How three young advisers are bucking the benefits establishment

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U.S. benefits brokers are… well, they’re old. Fifty-six years-old on average, according to Independent Insurance Agents & Brokers of America. So benefits agencies and brokerages have spread their arms wide, eager to welcome young advisers to the industry and repopulate their ranks.

Too bad their clients aren’t following suit.

Many young advisers say they’re struggling to get started, because too many potential clients are turning them away due to their age or lack of industry experience. These employers prefer to continue working with brokers with whom they have long-standing relationships and, in many cases, family ties or personal friendships.

So common is this situation that younger brokers have given it a name. They refer to it as “good ol’ boy syndrome.”

It’s especially a problem for young advisers seeking to launch their careers without the support of a family-owned business or an established firm. While many young brokers entering the industry work as a part of a family run business, brokers such as Mark Fox, now vice president of Collateral Benefits Group in Birmingham, Alabama, take a less well-traveled route.

Fox first started in the insurance industry as a broker servicing representative with Aflac. But just a year later, he made the gutsy decision to open his own benefits brokerage, Benefits Negotiator. “I was always told, ‘there’s money in insurance,’” he recounts. “When I was at my Aflac job, I would meet with brokers who would come to lunch in their big fancy cars.”

It did not take Fox long to learn that getting a share of that insurance money was not going to be as easy as it looked. A year-and-a-half after going out on his own, Fox says he was ready to throw in the towel. “The cost of acquiring a new client did not justify what I would be paid,” he sighs. “I was on the verge of quitting the insurance industry and finding something different.”

Leading questions

It was at this point that Fox realized he needed to completely alter his business model. To get past good ol’ boy syndrome, he needed to ask prospects leading questions that would help them realize when their current broker was providing less than optimal service. That meant moving to a fee-based system and behaving more like a consultant and less like a salesman who was just trying to push products.

“At the time, the Affordable Care Act was the big unknown,” Fox recalls. “Since no one really knew all the laws and regulations that the ACA entailed, I didn’t need to have all the answers either.”

He just needed the questions. Fox began asking prospects what their current broker was doing to prepare them for the ACA’s regulations and compliance demands. If the employer didn’t know, Fox suddenly had a shot at the business, because he at least was raising the issue.

Braden Monaco, a partner at Blue Horizon Benefits in Danvers, Mass., says employers tend to be blindsided, if their adviser isn’t engaging with them on a regular basis.

Back in 2008, when the ACA first started going into effect, “I used to always hear older advisers bitching and complaining about how the industry was changing,” Monaco says. “But I always saw the changes as an opportunity to bring something new to an industry that has become very complacent.”

Like Fox, Monaco entered the industry in his mid-20s and with very little experience. To convince employers to become clients, he would ask them, how would they feel if, instead of paying their current broker’s commission once a year, they had to write him a check for his services every month?

They got his point, which was they really weren’t being serviced throughout the year and were only dealing with their broker at renewal time. Monaco began inroads by making it clear that he was there to do the job all year month in and month out.

Asking prospects perceptive questions also helped Connor Gunn make the move from selling medical devices to advising clients about benefits.

Now an employee benefits consultant with Fisher Brown Bottrell Insurance of Hattiesburg, Mississippi, Gunn realized that the way for a young adviser like himself to win business was to get inside his prospects heads. But instead of asking them about regulations and compliance, he asked them questions about their thought process.

“I once had an employer say that he hoped he could get a good renewal at the end of the year,” Gunn remembers. “I responded by asking him if he thought hope was a good business strategy.”

That question led the employer to eject Gunn from his office, but undeterred, Gunn later returned with yet another question. Why, he asked him, would he continue to pay his current broker just because he was his friend? “If the broker wasn’t bringing anything new to the table or saving the client money, why keep them around?” Gunn wanted to know.

Gunn got the answer he was looking for. The employer is now his client and working with him to switch from a fully-insured to a self-funded health plan.

To be continued.

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