How to Understand a PEO Broker's Fees

Making sure that you fully understand the fees that your PEO broker is charging is an important part of ensuring that you are comfortable with this cost. Perhaps the best way to do so is to simply ask the PEO broker how he gets paid.

The fees for a PEO are worked out similarly to those involved when you obtain health insurance for your employees. These fees are typically paid by the vendor. So, you are going to make payment in one of the following ways:

.    You pay a salesperson only.

.    You pay both a salesperson and a broker, and they split the fees. You do not pay any extra fees if both of these individuals are involved.

.    You pay a broker only.

The important fact to remember is that you do not pay more if a broker is involved, so you shouldn't worry about the broker getting a few percentage points. In fact, if the broker has any skills at all, he is going to save you money in the long run.

Secondly, if you go through the PEO without using the services of a broker, you aren't going to save any money. The PEO is not going to discount your rate because you went directly to the PEO. The PEO is still going to put you in touch with a salesperson, and it is going to pay that salesperson the same commission that a broker would have received. The only difference is that now you are tied to a salesperson who is working for a specific PEO. He is going to channel you directly to it rather than finding you a more affordable option, simply because he doesn't have the ability to shop around for you.

Going through a PEO broker is better than using a salesperson to source your PEO options, because he can look at multiple solutions in order to save you money. If he knows that you are concerned about a specific issue, such as worker's comp, he can search for a PEO that can handle it for you. In many cases, he'll have knowledge of PEOs that are well suited to deal with unique circumstances and can recommend them to your company.

On the other hand, a PEO salesperson has a big disadvantage over a broker simply because he is limited to one particular PEO. Your best option truly is to use the services of a PEO broker. It might cost you the same initially in fees, but the savings are well worth it.