Zenefits, Short the Stock

Interviewing insurance executives at Zenefits in 2015 the problems of Zenefits were obvious. Just like the problems still are now, January 2017.

In midsummer 2015 I knew the meteoric rise of Zenefits was but a flash in the pan. Running an agency of their size relying on so few insurance staff is two mistakes. First, licensing that has exposed no respect for State protections for citizens and second, and worse than the first, is  squandering the opportunity to disrupt an industry stuck on its own existence.

There is so much opportunity to bring fundamental change to more than brokers it would be a tragedy if Zenefits new leader doesn’t get this right. Continue reading “Zenefits, Short the Stock”

It’s morbid to compare: GM 124; Hospitals 400,000

Outraged over auto deaths?

Mary Barra in front of congress.
Mary Barra in front of congress.

All human life matters and to my way of thinking it’s good the autos and government have a way to track responsibility. I live in Detroit so that makes me a car guy. I feel attached to the auto industry. It’s good the cars we drive are safe.

Outrage over car deaths, of course, makes sense. And, the autos have taken responsibility because the government has a good method to enforce the autos to be accountable to the public.

General Motors will pay $900 million to settle criminal charges related to its flawed ignition switch that has been tied to at least 124 deaths.

CNNMoney (New York) September 17, 2015: 2:46 PM ET;  “GM CEO: ‘People died in our cars’ ” Poppy Harlow


Let’s compare; outrage over 124 auto related deaths compared to more than 400,000 preventable deaths at hospitals? Where’s the outrage? Where’s accountability?

Screen Shot 2015-09-18 at 5.52.25 AM
Healthcare IT news aritcle,


In this article, congress talks about possible solutions but isn’t demanding accountability from our medical system.

“The tragedy that we’re talking about here (is) deaths taking place that should not be taking place,” said subcommittee Chair Sen. Bernie Sanders, I-Vt., in his opening remarks.

Healthcare IT News, Erin McCann “Deaths by medical mistakes hit records, the way IT is designed remains part of the problem.” WASHINGTON | July 18, 2014


When I talk about our medical system is broken, it’s clear that if the auto tracking method were applied to hospitals we’d have accountability.

Here’s a quote from the same article;

In the hearing’s closing questions, when Sanders inquired as to why this crisis was not constantly splashed across front page news, he was met with this: “When people go to the hospital, they are sick. It is very easy to confuse the fact that somebody might have died because of a fatal consequence of their disease, versus they died from a complication from a medical error,” Jha said. “It has taken a lot to prove to all of us that many of these deaths are not a natural consequence of the underlying disease. They are purely failures of the system.”

In our premiums and in our government run healthcare we pay for these services.

But, our system requires more fixes than just this. The white paper is breaking apart many pieces of the medical system apparatus in order to demonstrate the areas where the system is broken. Follow the white paper for what’s wrong, then we’ll be publishing the fixes in 1qtr 2016.

All insurance is not Created Equal.

A Health Policy Buyers Dilemma

If you’ve had an insurance policy, and we all do, you may not have ever had a claim. The serious claim that is often large, like ten’s of thousands of dollars large is something many people never experience. This causes a purchase dilemma for most people. They must choose a policy without knowing if, at claim time, it will pay as hoped. They may not be entirely sure what to expect even after the sale. It’s popular for a buyer to accept a recommendation from a sales agent because they have to trust that person to match their needs.

Question One

Here’s the rub, many agents are wonderful, terrific people who want to take good care of their customer. There are some, as in any industry, who are going to recommend what’s in their best interest over their clients interest. Unfortunately, it isn’t quite so black and white. In our work with clients and the Decoder we frequently find opportunities for customers and make adjustments to the original recommendations. We’re making a living on finding these opportunities. We can’t say exactly why it is this way but it’s clear there are always opportunities to do better. In case you’re curious, these adjustments along the way pay for the Decoder within a month or two for most groups.

Question Two

There is a second question to be asked. If you’re not worried about your agent’s recommendations and are confident in them, the question is determining their level of confidence in understanding where the opportunities exist for your business. Healthcare is changing daily, we call it “shifting sands,” the speed of change literally keeps me up at night and this is what we do.

Chances are, what your agent knows, comes almost exclusively from insurance carriers and vendors. If you look objectively, you have to say that makes complete sense. After all, selling insurance to business is what they do for their lively hood. You shouldn’t expect something different. Plus, the speed of change makes sorting out all the carrier and vendor and marketplace options really difficult. Is your agent really up on all the options that might fit you, and can they explain those options in a coherent financial manner your CPA would understand?

Assess Two Qualities About Your Agent

I’m probably stating the obvious but it’s important to know where your allegiance lies. In the first case, the agent who you can trust must be screened by you. It’s very likely, you have confidence in your ability to screen out the better agents. You will have confidence then in choosing or keeping your agent.

Let’s assume in the first case that you’ve used a good process to hire an agent. What about the second case, where you are less prepared to assess how up to speed agent is with ACA, reform, plan regulations, policies and myriad of new options? Fact is, it’s highly unlikely that your abilities in this second part are as adequate.

Sales Process Does Not Work in a Buyers Favor

Insurance has the reputation it has because it’s earned it, and because what insurance provides almost seems like selling air. It is complicated and the sales process does not work in a buyers favor. What is common is that most people don’t experience serious claims that test their trust in a policy and agent, and as a result learn too late that they have a problem.

Insurance is complicated and healthcare is among the most complicated. You should almost expect problems if you’re not introducing an outsiders opinion about the decision you’re making for your policy. I’ve built BenStaff to do just that for you. I had to separate myself from the traditions of insurance and stepped out intentionally to offer an alternative. To protect and work with owners to solve the equation for the optimum outcome has been a real struggle and also opportunity. I have no part in traditional insurance and as a result can give you the benefit of insider information without making a living at selling you a product. I work with agents all the time and am happy to work with a customer’s agent. BenStaff does not participate in commissions, fees or overrides or other bonus’ traditionally part of the sales process.

Many businesses feel forced to reduce the decision to who they trust. While this can be good, it exposes your small and large business to the risk that who they choose to trust may not be the right person or not sufficiently knowledgable to tackle the new day.

How is it financial firm doesn’t understand it’s own fees?

It is remarkable that a financial institution like Citigroup is being sued by it’s own employees, who should have known they had fees included in their own 401k’s. How is it that employees who build these plans for use by small business accepted the practice of excessive fees in their customers plans.

Where was the outcry, education to their own customers?

Nearly seven years after their awsuit was filed, the plaintiffs in a “self-dealing” case against Citigroup will be allowed to move ahead with their claims.

On Sept. 30, U.S. District Judge Sidney Stein denied Citigroup’s motion for summary judgment, which would have thrown the case out of court based on Citigroup’s assertion that the statute of limitations had passed.

The suit, brought by former Citigroup employees Marya Leber and Sara Kennedy, is one of a number of excessive-fee cases filed in recent years.

It alleges that Citigroup breached its fiduciary duty by including its own fund options, and those of its affiliates, in the company’s 401(k) plan despite having higher fees than competing funds of equal

Specifically, the plaintiffs allege that Citigroup’s funds “charged higher fees than those charged by comparable Vanguard funds— in some instances fees that were more than 200 percent higher than those of comparable funds.”

Court documents show that in 2003 Citigroup’s investment committee eliminated 10 unaffiliated funds and added the new funds, including three of Citigroup’s own options. Participant assets were then automatically transferred to the new or remaining funds, four of which were Citigroup’s own or Citigroup-affiliated.

Citigroup’s motion to dismiss the case was rooted in the claim that the plaintiffs were aware of both the affiliated status of

the funds in question and their fees more than three years prior to the suit’s filing.

Under the Employee Retirement Income Security Act, if plaintiffs have “actual knowledge of the breach,” then they must

bring their claim to court within three years of acquiring that knowledge.

Stein wrote that the plaintiffs did not have “actual knowledge,” as Citigroup claimed, because Citigroup failed to prove that

the plaintiffs were given data on the fees of comparable funds.

In denying the motion, Stein said Citigroup had “not even attempted to offer evidence that plaintiffs possessed the fee data

“Citigroup employees could have earned millions more for their retirement if Citigroup had followed the law,” alleged Greg

The plaintiffs are expected to ask the court to certify theirs as a class-action claim.

Benefits Pro; link: http://www.benefitspro.com/2014/10/08/judge-rejects-citigroup-bid-to-dismiss-401k-fee-ca