The personalization paradox: A broker’s challenge and opportunity

In today’s employee benefits landscape, personalization is a hot topic for everyone involved — employees, HR and benefits leaders, and benefits advisors. Employees are increasingly seeking benefit plans that align more closely with their unique needs and goals; but, there’s a catch. Employees are hesitant to share the kind of personal data that’s necessary to achieve the tailored benefits experience they want. This push and pull presents a puzzle and an opportunity for benefits advisors who want to go beyond having a transactional relationship with their clients and become trusted advisors, helping organizations deliver a more personalized, holistic employee benefits experience.

The demand for personalization

The evolution to a four-generation workforce and the increase in remote and hybrid work arrangements are among the cultural shifts that have driven the desire for greater personalization of benefits. Research by LIMRA, for example, found that baby boomers place 13 percentage points more emphasis on the value of physical benefits such as health insurance than Generation Z. On the other hand, Gen Zers place eight percentage points more emphasis on the value of mental health benefits compared to boomers. Gen Z feels mental health benefits are as significant as vision insurance and almost as important as dental and medical insurance.However, the desire for personalization cuts across all generations. Nearly 90% of employees desire benefits that resonate with their specific situations, such as a health care plan tailored to their lifestyle.This increasing demand for personalization is not lost on employers. LIMRA’s research found that nearly a third of all employers (and 40% of organizations with 1,000 or more employees) say that meeting the needs of their multigenerational workforce is a primary challenge. BenefitsPRO has reported that with employment dissatisfaction remaining roughly constant across generations, a benefits design strategy considering generational and lifestyle differences may boost an organization’s chances of achieving its retention and recruitment needs.The personalization push has another wrinkle that advisors must be aware of in order to fully support employers today. In the age of personalized recommendations from services like Netflix and Amazon, employees are asking why their benefits can’t be similarly customized. Whether a Gen Z professional is navigating their retirement savings plan or a boomer parent is exploring their health care options as their needs change, personalized benefits can simplify choices and enhance satisfaction within the company. But that’s only possible with the right benefits administration system and helpful, accessible employee education. Here, too, employers are aware of the pressure to respond. An Aflac study found that 8 in 10 employers feel that their benefits provider must lead in technology.The personalization paradox: A broker’s challenge and opportunityHere’s the paradox: Despite their desire for a more personalized benefits experience, employees are reluctant to share personal data. Providing the kind of personal data needed to design a truly personalized benefits plan and deliver a smooth and personalized benefits enrollment experience has raised concerns over employee privacy.Only 27% of employees are comfortable with their employers using personal data to improve their benefits experience. The reluctance to share personal data stems from privacy fears, exacerbated by frequent data breaches and scandals. Employees are not alone. A staggering 77% of Americans express little trust in companies handling their data responsibly.Employees in particular worry about who accesses their information, potential misuse, and whether it could impact coverage or premiums. This large gap between the desire for personalization and the concern for data privacy poses a significant challenge for HR and benefits leaders who are responsible for crafting and advising on benefit strategies. But, it also provides a massive opportunity for benefits brokers to play a supporting role.