Clients are looking more than ever for their benefit broker to become a trusted adviser, rather than an insurance salesman. For those brokerages willing to take up the charge, developing strategic partnerships can allow them to compete with anyone.

It’s simple; partnering with outside firms enables a larger breadth of services at a lower capital investment, says Dario A. Campolattaro, CEO of Leesburg, Va.-based Kelly Insurance. At his small agency a little more than an hour west of Washington, Campolattaro says partnering gives him the opportunity to offer his clients services that a larger agency could do in-house.

Through partnerships with companies such as HR consulting firms, retirement advisers and compliance-oriented law firms, small shops can afford to associate their brand with a bigger footprint.

For Scott Haile, founder and partner at Scott Haile & Co., an employee benefit brokerage in small-town McMinnville, Tenn., his partners change year-over-year, but these days most are focused on helping with overall compliance and consulting on the Affordable Care Act. “We can raise our level of being competitive,” he says.

It is about maintaining a livelihood in this changing health care landscape, adds Luke Murray, founder of Aspire Benefit Services. The Dublin, Ohio-based general agency partners with benefit firms. “In this market, group brokers are expected to a do a lot more with less, and they need partners to take some of the workload.”

Value-added
In the last five to 10 years there has been an increased demand in what clients want from their broker, Campolattaro says. Now looked at as the first point of contact for HR, compliance, benefits and other types of insurance, “to stay competitive in the marketplace, you need to provide those services.  … I don’t know if [clients] appreciate it — but they expect it,” he adds.

For Sean Michelsen, president and owner at Charlotte, N.C.-based The Michelsen Group, Inc., that has been true more than ever recently. While meeting with new clients, he and his employees always ask their clients what issues are affecting their business. The issues that come up tend to focus on HR, turnover, attraction and retention and performance management — all “outside the traditional insurance agency realm,” he says.

At first, Michelsen worried about becoming an expert in these varied fields. “It was very tough in the beginning, trying to figure out internally, but we settled that we don’t need to be perfect in everything,” he says, adding that clients are very responsive to all these partnerships.

For example, one of Michelsen’s clients mentioned having issues with his salespeople not meeting their sales goals. Michelsen and his team interviewed three sales training organizations on the clients’ behalf. The client implemented one of those sales training organizations, and now Michelsen brings that organization to other clients who mention the same sales issues.

Such partnerships help both the broker and the partner, says Shami Sheikh, senior vice president, LifeWorks, North America, at Ceridian in Toronto. His company works with many brokerages. For the client, it gives them access to a service that they would not be able to achieve on their own. For Ceridian, it provides ease of contracting. The broker gets a more efficient business process. “These are very important relationships,” Sheikh says.

Making it work
The first question two companies should ask themselves when looking to form a partnership is, “What is the purpose of the union?,” says Monique Reece, founder and CEO of MarketSmarter, a business growth consultancy in the Denver area.

Common pursuits include bringing in increased revenue, expanding market share into a specific geographical region and capturing new customers, or a new demographic group. The parties involved need to ask themselves, “What’s the purpose, and how will this company help me to achieve that?” she says.

Culture is a huge consideration when deciding to form a strategic partnership — and it is one that is often overlooked, says Reece. “If you look at partnerships that fail, or mergers and acquisitions that don’t work, that’s typically the reason why,” she says. “There’s just not a good fit between how one company does business and how another does business.”

At Ceridian, this often comes down to goals. Ceridian typically looks for a broker partner with a growth or retention-focused mentality. “You have to understand their goals,” Sheikh says. “Once you establish their goals, you can help them do anything.”

Things to consider, says Reece, are, first, is there a revenue number that both parties agree upon? “It’s really good to have real, clear expectations going in — in terms of here’s how much additional revenue we might generate together. Here’s how we’re going to do it,” she says.

Second, it is critical to define exactly who the people are at each organization who are responsible for making it happen, Reece adds.

She cautions advisers interested in establishing a partnership to pay attention to support needs as well, such as proper training and front- and back-office support, if necessary. Training is one of the most overlooked factors, in that it is often done initially, but not followed up on, or it is only provided to one or two departments, instead of the whole company, Reece says.

Partnerships that begin with the best of intentions often fall apart when things don’t happen as planned, Reece says. It often comes down to lack of detail. To combat this, “really develop a marketing plan for that strategic partnership that defines what each party is responsible for and exactly what they’re going to do and how they’re going to do it,” she says.

It is important to “make sure both companies really have some skin in the game,” Reece adds. This means defining these detailed plans in writing and revisiting them on a quarterly basis, “to see what you said you were going to do — and if you did it,” she says. It’s also the time to reassess marketing and training needs.

A business partner
In the end, North Carolina broker Michelsen says that while the words trusted adviser get thrown around a lot, “we really wanted to be somebody our client could turn to, and we are becoming more of a strategic partner that isn’t limited to insurance products. … Our clients look to us more as business partners.”

Haile, the Tennessee broker, says that his agency will never go back to just talking to clients about insurance. “I never dreamt what I’m doing now is what I would be doing now,” he says.

Everywhere Haile goes — from the grocery store to the gas station — people are stopping him and saying, “You know about Obamacare?” and asking him for help. “Without these [strategic partners] and my commitment to learn more, I wouldn’t be able to fulfill those questions or needs,” he says.

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