Retirement Advisors Had to Become Fiduciaries. Health Benefit Brokers Are Next.
Retirement Advisors Had to Become Fiduciaries. Health Benefit Brokers Are Next.
For decades, retirement plan advisors operated in a world where conflicts of interest were common, compensation was opaque, and 'what's best for the client' was more of a tagline than a legal obligation. Then came ERISA, DOL rulemaking, and a wave of litigation that changed everything. Retirement advisors today must disclose compensation, avoid prohibited transactions, and in many cases formally adopt a fiduciary standard. That transformation didn't happen overnight — but it happened. Health benefits are next.
The Retirement Plan Precedent
When the DOL began tightening fiduciary standards for retirement plans, the industry pushed back hard. Advisors argued the rules were burdensome. Some left the business. Others adapted. Over time, the ones who adapted — who embraced transparency, disclosed compensation, and aligned their interests with their clients — built stronger, more defensible practices.The plan sponsors who demanded fiduciary advisors were better protected. The ones who didn't often paid for it in litigation, fee overcharges, or regulatory scrutiny.That cycle is now beginning in health benefits.
Why Health Benefits Have Lagged
Health benefit brokers have historically operated under a different regulatory framework. Unlike retirement advisors, most are not currently required to act as ERISA fiduciaries. Compensation structures — carrier overrides, volume bonuses, administrative fees from vendors — have remained largely in the shadows.The Consolidated Appropriations Act of 2021 (CAA) changed the starting line. It introduced compensation disclosure requirements for health benefit brokers that mirror what retirement advisors have been subject to for years. But disclosure is not the same as a fiduciary obligation. And disclosure alone doesn't resolve the underlying conflict: a broker who receives volume-based compensation from a carrier has a financial incentive to recommend that carrier — regardless of whether it's the best fit for the plan.
What It Actually Means to Be a Fiduciary
A true fiduciary obligation means one thing: your only interest is the client's interest.In practice, for a health benefit broker, that means:
• No compensation from any party other than the plan sponsor
• Full disclosure of every fee, override, and incentive — with no exceptions
• No volume-based compensation structures that create carrier preference
• No back-end deals with TPAs, PBMs, or stop-loss carriers
• Recommendations driven entirely by what is best for the plan and its participantsMany brokers will use language that sounds like this. Very few will commit to it in writing.
The 'Flowery Language' Problem
Here is what Culpepper RFP regularly sees in broker responses to RFPs and due diligence questionnaires: language designed to appear fiduciary-aligned without actually being fiduciary-aligned.Phrases like 'we prioritize client outcomes,' 'our recommendations are always client-first,' or 'we maintain high ethical standards' are not fiduciary commitments. They are marketing language. They do not create legal obligation. They do not require disclosure. And they do not protect the plan sponsor when something goes wrong.Culpepper RFP's approach is direct: we ask brokers to confirm, in writing, whether they will serve as a fiduciary to the plan. That question alone eliminates a large portion of the field.
Why This Matters for Plan Sponsors Now
Litigation in the health benefits space is accelerating. The same plaintiff firms that reshaped retirement plan law are now bringing suits against plan sponsors for inadequate oversight of their health benefit arrangements. The DOL is conducting more investigations. ERISA counsel are increasingly recommending that employers treat health benefit decisions with the same fiduciary rigor they apply to retirement plans.The question is not whether the standard will arrive. It is whether your organization will be ready when it does.Working with a broker who commits to a fiduciary standard is not just good practice. Increasingly, it is the only defensible practice.
What Culpepper RFP Requires
Culpepper RFP will only include health benefit brokers in our evaluation process who agree to serve as a fiduciary to the plan unless the sponsor specifically requests. This is not a preference — it is a threshold requirement.We believe plan sponsors deserve evaluations built on that standard. And we believe the brokers who are willing to commit to it — who can stand behind their recommendations without hidden financial entanglements — are the ones worth working with.
If your organization has not evaluated whether your current health benefit broker is operating as a fiduciary, that evaluation is overdue. Culpepper RFP can help you understand what you should be asking — and what the answers should look like.
📩 Let’s make sure your plan stays out of the headlines.Reach out here.
