Manulife Financial Small Business Research Report 2 0 1 1

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Manulife Financial
Small Business
Research Report
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Manulife Financial
Small Business
Research Report
3 Opportunity Knocks
4 Methodology and Executive Summary
5 Professional Support Network
8 Increased Employee Productivity and Focus
11 Top Talent Retention
14 Controlling Costs
17 Access to Capital
20 Growing Revenue
23 Advisory Board
About Manulife Financial
Manulife Financial is a leading Canadianbased financial services group operating in 22
countries and territories worldwide. For more
than 120 years, clients worldwide have looked
to Manulife for strong, reliable, trustworthy
and forward-thinking solutions for their most
significant financial decisions. Our international
network of employees, agents and distribution
partners offers financial protection and wealth
management products and services to millions
of clients around the world. We provide asset
management services to institutional customers
worldwide as well as reinsurance solutions,
specializing in life and property and casualty
retrocession. Funds under management by
Manulife Financial and its subsidiaries were
$478 billion (US$492 billion) as at March 31,
2011. The Company operates as Manulife
Financial in Canada and Asia and primarily as
John Hancock in the United States. Manulife
Financial Corporation trades as ‘MFC’ on the
TSX, NYSE and PSE, and under ‘945’ on the
SEHK. Manulife Financial can be found on the
Internet at
’m always fascinated when I get a chance
to speak with the small business owners
I encounter in my day-to-day life. Whether it’s
the firm that keeps my air conditioner running
on those hot summer days or my favourite
restaurant where my family celebrates special
occasions, each business owner has his or her
own story to tell.
In our first Manulife Financial survey of small
business owners, we wanted to hear those stories.
We asked small business owners to tell us what’s
on their minds, what their challenges and priorities
are and how financial planning—and financial
advisors—can help them achieve their goals.
What we learned is that owners aren’t
thinking about their overall financial plans.
Instead, they’re focused on paying their bills,
while wondering how to find good employees,
and at the same time trying to win customers,
increase sales and grow profits.
Small business owners might not spend a lot of
time thinking about the art of financial planning—
they’re too busy running their companies—but
they certainly do worry about their financial
future. So they spend a lot of time on tasks and
goals that you, as an advisor, can help make easier,
more effective and more achievable.
In our first annual Manulife Financial Small
Business Research Report, you will learn about
the topics on the minds of small business
owners, and you’ll discover ways to help solve
the puzzles they face each day. We’ve grouped
these under six main themes: professional
support network, employee productivity, top
talent retention, controlling costs, access to
capital and growing revenue.
After conducting the research, we asked a
panel of your peers to interpret the results. In this
report, you’ll find their ideas and suggestions
about new ways for you to apply your expertise
and to turn small business owners into small
business customers.
By targeting the six areas of interest, I believe
your skills and advice will be more relevant,
powerful and valued by your clients (small
business owners). And Manulife Financial is
here to help make that possible.
To begin, I invite you to explore the
information layered between the covers of the
first edition of our annual Manulife Financial
Small Business Research Report. Enjoy it, take
some time to dig into the report and come back
often for more. I think you’ll discover many
useful insights on the pages that follow.
Be sure to visit to
explore the other useful tools that have come
out of this research to help you better serve
the small business market.
Rick Brunet
Executive vice-president,
Manulife Financial
Manulife Financial Small Business Research Report
Approximately nine in 10
companies in Canada are
defined as small businesses.
And despite the wide range
of products and services
they offer, they all share
common challenges and
opportunities. Small business owners
The Manulife Financial Small Business Research Report is based on the results
of an online survey of 1,005 Canadian small business owners and senior
managers across industry sectors and regions. The research was conducted
by the Rogers Connect Market Research group of Rogers Publishing Ltd., on
behalf of Manulife Financial. The survey was fielded in June 2011. For the
purpose of this research, “small business” was defined as having between two
and 100 employees. The margin of error is ±3.1%, 19 times out of 20. The
following charts provide some of the key demographics of the respondents.
Note that some response categories in this report do not add up to 100% due
either to the rounding of numbers or questions that allowed respondents to
provide multiple responses. Base: All respondents; N =1005
rely heavily on their employees to remain competitive.
However, to ensure their
Organization size
businesses are sustainable
they need to balance this
investment in a healthy and
productive workforce with
strategies that contain costs
and grow revenue.
The 2011 Manulife
Financial Small Business
Research Report explores
how small business owners
51–100 employees: 9%
Average number: 19.0
Atlantic Canada: 7%
Manitoba/Saskatchewan: 7%
are managing their workforce and day-to-day activities, while envisioning ways
to grow their companies for
Number of years in business
long-term viability.
Less than
10 years
Minority ownership: 8%
Senior management role
without any ownership: 20%
Ownership stake (NET): 80%
25–49 years
10–24 years
50 years +: 7%
No answer: 12%
Average: 22.7
Professional Support Network
Support Network
mall business is vital to the Canadian
economy, and owners are always looking
to build their companies. With tight resources
and fewer employees, many owners find the
day-to-day issues of running a business a cause
for concern. The survey data showed that 36%
of respondents believe not being able to spend
time on big-picture planning is a problem. And
of those, 85% are looking for help.
So where are owners finding this support?
The data revealed that owners look to a variety
of sources for help. Topping the list is outside
consultants (10%), followed by accountants (6%)
and internal company resources (6%).
Within this network, it seems there is a great
opportunity for group benefits and financial advisors to position themselves as a key resource for
small business owners. But it’s not that straight­
forward, as almost six in 10 (59%) of the small business owners surveyed disagree that they would like
an outside consultant in a quarterback-type role.
Michael Horne, a partner in the Carleton
Financial Group in Ottawa, believes this is valuable insight for benefits advisors. “I think a lot
Manulife Financial Small Business Research Report
T ell your clients
about the contacts
in your network
and offer to set
up meetings.
Identify respected
accountants and
lawyers in the
industries your small
business owners are
in and ask to meet
with them.
ffer lunch-andO
learns on health
benefits and pension
and retirement
issues for professionals in your business
owners’ markets.
Identify what
additional value you
can provide and
communicate this
to your clients.
evelop service
offerings and make
sure your clients are
aware of everything
your company
provides through
newsletters, mail
outs, presentation
add-ons and takehome handouts.
ecome familiar
with business planning and HR issues
and resources so
you can provide
insight when your
clients need it.
of financial advisors hold themselves out as
that quarterback, so it’s surprising to see that
so many owners are not interested in [having
advisors in] that role,” he says.
Gad Attias, president of Groupe Censeo Inc.
in Laval, Que., is less surprised. “It’s always the
president or the owner who quarterbacks these
kinds of organizations because [the companies]
are often not big enough to have specialized
job titles. The owner usually ends up controlling pretty much all of the decisions,” he says.
According to Roger d’Eschambault, president
of dElta Benefits Inc. in Saint-Lambert, Que.,
business owners are unaware of all the ways a
benefits advisor can help. “I think the advisor has
a much bigger role in the overall cost of doing
business than owners may even recognize,” he
explains. “I think there is a perceptual issue here;
perhaps business owners are not placing as much
value as they could be on their financial advisor.”
Selling a Service
To help change this perception and open the
door to further opportunity, Joel Rose, principal
of usefulideas in Toronto, challenges benefits
advisors to move from a business model built
on just selling product to a more holistic service.
“We often used to only sell product. And while
we know a lot about that product, we were not
saying ‘can I help you with anything else?’ Now
we do,” he explains. Depending on an advisor’s
area of expertise, this could be HR, business planning or risk management help.
This makes sense, especially when you consider that 60% of the survey respondents say
they use personal references when looking for
outside consultants, and 49% rely on word
of mouth when searching for help. It appears
owners want a reliable contact to put them in
touch with trusted people.
In this environment, Attias sees opportunity.
“Owners need extra help from someone like
an advisor. The advisor can act as the source
of references for financial questions, for human
resources questions, for other questions that
owners may have.” Attias encourages benefits
advisors to develop a network of contacts to
support this type of role. He also suggests they
develop a broad set of tools—such as business
Running a business is a lot
more involved than I had
originally anticipated
Total agree
Strongly Agree: 29%
Strongly Disagree: 9%
Base: All respondents; N=1005
planning and HR resources—to be ready to
guide the owner through challenging situations.
To help position himself as a knowledge hub
while building a strong network, Michael Wortsman, associate broker with Creative Planning
Financial Group in Toronto, actively cultivates
relationships with accountants and lawyers.
“Providing a lunch-and-learn session for a group
of accountants, for example, is a great way to
explain to them how group benefits costs can be
controlled, because that’s generally their mandate
with their clients,” he explains. A seminar on the
Income Tax Act as it relates to health benefits is
another good topic, Wortsman says. “Identify the
things they’re not intimately familiar with, but are
part of their business, and share your knowledge.”
Relationship Building
Selling on relationship, not price, is certainly
working for benefits advisors such as Sam
Bruno, financial services manager of Simmons,
Black & Emsland Insurance Services in Kamloops, B.C. Many of his small group clients
with five to 10 employees turn to him for far
more than simply negotiating a better price
at renewal time. By broadening his offerings,
he delivers superior service to his clients—and
secures more business in the process. “Not only
Professional Support Network
How did you locate the outside consultants or services
that you currently use?
Personal references
Word of mouth
Professional references
Industry association
Industry conferences and events
Internet search
Boards of Trade/Chambers of Commerce
Government agencies
Hard copy directory (e.g., Yellow Pages)
Social media (e.g., LinkedIn; Facebook)
Note: Responses less than 2% not shown
Base: All respondents; N=1005
do we have their commercial insurance, we
also get their other [business], such as auto
plan insurance. They look to us as their main
point for many issues,” he explains.
For benefits advisors who are unable to
provide services such as administration, it
all comes back to having a strong reference
ready to offer an owner support in times of
need. Attias embraces this approach, especially
when it comes to guiding clients in key areas
such as HR costs and employee productivity.
For example, take an owner who may be
struggling with stressed employees. In addition to recommending that the owner look
into a service such as an employee assistance
program (EAP), a benefits advisor may also
suggest experts who offer workplace seminars
focused on relieving stress. “The owner will see
the advisor as more important if he or she can
provide constructive help,” Attias says.
Teaching clients about your expertise
A few years ago, Joel Rose, principal of usefulideas in Toronto, discovered
something disappointing. “We surveyed our clients and we learned that they
trusted us but didn’t want to do anything besides benefits with us,” he recalls.
He realized it was because clients didn’t know what else Rose’s team could
provide. “So, we added to the back of our benefits presentation all of the
other things that we offered, and we made sure that these were presented
at every renewal and at the end of every one of our initial presentations to
clients.” A few years passed before clients started asking about those services,
but once they did, business took off quickly. The lesson for Rose? Recognize
your growth opportunities and assert yourself.
Joel Rose
Manulife Financial Small Business Research Report
Increased Employee
Productivity and Focus
mployees are the lifeblood of every small
business. When they are productive and
focused they are likely to be contributing even
more to the success of the company. In the survey,
97% of respondents agreed that satisfied employees are more productive. The goal for a benefits
advisor, then, is to guide and support the owner
in creating a positive workplace for employees.
But, even though owners want happy, productive employees, cost containment is a reality.
In the survey, 58% of respondents said they
provide a health benefits plan. Out of those
who do not, 78% support providing a plan,
but believe them to be too expensive. Further,
when asked directly why they did not offer a
plan, the number one response was cost (64%).
These are the areas where a benefits advisor
can step in to connect the dots for an owner.
For example, it appears that offering a health
benefits plan or retirement plan might make
employees work harder for a company. The
survey showed that among those respondents
who offer a health benefits plan, 80% feel taking care of employees makes them work harder
for the company, compared to 70% for those
who do not offer benefits. A similar trend exists
when it comes to retirement plans. Four in five
(82%) of those who offer a retirement plan feel
employees work harder for the company compared to 74% of those who don’t offer a plan.
Increased Employee Productivity and Focus
Which of the following
most closely represents
your viewpoint?
Taking care of my
employees makes them
work harder for the company
Employees are just looking for the
best personal deal they can get
Base: All respondents; N=1005
Herb Goedecke, president and CEO of Aero
Corporate Benefits in Waterloo, Ont., says
a benefits advisor should first address the
idea that plans are too expensive. “There is an
almost irrational concern that benefits plans are
too costly. You can demonstrate rather easily
that a plan is affordable, especially if it’s a percentage of payroll,” he says. “Business owners
are surprised they can do it for less than 5%.”
Where benefits advisors become crucial
is in helping owners maintain that threshold
through good benefits plan design and cost
containment. “There is the fear that benefits
plans are affordable now but that costs will
spiral in the future. We need to continually
demonstrate to owners our ability to keep
these costs under control,” Goedecke explains.
Once cost is directly addressed, benefits
advisors can move into conversations that
clarify the indirect impact of benefits plans
on employee satisfaction and costs. “There
is often no link between the benefits plan
and satisfied employees for the owner,”
d’Eschambault says, adding that elements
of benefit plans, such as EAPs, short-term
disability (STD) and stress management programs, are all valuable ways to demonstrate
to employers how they can increase employee
satisfaction and, in turn, boost productivity.
Connecting directly with employees is an
underutilized tool for demonstrating the connection between satisfaction and the benefits
plan. After all, says Wortsman, communication
is the crucial part of explaining the value of
benefits and, benefits advisors should communicate directly with employees. “It’s up to us
to offer to do employee presentations at least
once a year for our clients,” he says. “Every
time I do one, at the end of the presentation,
80% of the people who are there are excited
about some element that they didn’t even
know existed before the presentation.” When
an employer sees this effect on employees, the
cost conversation becomes more negotiable,
Wortsman says.
Wortsman also suggests that a similar creative approach can be used for STD, too. “For
a company with under 100 lives, a short-term
disability plan can be very expensive. Connecting a company with a short-term disability
claims management provider that will handle
things on a case-by-case basis is a great solution,” he says. Using an external provider
can help to control costs while allowing an
employer to formalize STD and be prepared
before an employee gets seriously ill.
According to d’Eschambault, employee
meetings are also a good practice at renewal
time. “We’ve been meeting with employers
and employee groups to discuss renewals and
we have been thanked because they finally
understand how rates are calculated, even
if it sometimes means an increase,” he says.
Wortsman has had a similar experience. “We
had a renewal meeting with employees for
the first time this year and we showed them
their health trends and how their premiums
have fluctuated,” he says. “Everyone was
excited; it was the first time that they had
been presented with their own group’s health
claims data. From there, we discussed what
their employer had done and the work we
have done to control costs.”
A benefits advisor should also meet with his
clients—without their employees—more often
than just at renewal time. Attias sees his clients
periodically throughout the year. “Outside of
the renewal process clients are laid-back and
each out directly to
employees about benefits
plans at the launch of
a plan, once during the
year and at renewal time.
T alk to business owners
about the prevalence of
stress in the workplace
and its negative impact
on employees.
P romote features in the
existing plan that can be
used to help employees
manage stress. These
types of programs are
often embedded in
the benefits plan but
aren’t used to their full
extent due to lack of
evelop a stress
resource kit for owners that includes tips
on recognizing signs of
stress and what can help
stressed employees. Be
sure to highlight what
elements of their individual plans can be used
to cope with stress.
ollect case studies
of small businesses
that have added benefits plans while saving
money and boosting
productivity. Refer to
them in meetings with
potential clients and
forward the case studies to clients who are
considering increases
or cuts to their plans to
demonstrate the value
of a benefits plan.
Manulife Financial Small Business Research Report
How much of a problem is the
stress level of your employees
for you and your company?
Not a
Base: All respondents; N=1005
No answer
sometimes much more open to listen and explore
options,” he says. “The client has time to think
about your suggestions, and if he wants to talk
about strategy, ideas or documentation, there is
a chance. Then, when we come to renewal time,
both the advisor and the client are prepared and
the renewal is a much easier process. It’s definitely
a key point to maintain communication with the
client and make sure that you give him the tools
and information he needs to make a decision.”
To further drive home the value of a benefits
plan, a discussion around employee stress levels
is key. While the survey revealed that only 12%
of small business owners and senior managers
believe the stress level of their employees is a
problem, numbers from Statistics Canada tell
another story. A study on work/life conflict surveying more than 31,000 workers found that
more than half felt stressed and one-third felt
burned-out or depressed. A separate study by
Statistics Canada found that absenteeism due to
stress has increased by more than 300% in the
past 15 years. The research shows that most small
companies—whether they offer a plan or not—
need help understanding that stress affects their
employees. Only 14% of companies who offer a
benefits plan are aware that stress is a concern for
their employees. Even fewer (10%) of those who
do not offer a plan are aware of it as a concern.
Wortsman says that a case study or personal
story about the effects and costs of stress on a
small business is an effective way to get employers’ attention. “If you have clients who have
already implemented programs and they’ve
seen the results either in reduction in claims or
critical illness claims being paid out, then those
are great stories to share with a client who’s
going through similar challenges,” he explains.
Attias says that benefits advisors should also use
these discussions to review the plan features that
deal with stress—be it an EAP or other services—
to draw attention to the stress level of employees.
Finding individual clients in group
Sam Bruno
Financial services
Simmons, Black
& Emsland
Insurance Services
Connecting directly with your client’s plan members is a way to boost the value of
the plan—and an opportunity to grow your own business. Chances are you search
for new group opportunities through your individual clients, but you can also follow
what Sam Bruno, financial services manager of Simmons, Black & Emsland Insurance
Services in Kamloops, B.C., does and try the reverse. “When a new employee joins
one of my business owner’s benefit or retirement plans, I ask the company to send
the new hire over to me,” he explains. “I personally sign them up to the plan and
during that conversation, I talk about that individual’s personal financial plan. I
often end up selling personal life insurance, an RRSP or another product to that
individual. It ends up being positive for the owner because I’m enrolling the new
employee, and it’s good for the growth of my individual book.”
Top Talent Retention
Top Talent Retention
o remain competitive, a small business
must hang on to its most talented
employees. A benefits plan is a crucial way to
keep great employees from leaving their jobs.
In fact, according to the 2011 sanofi-aventis
Healthcare Survey, 59% of group health benefits plan members in Canada would rather
keep their benefits plan than receive $10,000
in cash. When the amount is doubled to
$20,000, 48% of those asked would still
choose their benefits over cash.
But according to the Manulife Financial Small
Business Research Report, only 55% of business
owners appear to understand the connection
to attraction and retention. Although, those
that offer benefits or retirement plans seem
to be more aware of their value. Among those
respondents that offer a health benefits plan,
71% see it as crucial in attracting and retaining top talent, while 31% of those that do not
offer a health benefits plan see it as valuable.
It’s a similar story for retirement plans. Seven
in 10 (72%) of those that offer a retirement
plan see it as very important and 48% of those
that do not offer a plan see it as valuable. The
data appear to reveal a potential opportunity
for benefits advisors to sell more health and
retirement plans. The majority of those without
Manulife Financial Small Business Research Report
evelop strategies
to respond when
owners say “The
plan is too expensive.” Think of a
creative plan design
or new ways of
comparing the cost,
such as the cost of a
benefits plan being
the equivalent of
the company’s
next raise.
L ook for opportunities to create unique
benefits offerings
to help your client
stand out in her
industry. Do this
by learning what
competitors are
offering and by
getting to know the
needs of the company’s employee
base intimately.
reate benchmarkC
ing reports for clients regionally and
then by industry.
sk your client if
she is considering
adding a pension
plan and if not,
what is keeping her
from starting one.
plans are already aware of the benefits, which
suggests that other factors are the stumbling
blocks preventing them from implementing
plans. For those owners not offering plans
and unaware of their value for attraction and
retention, benefits advisors have a strong place
to start a conversation.
Among those who do not report retaining
key employees as an issue, the most popular
tactic reported is to pay them well (34%). A
benefits package was a distant second (19%).
Of those who view this as an issue, advisors
are a source of support for this issue—31%
of owners/senior managers report turning to
a financial advisor for help.
Benefits advisors can capitalize on this
trust to show owners what a difference a
competitive total compensation package could
mean for the success of their organization.
This begins with a discussion on the topic
of benefits versus cash. A large number of
the owners and senior managers who
responded to the survey said they would
offer some form of cash compensation—
competitive wages (34%), bonuses (11%),
salary increases (5%) or profit sharing (5%) —
as a way to keep top talent.
“Owners don’t seem to understand the
value that is attached to benefits and how
they can achieve much more by giving benefits—which have so much more value to the
employees on a personal experience—instead
of just a raise,” Attias says. After all, a 3% or
4% increase in salary will get taxed, so spending the money on a benefits plan puts more
in the employee’s pocket, he explains. Owners appear to believe that cash means more
to employees and is a cheaper option than
a benefits plan. But benefits advisors know
that’s often not the case.
Horne says one way he tackles the belief
that plans are too expensive is to ask an owner
what his budget is and then build a solution
accordingly. Bruno gets even more specific
by asking what part of the plan the owner
finds most expensive. “If they say dental,
I work on the dental until I can get it down
to a reasonable price with deductibles,” he
says. Rose agrees that deductibles are a good
Which of the following
most closely represents
your viewpoint?
Competitive health
benefits are crucial in
attraction and retention
Health benefits have
no real impact in
attraction and retention
Base: All respondents; N=1005
Do you offer or have you
ever considered offering
your employees any of
the following?
Have Considered
Equity Plan
Group RRSP
Pension Plan
Note: Responses less than 2% not shown
Base: All respondents; N=1005
way to show owners that costs can be shared
with employees.
According to d’Eschambault, another
way to change an owner’s paradigm about
Top Talent Retention
benefits versus cash is to “ask the owner
what he thinks employees need and help
him to provide that.” This gives the benefits
advisor the opportunity to help the owner
create a unique benefits package that is
almost custom-tailored to the needs of an
employee base. This kind of solution is much
more valuable than cash because another
employer will most likely not offer the same
plan design. It becomes part of an overall
employee retention strategy.
Knowing what other companies are offering in their benefits plans is another way
benefits advisors can show owners the value
and importance of total compensation.
“One thing that you can use to help illustrate this to a client is a benchmarking tool,”
Wortsman says. “They will get a sense of
whether their plan is measuring up against
their competitors, if it’s worthwhile for
an employee to stick around, or if they are
far behind in some of the coverage.” Horne
says that he benchmarks for his small business clients both regionally and across their
own industries.
A positive trend, notes d’Eschambault,
is the move toward insurance companies
providing the small group market with
benchmarking information. “The insurers
will provide benchmark data for an advisor
based on their block of business. They will
drill down to a postal code or industry,” he
says, adding that “there’s probably even
more valuable data sitting somewhere on
an insurer’s computer system that could be
useful for everybody to have.”
When it comes to the retirement plan side
of the total compensation package, the survey data showed that 47% of all respondents
offer some type of retirement savings vehicle
for employees. The roundtable participants
said that in their experience, the majority of
small businesses have a profit-sharing plan.
The survey found that 25% have a profitsharing plan, 20% offer a group RRSP, and
only 15% offer an employee pension plan.
However, almost half (49%) have considered
offering a pension plan, providing another
talking point for benefits advisors to bring
up at their next client meeting.
Learning market influences
on total compensation
For Michael Horne, a partner in the Carleton Financial Group in Ottawa, total
compensation in his region is being driven by the largest employer—the federal
government. “Once companies get to about 40 people, they see their key employees
leaving after three or four years to take government jobs because of the pension,” he
explains. So, Horne is experiencing an uptake in pensions for groups of 20 employees
and up, as companies come to realize it’s cheaper to put one in place than to lose key
personnel and spend valuable resources recruiting and training new talent. “Gone
are the days where people stay around long term. The younger generation is not
afraid to move companies to get to where they want to be, and that is changing
what companies have to do to keep people,” he explains. Research from various
sources supports Horne’s personal experience. According to studies done by Robert
Half International, generation Y (those born between 1980 and 1995) are expected
to switch jobs frequently and are often looking for better benefits and perks.
Financial Group
Manulife Financial Small Business Research Report
Controlling Costs
or small businesses, maintaining and
growing a company requires carefully
tracking costs now and figuring out ways to
keep expenditures down later. The survey
revealed that only one-fifth (20%) of owners
currently view controlling costs as a problem.
However, all of the respondents cited labour
(27%), then payroll and salaries (22%), as the
top two most important expenditures to consider when controlling costs. Those with health
benefits plans are even more motivated to keep
labour costs contained, according to the survey.
Among those with a health benefits plan, 31%
say that labour is an area that they would look
at to control costs, while only 21% of those that
don’t offer a plan would look at this area for
cost control. Payroll is another area that those
with a health benefits plan are more likely to
indicate they would look at for cost control
(25%) than those without a plan (17%).
The survey also showed that of the small business owners who need help in controlling costs,
most are turning to accountants (16%) or internal
associates (13%) for support. So where do benefits advisors fit into this process? “The cost of
labour, payroll and salary means benefits, too,”
says Attias, but not all employers realize this.
Goedecke says he often spends time explaining
this to clients. “It really is tax-efficient compensation and not an add-on expense,” he says. For
example, explains Goedecke, if an employer is
going to spend $1,000 on salary or benefits, it’s
the same $1,000 expense to the employer. But
it’s a big difference to the employee. The $1,000
Controlling Costs
With respect to costs, what are the top 3 areas you focus
on when you are trying to control your expenditures?
Material/material costs
Company expenses/overhead/fixed costs
Note: Responses less than 4% not shown
Base: Total answering; N=903
in wages is taxable, but $1,000 in benefits is
not and has arguably more spending power.
Once owners connect benefits costs to payroll expenses, benefits advisors can open up
discussions on strategies to managing expenditures. Is the plan being utilized? Could the
plan design be changed to maximize health
outcomes? Should the payment structure
between the owner or sponsor and employees be altered to promote more responsible
use of the plan? “Controlling costs means
helping the owner provide these benefits for
his or her employees in a meaningful and
economic way,” d’Eschambault says.
One area where benefits advisors are
strongly positioned to provide insight on controlling costs is around the stress of employees.
For example, the Canadian Policy Research Networks estimates that stress-related absences
cost Canadian employers about $3.5 billion
each year. According to the Conference Board
of Canada, 2.6% of payroll is lost annually as
a result of absenteeism (defined as employee
absences due to illness, disability or personal or
family responsibility). To get more information,
a benefits advisor can ask questions such as
“Are you interested in controlling the costs of
absenteeism? Do you have stress in your workplace? What effect is it having?” Uncovering
details about which costs keep owners up at
night will give a benefits advisor a starting
point for reducing those costs.
Many large organizations already capitalize
on this approach in managing their benefits
plans, Horne says. “It’s our job as the advisors
to bring those ideas that have already been
studied and understood for years by larger
companies to these clients with 10 employees,” he explains. “It’s about taking things from
the claims-based products and moving them
to the service-based products, which I think
is how we are starting to talk to our clients.”
D’Eschambault also believes benefits advisors need to provide owners with valuable
information. The traditional small business
owner does not have access to the literature
that benefits advisors get on these issues, he
says. “It’s our job to package these data up
better and show how those broad numbers
translate into everyday costs.” Ultimately,
explains d’Eschambault, part of being a good
benefits advisor is being willing to challenge
your clients on their paradigms. “We are not
yes men. I think it’s up to us to show our clients what steps need to be taken, and why.
This is real value to our clients.”
Not all clients are looking to cut benefits.
D’Eschambault says he is surprised at the
E xplain the concept
of total compensation to your clients so
they understand that
benefits costs are a part
of overall labour costs.
Then outline ways you
can help control benefits costs to keep those
labour costs low.
learly differentiate
between the cost of
having a plan and the
cost of not having a
plan, which includes
everything from
decreased productivity
to absenteeism
and stress to talent
that moves to the
etwork with fellow
benefits advisors with
experience in large case
clients to share trends
and insights and brainstorm creative solutions
for clients.
eview the ways
benefits plan design
can control costs and
be ready to present
custom-tailored ideas
to your clients.
Manulife Financial Small Business Research Report
Where or who would you turn to for help or assistance
to deal with controlling costs?
Accountant/accounting department/accounting firm/CA
Internally/associates within the company/staff/colleagues
Business partner/partners
Financial institutions/Bank/Bank manager
Senior management/executives/employees
Note: Responses less than 3% not shown
Base: Total answering who ranked the issue as a problem; N=250
number of smaller clients that have recently
been requesting that he enhance their plans. “It’s
making me think. In the last 25 years we’ve been
saying owners need to increase their deductibles
and lower their co-insurance. Basically, you need
to strip your benefits plan down. But for some,
it’s the exact opposite. So are we really listening
to our clients?” Horne believes benefits advisors
are attempting to be sensitive to their clients’
concerns by suggesting options for cost savings.
“When an employer is talking to you about cost
and you come in with a proposal to increase
costs, you put yourself at serious risk,” he says.
Both d’Eschambault and Horne agree that
the route around this problem is to develop a
deep understanding of the employee base, its
needs and the client’s goals for taking care of the
employees and controlling costs. For example, the
survey showed that as small companies increase in
size they are more likely to offer a health or retirement plan. Among employers that offer a health
benefits plan, the average number of employees
is 25 versus 11 employees for those that do not
offer a health benefits plan. Among those that
offer a retirement plan, the average number of
employees is 32 versus 14 for those who do not.
Taking ideas from big to small
Associate broker
Creative Planning
Financial Group
Small organizations typically don’t pay attention to the research showing how
companies can control costs because the data are often based on large organizations.
“They don’t realize that an investment in an EAP program will, over the long term,
reduce health claims. But advisors know,” says Michael Wortsman, associate broker
with Creative Planning Financial Group in Toronto. “Our clients are not too small
for an EAP.” Other non-traditional benefits services, such as medical referral and
second-opinion services, should also be available to smaller plans, he explains. “We
know they are going to help the employees’ families feel better, which will make
the owner feel better about the plan he provides.” A benefits advisor can apply the
learning of how larger companies tackle controlling benefits plan costs in a scaleddown version for small employers.
Access to Capital
Access to Capital
he volatility of the national and international markets will no doubt have an
impact on small business in Canada. Despite that
ever-present reality, small businesses appear to
be optimistic. In fact, about six in 10 (59%) of
the respondents of the survey say that getting
access to capital is not a problem. And 53% say
managing cash flow isn’t an issue either. There
are, however, some that do say access to capital
is an issue. Of those, 48% turn to the bank for
help and 36% turn to an accountant for support
with cash flow issues.
These results are in line with Horne’s belief
that the small business market in Canada is
very optimistic and healthy right now. Wortsman agrees. “From my perspective, I think the
smaller companies are proving to be healthier
financially than the larger ones that are at that
crossroad about where they need to invest,”
he says.
While traditionally benefits advisors might
have had little to offer in helping small businesses access capital, this role is changing.
It’s now about benefits advisors positioning
Manulife Financial Small Business Research Report
each out to smaller
companies that are
growing slowly and
steadily. They may
soon need benefits or retirement
programs to attract
and retain key
E conomic recovery
presents an opportunity to retain
on’t shy away from
conversations about
access to capital,
growth and managing cash flow. Ask
about challenges and
see if clients require
help finding information or experts.
ork with your
clients’ accountants
to demonstrate how
benefits costs can
be controlled to ease
cash flow issues.
et to know your
clients and their
businesses thoroughly. In-depth
knowledge can
help you shape a
benefits or retirement solution that
makes you invaluable to the business.
What areas in your company do you expect to invest in
over the next 12 months?
Equipment/equipment upgrades
Training/staff training
Real estate/property/office space
Hiring new staff/qualified staff
New/improved products/services
Additional space
NA/none/don’t know
Note: Responses less than 2% not shown
Base: Total answering; N=892
themselves to add value. “Companies that
are in a healthy spot financially might be looking at implementing a benefits program,”
Wortsman says.
Experience has taught Bruno that economic
growth leads to a demand for benefits. “In
B.C., we had a building boom a few years
ago. Before the boom, the contractors that
we approached wouldn’t even consider benefits. Once the building boom got going, all of
a sudden they wanted benefits to keep their
electricians, plumbers and others from moving
to another company,” he said.
Horne also sees opportunity for his book of
business when a client is discussing growing
his or her company. “If I’m in front of a client and he is looking to grow the business, I
have people in my network that I would like to
get him in front of. Hopefully, one day those
people send me clients who are looking for
benefits,” he says. He believes smaller to midsize companies will be most open to this kind
of service from a benefits advisor. For example,
if a company with 50 employees is using the
same bookkeeper that it was using when it
had three employees, the company may not
be getting the best advice. “So in a casual
conversation, I suggest the owner get a second
opinion,” he explains, adding that he will then
provide a few options from his network.
It’s important for Horne to be discussing
many elements of his clients’ organizations
(including access to capital) so he can provide
this type of additional support. D’Eschambault
also sees the potential in this kind of approach.
“Ideally, clients will say, ‘You know what?
Roger has helped me out a lot, and I’m going
to call him up and ask what he thinks about
this issue,’” he says. In this way a benefits advisor becomes the trusted resource for a small
business owner.
When it comes to cash flow, benefits advisors
can offer more direct suggestions. “Group
insurance is a big chunk of the expenses. We
Access to Capital
are able to manage a portion of the cash
flow by helping the employer control the
increasing costs or giving options to manage
it,” Attias says.
An obvious challenge with having a
small business owner who is successfully
growing is how does a benefits advisor
adapt to this growth? In some cases, says
d’Eschambault, there is nothing a benefits
advisor can do when a company is bought
out by a corporation with an existing plan.
However, Attias believes a benefits advisor
in this position can be a key resource for
the incoming person or team taking over
a plan. “When a new person comes in we
already have full knowledge of the company
and we can make sure that this information is transferred to those people,” he says,
adding that this supports a smooth transition. “I think it’s also important to keep the
relationship strong with the employer,” he
adds, believing this strong connection, built
on long-term, intimate knowledge of the
business, could lead to consulting work for
the benefits advisor.
But according to Bruno, the best way to
service businesses that just grow organically
is to focus on the distinct needs of each
Which of these issues do
you feel you need the most
assistance dealing with?
Ranked 1, 2 or 3
Ranked 1
Not Ranked
Access to
cash flow
Base: Those that rated issues as a problem;
Range: N=209; N=182
client. “There is no one size fits all. Every
company has different benefits and different pensions, and they require different
approaches,” he says.
Growing with your clients
Typically, when a small business grows to the several-hundred level, the benefits
advisor servicing the company’s benefits plan can expect to be served with a
transfer letter. “Our advantage is to have such a unique proposal in place that it’s
not easily [shifted] to another advisor,” says Roger d’Eschambault, president of
dElta Benefits Inc. “I want what we do and what we sell to be simply not available
and transportable. So, what does that look like? What can I do to enhance the
value for the employees in the firm? What are the things that make the employer
look better to his employees and how can I deliver those to the employer? My
point is, advisors must know their small business clients and their needs. It’s about
recognizing that each client’s environment requires a custom-designed solution.”
dElta Benefits Inc.
Manulife Financial Small Business Research Report
Growing Revenue
s the Canadian economy remains cautiously optimistic in the face of economic
uncertainty in the U.S. and Europe, small business owners are divided. According to the survey, half (49%) of business owners agree that
they are just holding on economically, while the
rest (50%) disagree.
When it comes to growing revenue, small
business owners are also evenly divided on
the topic. About one-third (29%) of those
surveyed said growing revenue is not a problem
for them, while 36% said they are neutral on
the issue. But growing revenue is a concern
for the remainder of the respondents. In fact,
29% of owners/senior managers surveyed said
it is a problem for them and their business. Of
those, an overwhelming majority (92%) feel
they need help growing revenue, and they are
turning to senior partners/external associates,
business consultants, customers and financial
institutions for this support.
A closer inspection of the data showed
some interesting comparisons. To start, the
small businesses that offer either a benefits or
Growing Revenue
What is the
total Canadian
of your
No answer
$25 million or more
$20 to $24.9 million
$15 to $19.9 million
$10 to $14.9 million
$5 to $9.9 million
Up to
Average $3.545 Million
Base: All respondents; N=1005
to $999,999
$2.5 million
to 4.9 million
$1 to
$2.49 million
Do you have a written
annual business plan?
No No
Did you have external
assistance in preparing
your business plan?
No No
of) of)
All respondents;
All respondents;
who have
a written
who have
a written
plan; plan;
retirement plan were more likely to report
an increase in revenues over the past five
years than those who didn’t offer either type
of plan. Next, those companies that offer
a health benefits plan reported average
revenues of $5 million compared to $1.5
million for those that do not offer a plan.
So where is the benefits advisor’s place in
growing revenue? According to Horne, it’s
related to business development. He actively
engages clients in conversations about where
their companies are headed, which provides
him with the opportunity to create added
value. “We have a roster of accountants, HR
specialists and business development consultants [to help carry on that conversation], but
we stay involved in the process,” he explains.
Rose agrees with staying close to the
business planning process so benefits advisors
can highlight the importance of competitive
compensation packages that include benefits
and pension plans. “You are fitting yourself
into their business model by explaining that
attracting the best quality employees is their
most important asset in growing the business
and making it successful,” he says. These
conversations can also include suggestions
for controlling labour and employee costs,
T alk to clients about
business planning and
inquire if they have a
written plan. If they
do, ask to see it. If they
don’t, suggest a business plan consultant
from your network.
L earn about your
clients’ business and
industry and use that
information to spark
a conversation about
what clients plan for
the future.
evelop relationships
with business plan consultants and business
development experts.
Explore challenges and
roadblocks that small
businesses face and ask
your clients about them.
Offer these contacts
as referrals when your
clients need help.
Include benefits
and pension costs
into the business
plan, so the owner
can plan accurately
for growth and avoid
unnecessary surprises.
reate a library of
business planning and
development resources.
When issues come up
in conversation, offer to
send these resources to
the business owner.
Manulife Financial Small Business Research Report
all of which contribute to the company’s ability
to grow revenue.
Bruno, who services many very small group
clients, says he is quite involved in business
development with his customers. “We pretty
well know exactly where they are going from
a business perspective. They’re very open to
sharing their business plans,” he says.
But it is important to balance the opportunity
to help clients with the risks of doing so.
“You can build a fence around your client by
providing additional services that will help
entrench you in their business, but there’s
also a point where you’ve crossed over into an
area where you’re not an expert,” Wortsman
says. Rose agrees. “You’re really working on
tricky ground if you step out of your core
competence and tell the customer that you
can do something that you really can’t do,”
Rose says. He believes the best approach is to
meet with clients as a fellow small business
owner looking to discuss issues related to
running a company, and then see where the
dialogue goes.
When faced with an issue beyond his scope,
such as anything falling in the legal or tax
realm, Bruno accesses his network of experts
Compared to 5 years ago
what is the change in your
company revenue?
Big increase
Base: All respondents; N=1005
to help support his client. This has resulted in
deep trust from his clients, which has translated
into referrals. “Not only do I get their business,
but they refer us,” he says. “We have a lot of
clients in the same industries, and even though
they are competing for the same business, they
[still] recommend our firm to one another for
benefits issues.”
Helping clients build a business plan
Gad Attias
Groupe Censeo Inc.
The survey revealed that 40% of business owners do not have a formal written
business plan. “For small business owners, a business plan is often in their head.
They are very hands-on and know what they should do this year to reach their
goals. They don’t have the resources, like a VP of finance, to give projections and
keep them tightly on track,” explains Gad Attias, president of Groupe Censeo Inc. in
Laval, Que. So this presents an opportunity for benefits advisors. “When it comes to
the group pension or benefit portion of business planning, these costs, specifically
group insurance costs, are something that eats up a big portion of expenses every
year. The advisor can help project future costs of this expense and show how it will
impact cash flow.” Attias feels helping a business owner identify where cash will be
needed so he can plan more thoroughly is the most effective indirect way to help
a client grow revenue.
2 011
Manulife Financial
Small Business
Research Report
Advisory Board
The 2011 Manulife
Financial Small Business
Research Report relied
on the advisory board
to help shape the survey
theme and interpret the
results. We thank them
for investing their time,
breadth of knowledge
and expertise in this
inaugural look at the
small business market in Canada.
Gad Attias
Sam Bruno
Joël Drolet
Financial services manager
General manager
Groupe Censeo Inc.
Simmons, Black & Emsland
Goguen Champlain
Insurance Services
Financial Services Inc.
Herb Goedecke
Michael Horne
President and CEO
Aero Corporate Benefits
Carleton Financial Group
Jay Quinn
Joel Rose
Michael Wortsman
Associate broker
Lane Quinn Benefit
Creative Planning
dElta Benefits Inc.
Consultants Ltd.
Financial Group
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© 2011, Manulife Financial.