Chances are every benefit broker and adviser has thought about their options for survival in the future more than a few times, even in the last week. And regardless of the size of your independent employee benefit brokerage, you’re probably seriously considering at least one of two options — partnering up with other benefit firms, or being acquired by one.

Industry experts agree that brokerage acquisitions are rampant. While this may be a good option for older brokers looking for a succession plan, brokers who want to exit the industry entirely or others who weigh the pluses and minuses and find a sale in their favor, it’s not the only way for a broker to continue their work and service to clients for years to come.

“There are some agencies where it’s going to be meaningful to them to lose their independence, and with that you have to think about the value to the customer and your employees and what that means to your culture,” says Karen Moher, executive director of C2, a partnership of seven larger benefit brokerages across the U.S. “For us, competing in the marketplace is about maintaining that culture.” She says partnership is the route she thinks brokers should go and her two-year-old company is doing it differently than any other.


Moher explains that whether you partner through an official organization like C2 or via unofficial means such as local alliances with other area brokerages, assessing the cultural fit between partnering organizations is the most important criterion for success.

“That’s the part I think a lot of firms stumble on,” she says. “And I think firms that would like to partner with other firms, if you look at it strictly from the business front, the success can be much greater if there’s a cultural fit too.” C2 adds the “due diligence” of thoroughly vetting a firm’s culture before they can join the group. And, Moher’s team never plans on adding more than 10 firms because they pick larger brokers that are ranked first or second in their region that spans at least several states.  With seven members, currently, they have almost all of the U.S. covered and think of themselves as operating as one unified brokerage with the appeal of deep local roots because the firms maintain autonomy.

She adds that evaluation of a cultural fit with a potential acquirer, if a benefit broker decides to go that route, can also make this option more successful for clients and employees when making the transition.

Partnership organizations

While C2 is a selective option with just a few more spots left for partnership, there are other membership groups like UBA and BAN that operate as a formal alliance. They too, however, have restrictions on the number of member firms that can be involved in a given region or area.

Thom Mangan, former CEO of UBA currently serving as president of the human capital practice at Market Financial Group, says partnerships through formal organizations are “critical for independents” and yet, “there are no new ones being created to my knowledge.”

There are different flavors of partnerships also opening up, however. For example, ProSential Group was formed by Don Rowe and Joe Markland to support firms who participate in the technology solutions provided by their other company HRT Services, a consultancy for brokers and advisers.

Don Atherton, a broker at Bashaw & Atherton in the Houston area, is a member of ProSential. He says there are different reasons to join the different formal organizations available but no matter what, “if you’re looking at the survivability of independent firms, you have to look at what your competitors are doing, and to compete, independent firms really need the technology support and geographical footprint that one of these organizations can give you to survive.”

EBA recently reported on yet another partnership tactic, a private exchange. A mid-size benefit brokerage, called MRCT located in St. Louis, recently launched the SmartBenefits Marketplace; instead of keeping the exchange proprietary to their producers alone, the firm is offering other employee benefit brokers in the area the opportunity to also sell their employer clients on to the exchange.

See related: Private exchange innovation: Partner with the competition for success

Perry Braun, executive director of BAN, said in the piece that partnership through a private exchange or other non-merger agreements with brokerages with different skill-sets and assets than your own, is the key for independent brokers to survive.

Register or login for access to this item and much more

All Employee Benefit Adviser content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access