Partnership program gives lifeline to small CA brokerages

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When a benefit broker friend of Jordan Shields was about to undergo quadruple bypass surgery about three years ago, he worried about surviving the procedure and leaving behind a wife and two grown sons. But he also wondered what would happen to his clients if he died.

It proved to be an epiphany for Shields, co-founder of Arrow Benefits Group (ABG), the third largest HR/benefits firm in the North Bay outside San Francisco and a United Benefit Advisors partner. So he created a partnership program on the spot that allowed smaller brokers like his ill friend to incorporate their practice into his until they retired by choice or involuntarily, at which time ABG would buy out their book of business.

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“Like a lot of independent brokers who have an entrepreneurial spirit, it’s rather difficult for them to face their mortality — even when they’re being wheeled out in a hallway corridor” en route to a major operation, Shield says.

The Arrow Umbrella Program developed by Shields and ABG co-founder Keith McNeil seeks to protect fellow brokers from several threats. They include an overheated mergers and acquisitions market that favors large and midsize firms, market devaluation of small group business, decreasing commissions and a reduction in the number of firms with which carriers will work.

In essence, it provides sufficient capital to expand business, a comprehensive system for handling renewals and realistic succession plan that benefits not only owners, but also their employees and clients.

Increased clout
The umbrella program also has expanded ABG’s reach and client base across California and allows the firm more clout when talking to carriers. New partners include GSI Solutions in Santa Clara, Goodman Benefits & Insurance Services in Novato, Bob Copeland Insurance Services in Larkspur, Mission Benefits in Sunnyvale, Anderson Financial Solutions & Insurance Services in Santa Barbara, Executive Financial Systems in Los Angeles, Brody Walsh and Brody in San Francisco, and Entra Insurance Services in Walnut Creek.

Two more partners are expected to come on board before the end of the year. Each deal is customized to fit the needs of that particular broker, who Shields says is generously compensated. Arrangements include some bonus sharing. The firms being targeted typically have anywhere from one to three staffers and limited resources in terms of the tools and services they provide their clients.

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McNeil describes them as “largely experienced producers” without huge books of business who can maintain their independence despite being affiliated with UBA, the nation’s leading independent employee benefits advisory organization with more than 200 offices throughout the U.S., Canada and United Kingdom. He says UBA “has been very supportive of the idea” and says the objective is to find mutual strength in numbers.

Shields adds that there’s no need to expand the umbrella program beyond California, “which by itself is already a huge market… We’re not looking to rapidly grow this. We’re looking to target people we’ve known for a long time or know by reputation, or served with on various boards and so on. A lot of our relations to these people go back 20 to 30 years.”

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