Do you want to start a health and welfare fund firm? If YES, here’s a complete guide to starting a health and welfare fund firm with NO money and no experience. A health and welfare fund management firm is one of the many business opportunities that can be started in the United States of America.

There is a very large market for health and welfare funds management because employees and business owners both from the private and public sector usually concentrate on their core business hence assigning the management of the health and welfare funds of their employees to professionals.

Please note that you are expected to carry out thorough feasibility studies and market survey if indeed you want to maximize profits in this line of business. Aside from that, it is needful for you to master effective cost controls, ensuring pricing policy is appropriate to enable you stay afloat as a health and welfare funds management firm in the United States of America.

If you have been pondering on starting your own health and welfare funds management firm, but do not know how to go about it, then you should consider going through this article; it will give you the needed guide and direction.

20 Steps to Starting a Health and Welfare Fund Firm in the US

1. Understand the Industry

The Health and Welfare Funds industry consist of legal entities (i.e. funds, plans and programs) that arrange for medical, surgical, hospital, vacation, training and other health- and welfare-related employee benefits, exclusively for the sponsor’s employees or members. Unlike private insurers, health and welfare funds operate on a nonprofit basis for the benefit of members and their sponsors not shareholders.

This is how it works; a traditionally organized health and welfare fund is financed through a fixed monthly or annual contribution made by employees, which does not form a significant part of the total value of the fund. The counterpart funding comes from employer contributions, and the fund is overseen by a board of trustees and is generally managed by fund managers.

Organizations and labor unions can have in-house fund managers or can hire investment management firms just like Fidelity or Vanguard to help them manage their health and welfare funds.

A recent report published by IBISWorld shows that over the five years to 2018, industry revenue is expected to decrease. During this period, a consistent increase in healthcare expenditure (i.e. medical cost inflation) forced industry operators to consistently raise premiums and increase reserves to ensure healthcare liabilities are properly funded.

Combined with stock market volatility, this has also taken its toll on industry profit margins. Industry operators fear that the Patient Protection and Affordable Care Act, if left in place, will discourage union membership, a major driver for the industry, and could reduce revenue.

The Health & Welfare Funds industry is indeed a large industry and pretty much active in most developed countries of the world most especially in the United States of America, United Kingdom, Australia and Canada et al.

Statistics has it that in the United States of America alone, there are about 862 registered and licensed health and welfare funds management firms scattered all across the United States responsible for employing about 11,395 people and the industry rakes in a whooping sum of $190 billion annually. The industry is projected to enjoy -0.8 percent annual growth within 2012 and 2017. No establishment can boast of having a lion share of the available market in this industry.

One thing is certain about starting a health and welfare funds management firm, if you are able to conduct your market research and feasibility studies, you are more likely not going to struggle to secure clients because there are always clients all across the United States who would need your services from to time.

It is important to state that this industry is not saturated. As a matter of fact, in the whole of the United States of America, statistics shows that there are only 862 registered and licensed health and welfare funds management firms. So also, the fact that no player can boast of dominating the market in this industry means that there is room large enough to accommodate newcomers.

Some of the factors that encourage entrepreneurs to start their own health and welfare funds management firm despite the fact that the entry barrier is high could be that the business is thriving and profitable and can be started in part of the country, without the rigors of raising capital to meet certain capital base/capitalization as required by the regulating authorities.

Lastly, with health and welfare funds management firms, you can afford to partner with other smaller firms that are into insurance related services. The bottom line if that if you have a robust network and you are well positioned, you can indeed maximize profits with your health and welfare funds management firm.

2. Conduct Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic composition of those who require the services of health and welfare funds management firms cut across government corporations, corporate organizations, NGOs, business owners cum entrepreneurs with employees who would definitely need good management of their health and welfare funds.

So, if you are looking towards defining the demographics for your health and welfare funds management firm business, then you should make it all encompassing. It should include government organizations, corporate organizations, startups, entrepreneurs, businesses, employees, unions and other professional associations within and outside the city you are operating in.

3. Decide What Niche to Concentrate On

Most health and welfare funds management firms tend to operate general services such as managing medical benefits, prescription drugs, dental benefits, long-term disability benefits, and death benefits exclusively for the sponsor’s employees or members, that is why it seems that there are no niche areas in the industry.

But on the other hand, some health and welfare funds management firms may decide to major in some key areas such as;

  • Providing employee health and welfare benefit plans (excluding pensions)
  • Providing union health and welfare funds
  • Negotiating contracts with insurance carriers using collective bargaining
The Level of Competition in the Industry

Please note that no matter the line of business you decide to pitch your tent in, you are still going to compete with other players in your industry and health and welfare funds management firm business is not an exemption.

The level of competition in the health and welfare funds industry depends largely on how big and organized your business is. Bigger firms work for government agencies and larger corporations and smaller firms usually work for small businesses, employees, unions, other professional associations and startup entrepreneurs et al.

The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or services properly, you will always make headway in the industry.

4. Know the Major Competitors in the Industry

Please note that in every industry, there are always brands that perform better or are better regarded by customers and general public than others. Some of these brands have been in the industry for a long time, while others are known for how they treat their customers and how they choose to brand their business.

These are some of the leading health and welfare funds management firms in the United States of America and also in the globe;

  • The Vanguard Group
  • Fidelity Investment
  • Black Rock
  • UBS
  • Barclays
  • JP Morgan Chase
  • Goldman Sachs
  • AXA Mansard Health Limited
  • Insurance Linked Securities Managers & Funds
  • Baron Funds
  • AAM Company
  • Pacific Investment Management Company
  • Principal Financial Group
  • & W. Seligman & Co.
  • Columbia Management Group
  • Dimensional Fund Advisors
  • Wellington Management Company
  • Harbert Management Corporation
  • Guardian Capital Group
  • New York Life Investment Management
Economic Analysis

When it comes to starting a health and welfare fund management firm, you just have to get your feasibility studies and market research right before venturing into the business. It is good to mention that health and welfare funds management business is not for rookies; it is for professionals who have gathered the required experience to handle such business. But an aspiring entrepreneur can learn ropes on the job. You just have to be careful so that you won’t invest people’s contributions wrongly.

Starting this kind of business would require that you raise plenty of capital to meet up with your financial obligations.

You will be expected to hire the services of experts that will help you with comprehensive economic and cost analysis and the profitability of the businesses within the location that you intend launching it. If you get your economic and cost analysis right before launching the business, you may not have to stay the long before you breakeven.

5. Decide Whether to Buy a Franchise or Start from Scratch

If you are looking towards starting a health and welfare funds management firm, you would have to start from the very scratch because you can hardly get the franchise of a health and welfare funds management firm to buy.

Starting a health and welfare funds management firm from the scratch might be stressful, but it is worth the stress. You should just try as much as possible to secure a good facility, hire competent fund managers, come up with good investment strategies and then leverage on every marketing tool within your disposal to market your business.

Please note that most of the successful health and welfare funds management firms around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.

6. Know the Possible Threats and Challenges You Will Face

Rising healthcare costs have led companies to cut healthcare benefits, stunting revenue growth and increasing healthcare costs and competition are expected to constrain profit margins for health and welfare funds management firms.

The truth is that if you decide to start your own health and welfare funds management firm today, one of the major challenges you are likely going to face is the presence of well – established health and welfare funds management firms who are offering same services that you intend offering. The only way to avoid this challenge is to create your own market.

Some other threats that you are likely going to face are unfavorable government policies and the arrival of a competitor within your location of operation and global economic downturn which may affect your ability to attract small businesses that are already pulling out from health and welfare funds management schemes. There is hardly anything you can do as regards these threats other than to be optimistic that things will continue to work for your good.

7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)

As it relates to starting a health and welfare funds management firm in the United States of America, the legal entity you choose will go a long way to determine how big your business can grow; some health and welfare funds management plan firms design their business and services for regional market, some for national market, while others for international market via establishing their offices in other countries.

You can either choose a general partnership or limited liability company for your health and welfare funds management firm. As a matter of fact, if your intention is to grow the business and have clients both corporate and individual from all across the United States of America, then choosing general partnership is not an option for you. Limited Liability Company, LLC will cut it for you.

Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your health and welfare funds management firm; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.

If you take your time to study the various legal entities to use for your health and welfare funds management firm, you will agree that Limited Liability Company is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.

The truth is that when it comes to upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your health and welfare funds management firm so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.

8. Choose a Catchy Business Name from the ideas Below

When it comes to choosing a name for a business, it is expected that you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents.

So, if you are considering starting your own health and welfare funds management firm, here are some catchy names that you can choose from;

  • First Nation® Health & Welfare Funds Management Firm, LLC
  • Green Life® Health & Welfare Funds Management Firm, Inc.
  • Head Start® Health & Welfare Funds Management Firm, LLC
  • Grace Field® Health & Welfare Funds Management Firm, Inc.
  • Health Assurance® Health & Welfare Funds Management Firm, LLC
  • Triple Star® Group
  • Bob Iverson Funds Management, LLC
  • Premier Fund Group.
  • Larry Watkins® Health & Welfare Funds Management Firm, Inc.
  • Excel® Health & Welfare Funds Management Firm, Inc.
  • Viola Stanton® Health & Welfare Funds Management Firm, Inc.
  • Stanley Hensel® Health & Welfare Funds Management Firm, Inc.

9. Discuss With an Agent to Know the Best Insurance Policies for You

In the United States of America and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is imperative to create a budget for insurance policy covers and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your health and welfare funds management firm.

Here are some of the basic insurance policy covers that you should consider purchasing if you want to start your own health and welfare funds management firm in the United States of America;

  • General insurance
  • Risk Insurance
  • Credit insurance
  • Deposit insurance
  • Financial reinsurance
  • Lenders mortgage insurance
  • Health insurance
  • Liability insurance
  • Workers compensation
  • Overhead expense disability insurance
  • Business owner’s policy group insurance
  • Payment protection insurance

10. Protect your Intellectual Property With Trademark, Copyrights, Patents

If you are considering starting your own health and welfare funds management firm, usually you may not have any need to file for intellectual property protection. This is so because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.

11. Get the Necessary Professional Certification

Apart from the results you produce as it relates to return on investment (ROI), professional certification is one of the main reasons why some health and welfare funds management firms stand out. If you want to make an impact in the health and welfare funds management firm industry, you should work towards acquiring all the needed certifications in your area of specialization.

These are some of the certifications you can work towards achieving if you want to run your own health and welfare funds management firm;

  • Certified Financial Expert (CFE)
  • Certified Investment Management Analyst (CIMA)
  • Certified Benefits Professional – (CBP)
  • Degree in Finance Related Courses

Please note that you can successfully run a health and welfare funds management firm in the United States and in most countries of the world without necessarily acquiring professional certifications as long as you have adequate experience cum background in the industry.

12. Get the Necessary Legal Documents You Need to Operate

The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized especially a business such as health and welfare funds management firm. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.

These are some of the basic legal documents that you are expected to have in place if you want to legally run your own health and welfare funds management firm in the United States of America;

  • Certificate of Incorporation
  • Business License and Certification
  • Business Plan
  • Non – disclosure Agreement
  • Employment Agreement (offer letters)
  • Operating Agreement for LLCs
  • Insurance Policy
  • Consulting contract documents
  • Online Terms of Use
  • Online Privacy Policy Document
  • Apostille (for those who intend operating beyond the United States of America)
  • Company Bylaws
  • Insurance Policy
  • Memorandum of Understanding (MoU)

13. Raise the Needed Startup Capital

Starting a health and welfare funds management firm can be cost effective. Securing a standard office in a good business district, equipping the office and paying your employees are part of what will consume a large chunk of your startup capital.

When it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.

Here are some of the options you can explore when sourcing for startup capital for your health and welfare funds management firm;

  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for loan from your bank
  • Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
  • Source for soft loans from your family members and your friends

14. Choose a Suitable Location for your Business

Health and welfare funds management firms and most alternative financial services based businesses require that you see physically with your clients hence it must be located in good location; a location that is prone to both human and vehicular traffic and a location that is at the epicenter of a business district if indeed you want to attend to loads of clients and maximize profits from the business.

If you have taken your time to study health and welfare funds management industry, you will realize that the businesses are willing to pay expensive rents in order to stay in a busy business district; a place where business and financial activities are at their peak.

It cannot be overemphasized that the location you choose to open your health and welfare funds management firm is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location. If you make the mistake of renting or leasing a facility in a not too visible or hidden location simply because it is cheap, then you must be prepared to spend more in promoting the business and perhaps giving direction to potential clients.

It is important to note that a business facility in good location does not come cheap hence you should be able to allocate enough fund for leasing/renting in your budget. If you do not know how to pick a location for this business, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city and perhaps country you intend starting your health and welfare funds management firm.

15. Hire Employees for your Technical and Manpower Needs

There are no special technology or equipment needed to run this type of business except for customized fund management software apps, other financial related software apps and social media management software applications. You will also need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves).

When it comes to choosing between renting and leasing an office space, the size of the health and welfare funds management firm you want to build, and your entire budget for the business should influence your choice. If you have enough capital to run a standard health and welfare funds management firm, then you should consider leasing a facility for your office.

As regards the number of employees that you are expected to start the business with, you would need to consider your finance before making the decision. Averagely, you would need a Chief Executive Officer or President (you can occupy this role), an Admin and Human Resource Manager, Fund Manager, Risk Manager, Accountant, Business Development Executive/Marketing Executive, and Customer Service Officer or Front Desk Officer.

You would need a minimum of 6 to 15 key staff to effectively run a medium scale but standard health and welfare funds management firm in the United States of America.

The Service Delivery Process of the Business

The way health and welfare fund management firms work varies from one agency to another, but ideally, a health and welfare funds management firm is expected to first and foremost build a robust company’s profile before sourcing for clients to hire for their service.

A health and welfare funds management firm goes all out to look for companies that are ready to arrange for medical, surgical, hospital, vacation, training and other health- and welfare-related employee benefits. Once they are able to get members as the case may be, then they map out contribution requirements and what they expect to get in return.

It is important to state that a health and welfare funds management firm may decide to improvise or adopt any business process and structure that will guarantee them good return on investment, efficiency and flexibility; the above stated business cum services process is not cast on stone.

16. Write a Marketing Plan Packed With ideas & Strategies

As a health and welfare funds management operator, you would have to prove your worth over and over again before attracting larger corporations to enroll their workers in your scheme. So, if you have plans to start your own health and welfare funds management firm, it will pay you to build first build a successful career in the alternative financial services industry.

Businesses and organizations will only enroll their employees under your health and welfare funds management firm if they know that they are going to get good returns on their investment.

So, when you are drafting marketing plans and strategies for your health and welfare funds management firm, make sure that you create a compelling personal and company’s profile. Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to the alternative financial services industry. This will help boost your chances in the market place when sourcing for clients/investors.

Here are some of the platforms you can utilize to market your health and welfare funds management firm;

  • Introduce your business by sending introductory letters alongside your brochure to all the corporate organizations, startups, small, unions, other professional associations and medium scale business community in the location you intend operating your business
  • Advertise your business in relevant financial and insurance magazines, radio stations and TV stations (make yourself available for health and welfare funds management and other related financial services related talk shows and interactive sessions on TV and Radios)
  • List your business on local directories/yellow pages
  • Attend international health and welfare funds management expos, seminars, and business fairs et al
  • Create different packages for different categories of clients in order to work with their health and welfare funds contribution
  • Leverage on the internet to promote your business
  • Join local chambers of commerce and industries around you with the aim of networking and marketing your services; you are likely going to get referrals from such networks.
  • Engage the services of marketing executives and business developers to carry out direct marketing

17. Work Out a Reasonable Pricing for your Services & Products

One key factor that will help you get the right product pricing for a health and welfare funds management firm business is to ensure that you source your working capital from sources that won’t put pressure on you or give you high interest rate.

Another strategy that will help you offer your services at the right price is to ensure that you cut operational cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products and services.

You can also try as much as possible to work with independent contractors and marketers, it will help you save the cost of paying sales and marketing executives.

18. Develop Iron-clad Competitive Strategies to Help You Win

The health and welfare funds management firm line of business is competitive, and you must come up with a unique and highly creative strategy to be able to outsmart your competitors in the industry. Part of what you need to do to stay competitive in the industry is to continue to create better health and welfare packages and effectively manage resources under your control.

Organizations and people will always run to you if they know that you have a better option especially as it relates to producing results (giving them good returns on their investment and guaranteeing them of easy access to the services you offer.

Another strategy that you can adopt is to ensure that your organization is well positioned, key members of your team are highly qualified and certified as it relates to their job roles.

19. Brainstorm Possible Ways to Retain Clients & Customers

When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customer retention and perhaps attract new customers is to produce results and satisfy your customers always. If your customers are satisfied with your services delivery, they can hardly source for alternative service provider or products.

Statistics has it that one of the major reasons why client’s source for alternative service providers is when there is a drop in quality. Another reason is poor customer service.

If you can continue to improve on your service delivery, then you won’t struggle to maintain loyal customers and part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands.

When it comes to managing your customers, and building loyal clientele base, you should purchase a customized CRM software. With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all, you can easily receive compliant and feedback from them).

20. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity

If you are in business and you are not deliberate about boosting your brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be.

One of the secrets of larger corporations is that they are willing to spend fortunes to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.

If your intention of starting a health and welfare funds management firm is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on the promotion and advertisement of your brand.

In promoting your brand and corporate identity, you should leverage on the print, electronic and social media (the internet). As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brands, besides it is pretty much effective and wide reaching.

Below are the platforms you can leverage on to boost your brand and to promote and advertise your business;

  • Place adverts on financial magazines and related newspapers, radio and TV stations.
  • Encourage the use of word of mouth publicity from your loyal customers
  • Leverage on the internet and social media platforms like; YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Google+ and other platforms to promote your business.
  • Ensure that you position your banners and billboards in strategic positions all around your city
  • Distribute your fliers and handbills in target areas in and around our neighborhood
  • Advertise your business in your official website and employ strategies that will help you pull traffic to the site
  • Brand all your official cars and ensure that all your staff members and management staff wears your branded shirt or cap at regular intervals.
Ajaero Tony Martins