiple revenue streams:

• Lifetime payouts on each case brought to the organization for as long as the client stays with the PEO
• Broker referrals (you refer another broker to the PEO)
• Commissions on service fees
• Commissions on individual product lines
• Broker incentive programs (click here to see what incentives PrestigePEO may be running for our broker partners!)

A trustworthy PEO partner can offer HR services and solutions that delight your SMB clients and support a good relationship with your client. One of PrestigePEO’s greatest differentiators from other professional employer organizations is that we truly operate in partnership with benefits consultants. We don’t only rely on our brokers to refer business to us; if we get a lead directly, we assign prospects to our broker partners so they can continue their own growth as well.

Some of the happiest brokers (and their clients!) are those that partner with a PEO.

To help debunk the misconception that all PEOs are the same, here are a few differentiating “green flags” to look for:

• What information is disclosed by the company on its website
  • Employee benefits and services for you, your clients, and their employees
  • Client retention rates
  • Industry qualifications
  • Industries served
• Reviews and/or references from clients

To be clear, it can be tricky to verify a PEO’s business transparency without personal experience. In most cases, it’s best to pick up the phone and have a conversation with a company representative. Speaking with a human gives you additional opportunities to gather more information that may not be included on the website.

PrestigePEO’s commitment to transparency extends beyond the basics for benefits consultants. Unlike many other PEOs, we are proud to offer our partners fully transparent pricing on each of our products and services. Our unbundled pricing allows brokers and their clients to see itemized costs—and cost savings—line by line. Additionally, our teams work with our broker partners to build custom quotes with the versatility SMB owners need.

Since many PEOs are privately held, another smart way to get a read on a professional employer organization’s differentiators is to do a little creative exploration.

Take some time to examine a PEO’s website for additional context around the company and the folks who power it. Beyond certifications and accreditations, here are a few items to get curious about while looking for a broker-friendly PEO:

• How long the company has been in business
• Why the business was founded
• Who leads the company and whether their background positions them to understand what is valuable to benefits consultants
• Whether the company provides broker-specific content, resources, and/or contact information

Additionally, you can take a look at additional online resources to get an impression of the company.

One of the easiest ways to quickly determine whether a professional employer organization might be a good partner is to find out which industry certifications and accreditations they hold. Benefits brokers will want to specifically focus on the accreditations and certifications that are held by those that meet the PEO industry’s highest standards.

1. IRS certification: Certified PEOs (CPEOs) have the distinction of meeting and maintaining the most rigorous government requirements for IRS-mandated certification requirements. A few of these include financial reporting, tax status, background, experience, and bonds calculated by federal tax liability.The IRS publishes a list of all Certified Professional Employer Organizations and the effective date of the certification. You can find PrestigePEO listed as “Prestige Employee Administrators.”
2. Employer Services Assurance Corporation (ESAC): ESAC accreditation is paramount in the industry. To date, only about 9% of PEOs have achieved this, PrestigePEO being among them. To receive ESAC accreditation, an organization must meet and maintain rigid financial, ethical, and operational standards. Accreditation provides established verification and financial assurance of all key areas of PEO reliability.
3. The Certificate Institute’s Worker’s Compensation Certification (CI): This confirms a PEO’s risk management program meets and maintains industry best practices to reduce work related accidents and exposures to control workers’ compensation losses.

PrestigePEO is among only 1% of PEOs to earn and maintain all three of these distinctions. To learn more, visit our accreditation page.

A common misconception about PEOs is that they merely act as staffing agencies, HR outsourcing, and nothing else. In actuality, PEOs serve as a full-service support partner to benefits consultants and their small and medium-sized business clients.

Recent Market Tracking Research found that more than half of decision-makers already outsource health insurance benefits, payroll administration, and 401(k) plans. Facilitating a relationship between your PEO partner and your client simplifies their existing outsourcing by offering single-source solutions and services.

The same survey found that business associates, peers, and trusted advisors are highly influential sources of information for to decision makers. As your client’s trusted advisor, this may mean you’ll have to do some myth debunking for your client as well.

NAPEO’s PEO Industry Footprint 2023 reported that 208,000 SMB owners are PEO clients. Through those partnerships, PEOs co-employ millions of workers, resulting in access to healthcare and other benefits for a workforce comprising roughly the same number of people employed by the four largest companies in the United States, combined.

These findings prove that your clients can indeed trust your Certified PEO partner to responsibly handle important business functions. The PEO industry has successfully assumed payroll administration duties and kept up with workplace compliance regulations for hundreds of thousands of businesses, not to mention benefits administration for millions of individuals.

Similarly, PrestigePEO can help your clients stay on-target with these and other critical functions. We assign dedicated teams of experts to accurately processes payroll and offer payroll tax guidance for your client’s remote and in-office employees.

This is why the certifications and accreditations detailed in this article should be non-negotiables for PEO partnership. Meeting the industry’s gold standard for ethics, fiscal responsibility, reporting, and independent auditing can give you and your clients peace of mind when entrusting the functions to a PEO. These are the drivers that give you a powerful tool to empower your clients for short and long-term prosperity.

With an exceptionally broad scope of services and solutions for critical business operations, PEOs cast a wide net of expertise that can positively impact your clients’ payroll administration, HR management, workplace compliance, risk management, and more.

Not only does PEO partnership pave a way to provide clients with day-to-day support, but it also creates opportunities for small and medium-sized business owners to broaden their employees’ benefits offerings.

PrestigePEO is mission-driven to meet all the industry’s highest standards in order to furnish benefits consultants and health insurance brokers with the best possible employee benefits and HR services. We nurture mutually beneficial relationships with our broker partners so they can do the same with their clientele.

Our dedicated teams are always available to support clients with employee payroll administration, benefits, and other critical HR functions. We also work with brokers to customize proposals to include the services their clients need and exclude anything they don’t.

Whether you are brand-new to the PEO space or interested in learning more about partnership with PrestigePEO, reach out!