“The Art of the Deal” would be a good title for a book about the state of the benefits brokerage business in 2018 (if President Trump hadn't already used it). Mergers, acquisitions, consolidations and strategic partnerships continue to dominate the headlines in the employee benefits space.

But is bigger always better? Successful brokers with businesses of all sizes believe it's far more important for a company to understand its corporate values and core competencies, and then deliver exceptional customer service.

“In my opinion, most brokers and consultants work in their business and need to spend more time working on their business,” says Billy Potter, a principal with Snellings Walters Insurance Agency in Atlanta. Potter considers his company, with 65 employees, a small business. One measure of its success: Potter was named the 2018 BenefitsPRO Broker of the Year.

“I do like our size, but the plan is to continue to grow,” he adds. “In the last 10 years, we have quadrupled in size. I believe that many times, insurance agencies grow due to production and not due to structure. For example, an owner of a small insurance firm will grow to support his or her production. I believe our growth has been fueled by both our production and our structure. Having the right organizational structure will accelerate your growth, not hinder it.”

HUB International Insurance Services, with more than 7,000 employees, is at the opposite end of the size spectrum. “We feel that we are positioned very nicely today in meeting the needs of our small, medium and large clients,” says Trevor Garbers, vice president and practice leader for HUB International. “Our plans are to continue our growth through both organic and merger-and-acquisition activity.”

Many of the challenges, opportunities and formulas for success are the same for businesses of all sizes.

“I believe we all face the same challenges today, no matter if you are small, medium or large, with regard to our ever-changing marketplace landscape,” Garbers says. “These changes are happening very quickly and require our entire industry to raise the bar as a whole to best serve the needs of all the stakeholders involved throughout the process.

“The best agencies today are leading people and managing situations as they arise,” he continues. “Talent acquisition, development and retention are playing a bigger role today and will continue to be a driver in agency growth as a whole.”

Brock Insurance Agency in Chattanooga, Tennessee, is a medium-sized company in revenue. Justin White, partner, benefits consultant and cost-containment specialist, says the company is exploring expansion into new markets.

“I think an agency needs to do what makes sense for their core values and beliefs,” he says. “The one constant in this industry is change, and I think the biggest mistake an agency can make is getting to the point where you are comfortable with the number of clients that you may have and say, `I am just going to focus on servicing my clients.' We all lose clients for reasons that are out of our control. We can be doing everything that possibly needs to be done for that client with great results, but maybe they hire a new CFO, merge with another company or hire a new HR director.

“The point is that whether we like it or not, we have to always be in growth mode, which I view as a positive in this industry. It is healthy for the agency and for our clients that we are continuously looking to grow.”

Challenges and opportunities

Although the general path to success is often similar, specific challenges and opportunities can vary by company size. “All businesses struggle with getting `ground truth' from their employees,” Potter says. “I believe we struggle, too, but we just struggle less than most. We have a leadership team that is committed to boundaries and desires accountability. That strategic advantage has fostered a magnificent culture that allows us to operate at a better pace for our clients and the firm's strategic partners.”

Smaller businesses may struggle with misperceptions among current and potential clients.

“The intellectual capital that one consultant brings to the table compared with another is really what should be the focus, “ White says, “not how many locations someone has throughout the country. The last time I checked, a company is only going to deal with one consultant from one office and their support staff.

“I think larger companies tend to focus on the bottom line a little more, which is extremely important, but when that happens, you start looking at production with certain carriers and making sure you are maximizing all revenue opportunities.”

Again, everything comes back to client service.

“The main goal is to find the best solution for each of your clients based on their risk tolerance,” White says, “which means we need to look at all solutions in the market and not just focus in on placing business with certain carriers to maximize revenue. For this reason, I do feel like some of the independent shops are more willing to look outside of the box when it comes to finding the best solutions for their client.”

White says smaller agencies must focus more heavily on continuing education to keep pace with the greater resources available to large companies.

“I think the lure for some agencies to sell to larger agencies is that the resources that the larger agency provides are likely more streamlined and readily available,” he says. “Therefore, the smaller agencies probably have to work a little harder to create their value proposition. The advantage is that if you can create a proprietary solution, you can be very relevant to the client without having to be at a larger agency.”

White makes it a point to practice what he preaches. “Last year, I think I spent nearly 45 days out of the office attending conferences, workshops and retreats with my study group at my own expense,” he says. “I do this because it is very important to stay ahead of the curve with ideas and solutions. If an agent at a larger agency is doing these things as well, then the client is getting excellent representation.

“Conversely if a smaller agency is not doing any of these things, then the client does not have good representation. I have seen larger agencies than ours not do a very good job taking care of a client and I have seen them do a great job taking care of a client. The difference in those two situations is that it is not the same consultant.”

First things first

Brokers of all sizes face a potentially fatal threat: Forgetting what business they are in and why they are in it. Potter quotes business consultant and speaker Simon Sinek: “People don't buy what you do; they buy why you do it.”

“Business owners and employees could all benefit from thinking about the `why,'” he says. “When you have successfully identified the `why' in your life, the `how' and `what' usually present themselves. I believe businesses operate at two speeds—survive or thrive. In my opinion, the businesses that thrive usually have done a great job of identifying their why, which translates into employees who are working out of purpose and not obligation. If you hire an employee who is fulfilled by their work, you will unlock an unbelievable amount of potential, both personally and professionally.”

Growth can be the mark of a flourishing business that serves its clients well and needs to keep up with demand. It also can be the act of a struggling company grasping at straws. The difference lies in whether the growth serves a larger vision and strategy.

“A key piece of advice is to always manage to your core business objectives, and if agency growth is a core key objective, always keep your clients' and policyholders' needs in mind first when building out your overall growth model,” Garbers says. “In many cases, this can be overlooked, which in turn can put both your client and agency at risk. With fewer contracted licensed agents in the market today and fewer entering our marketplace, there are more opportunities than in the past to diversify and broaden your agency's scope of services, which can positively contribute to your overall bottom line.”

Success ultimately is about people, not numbers on a spreadsheet.

“All sizes can achieve an equal amount of success if managed correctly,” he says. “A critical feature is always staying a step in front of the changes and having the ability to adapt to the exact needs of your given client. One size no longer fits all in our marketplace. Clients and policyholders are more involved today, and it's our duty as professionals to meet their needs.”

Potter agrees. “Bigger is not always better. Focus on making your people better, and bigger is inevitable.”

Instant Insights /

When it comes to brokerages, one size does not fit all

More From HR Executive

Related Stories

Recommended For You