The Hidden Costs of Going Direct to a PEO vs an Insurance Broker
When small and mid-sized businesses look to streamline HR and provide robust employee benefits, a Professional Employer Organization (PEO) can be a great solution for employers to consider, but with so many options available it can be difficult to understand the key differences between them all. While PEO’s offer potential advantages, there can be disadvantages and even significant hidden costs, especially when choosing to go directly to a PEO without someone to guide you. Understanding these implications is crucial when determining the best fit for your company, and just as important is how you choose your PEO.
Exploring Your Options for Shopping the PEO Market
What is a Professional Employer Organization (PEO)?
A PEO provides bundled services that typically include payroll, HR, and access to benefits plans through a co-employment model. PEOs offer convenience, especially for lean teams, and often appear attractive due to promises of administrative relief and buying power. However, engaging directly with a PEO locks your business into their systems and pricing, without the benefit of independent oversight. How you choose a PEO matters just as much as which one you choose.
Working with a PEO Broker
PEO brokers offer flexible and tailored employee benefits solutions. A broker works on your behalf, helping you compare multiple providers, negotiate rates, and ensure compliance with California's complex regulations. Unlike working directly with representatives of any given PEO, a broker is not tied to a single provider or platform, allowing for a more objective and strategic benefits design. Most importantly, the right broker can also help you shop among multiple PEOs, helping you avoid costly mistakes and hidden fees.
Direct to a PEO vs Working with a PEO Broker:
What You Need to Know
Each PEO has their own sales teams that will look for potential employer clients for their services. They are hard working and know their product in and out, but because they only work for one PEO they are inherently less able to provide you a full 360 degree view of the entire marketplace. Brokers, on the other hand, serve as advocates who are only accountable to you and your organization. We help you assess all available options, including PEOs, and build a strategy that supports your goals.
Without a broker, many employers unknowingly pay more, are locked into systems that don't serve them long term, or miss out on opportunities to tailor a benefits strategy to their workforce. AEIS brings the expertise to help you compare both traditional and PEO options objectively.
The Hidden Costs of Going Direct to a PEO
Huge Time Savings
When you go direct to a PEO, you're personally responsible for managing the intake process with each one individually. That means providing financials, employee census data, and answering a battery of operational questions for each and every provider you're evaluating. In contrast, working with AEIS streamlines this process immensely through a single intake process. We then source proposals from multiple PEOs and compile a clear comparison spreadsheet and summary to help you evaluate them all side by side.
Higher Admin Fees and Benefits Cost
PEOs typically include administrative costs and markups on benefits within their bundled fees. These costs are often opaque, and without comparison to traditional brokered plans or other PEOs, it's easy to pay more than necessary. Without an advocate to help benchmark pricing, companies may unknowingly accept inflated costs with limited recourse.
Brokers like AEIS provide transparency and leverage across multiple PEOs. We identify hidden line items, spot inefficiencies, and help employers secure more cost-effective solutions. Our clients routinely save both time and money by avoiding overpriced or misaligned PEO proposals.
The Risk of Choosing the Wrong Model Without Objective Expert Guidance
Every business is different. A model that works for a tech startup may not be suitable for a manufacturing firm. Going directly to a PEO means making that decision without independent advice from people who know the marketplace. That puts your business at risk of choosing a model that may lead to higher long term costs, limited flexibility, or administrative headaches.
AEIS serves as an additional layer of protection, advocacy, and insight. We highlight pros and cons of each PEO relative to your goals and help ensure the model you choose today continues to work for you tomorrow
How to Choose the Right Benefits Strategy for Your Business
Choosing between a broker and a PEO shouldn’t be a guess. Ask yourself:
Do you want to compare multiple providers objectively?- Is it important to have long term flexibility?
- Do you need support understanding compliance in California?
- Are you looking to avoid time-consuming intake processes?
- Do you want to ensure you're not overpaying or locked into the wrong model?
If the answer is yes to any of the above, working with a broker who can present both PEO and traditional plan options is likely the best path.
Partner with AEIS to Simplify, Compare, and Save
At AEIS, we help clients explore all their employee benefits options, whether that means quoting with a traditional insurance provider, shopping the PEO market, or a hybrid approach. Because we maintain relationships with all major PEOs and group health insurance providers in California, we deliver a comprehensive view of your options.
One intake form gets you access to potentially dozens of PEO proposals, professionally summarized and benchmarked. More importantly, you get a trusted advocate who helps explain trade-offs, flag potential risks, and ensure your strategy aligns with your unique business needs.
Let us save you time, cut through the noise, and deliver a strategy that makes sense for your people and your bottom line.
Disclaimer: Any information related to compliance, laws and regulations, or other subject matters in this blog is intended to be informational and does not constitute legal advice regarding any specific situation. The content of this blog is based on the most up-to-date information that was available on the date it was published and could be subject to change. Should you require further assistance or legal advice, please consult a licensed attorney.
