BenefitMall sees high growth potential after Carlyle Group acquisition

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Founded in 1979, BenefitMall is the largest national general agency and the second largest privately-owned payroll services provider in the U.S. The Dallas-based firm serves some 200,000 small and medium-sized employers through a network of 20,000 benefit advisers.

At the close of 2017, BenefitMall was acquired by The Carlyle Group, a global alternative asset manager with $174 billion AUM, and named former president Scott Kirksey as its new CEO. To find out more about what these changes bode for the benefits provider and its adviser network, Employee Benefit Adviser sat down with Kirksey for a wide-ranging discussion. What follows is an edited version of that conversation.

Employee Benefit Adviser: What are your growth prospects now that you’ve got Carlyle’s financial backing?

Scott Kirksey: We’re excited about the growth opportunities in front of us. We have a very clear strategy and set of investment priorities, which we’ll begin executing immediately.

Under the investment group led by Austin Ventures, our previous financial sponsors, we were not investing heavily in growth. Now, the place where we’ll pull the lever the hardest will be to expand our sales team and enter new geographic markets. In addition, we’ll enhance our offerings to small businesses.

Our average employee group is 20 employees, and this small-group market is where we put a lot of our focus. Our work with this segment is very valuable to the carriers we represent, since it’s so expensive for them to build their own distribution channel and recruit and service the brokers who serve this market.

We recognized early on that the data that a small business has to maintain is becoming more and more cumbersome. But if we can integrate and pull it all together — payroll, HR and benefits — then it becomes increasingly valuable not only to that small business, but also to the carriers and brokers who are our partners. This sort of one-stop solution is something in which we’ll be investing heavily.

Also see:2017’s top 50 benefit brokerages in the large-group market.”

EBA: Who are your chief competitors and how do you differentiate your offering — — from the platforms and services that they provide?

Kirksey: We have GA competitors and payroll competitors, but there is no other national GA that also offers payroll. ADP and Paychex are competitors on the payroll side, but while they offer benefits, they offer them directly to the employer. So they’re in competition with the broker, whereas we offer our benefits through our network of trusted advisers.

On the GA side, we’re the only national GA with a local presence in 40 markets. Thirty-five percent of our brokers sell outside the state in which they reside; these brokers are among our fastest growing, and we are obviously very well situated to help them grow their business.

EBA: How big a role does technology play in all this? How does it contribute to your competitive advantage?

Kirksey: Technology is a big part of our business. We have always been a technology leader in payroll services — and now increasingly in HR and benefit services. But technology by itself doesn’t cut it. To be of value to a small business, software has to be backed up by service.

Here’s an example: In the HR world — particularly as it pertains to all the constantly changing legislation and regulations — our knowledge base and the sheer breadth of our service organization allows a small business to leverage that technology solution. They’re going to call and say, ‘I’m firing someone’, or ‘I’m letting someone go. What are all the things I need to do to comply with COBRA and the other rules?’

Even though the software is there, they need that service. They need to be able to reach somebody that has the experience and credibility to get them comfortable with what they need to do — and leave them with the confidence that the issue’s been resolved.

No matter how easy the software is to use — and ours is pretty easy — this is still something that these employers only do on occasion. So, they need that interaction.

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Payroll services Payroll M&A Benefit management Benefit strategies