Update on Transparency in Compensation for Employee Benefits Advisors

By, Dan Eisner, Employee Benefits Advisor

We are entering 2026 and there is still no requirement for employee benefits advisors to disclose to clients how and what they are paid.  As a reminder, the Canadian Life and Health Insurance Association (“CLHIA”) introduced its recommended compensation disclosure guidelines for employee benefits advisors in Canada eight years ago, back in January 2018 – commonly known as the “G19” initiative.

That guideline in 2018 would have required all advisors to disclose the compensation they receive for both group benefits and retirement programs to their clients, the employee benefits plan sponsors. The CLHIA ultimately withdrew their recommended G19 guidelines in May 2019 after facing significant opposition from multiple advisors and industry groups across Canada. Advisors who opposed this initiative around transparency promised to replace it with something better, but today, we are still operating with no guidelines in place on an industry-wide basis, nor does there appear to be any progress made on their initiative.Only a few advisors, including ZLC Employee Benefits Solutions, proactively provide transparency around compensation to their clients.

For many business leaders, clear transparency around vendor compensation and a strong understanding of the services those fees cover is essential. Based on my experience, when we are fully transparent with our clients about how and what we are paid, trust grows, engagement rises, and our relationships become stronger. Transparency isn’t just about satisfying regulators, it’s about creating a client relationship where fairness is visible, consistency is expected, and clients feel respected.

Let’s not forget that advisor compensation, particularly if paid by way of commissions tied to insurance premiums, are a part of the employee benefits program costs. As a result, any adjustment to the commission rate paid to an advisor impacts overall plan costs.  For example, a reduction from a 5% commission rate to a 4% commission rate will have a direct 1% reduction on the employee benefits program costs.  A small reduction can still provide a meaningful impact on the bottom line or simply help keep the group benefits program sustainable given that employee benefits inflation has ranged annually from 6% to 9% over the last decade.

Group benefits plan sponsors need to ask themselves if the value of the services provided by their advisors has gone up in relation to any increased level of compensation. When looking into this question, plan sponsors should demand transparency so that they can accurately make this assessment.  They should also consider a number of factors when reviewing their costs. For example, whether the advisor’s cost structure has increased as a result of being part of an industry consolidator with increased overhead? And whether the level of service has gone down if an advisor has directed the plan sponsor to contact the carrier directly with issues and questions, etc. Most employee benefits plan sponsors will not have a problem paying higher commissions if they are getting expanded or enhanced services. Ultimately, without transparency how would a plan sponsor know?

Transparency can feel uncomfortable as it forces conversations that many employee benefits advisors have avoided for years, but today’s clients expect more and deserve more. In my view, all employee benefits advisors should move away from the current industry environment currently lacking transparency. In the long run, it is more beneficial to all parties to accept the reality of potentially having to react to another industry compliance or regulatory initiative in the future, and proactively build a new culture of transparency with their clients.

At ZLC Employee Benefits Solutions, we are proud to say that, while G19 may still be dead, transparency around compensation to us as employee benefits and group retirement advisors continues to be alive and well. We went in a different direction from the broader industry in 2019 as we did not agree with the work of the “anti-G19 advisors group”. We provide full disclosure, formally detailed in our annual renewal reports, so that our clients can assess our “value add”. The feedback from our clients continues to be positive and we will maintain our transparency  so that each of our clients, regardless of size, understands the nature of compensation paid to us and the estimated annual amount.

Should you have any questions about the above, please do not hesitate to contact any member of our team.

ZLC Employee Benefits Solutions is one of the fastest growing advisors for employee benefits and group retirement programs in Vancouver and we are fortunate to have the best people, resources, and clients. We provide value by leveraging one of the most skilled benefits teams – collectively almost 500 years of experience within our team of 21 employee benefits specialists. We have been working with businesses ranging from 3 to over 75,000 plan members for over 40 years.