The future according to young benefit advisers
This is not your father’s benefits market. But what if it is your father’s benefits firm that you work for? At a recent Workplace Benefits Renaissance conference session in Atlantic City, New Jersey, a trio of three young advisers—all of whom have been named Rising Stars by Employee Benefit Adviser for 2018—spoke about the challenges of embracing change while working in agencies owned and run by dad.
Moderated by Eric Silverman, principal and owner of Silverman Benefits Groups, the panel consisted of Derek Rine, benefits practice leader at David Rine Insurance; Taylor Lindsey, partner and owner of Employee Benefits Consultants, and Bob Gearhart, Jr., a partner at DCW Group. What follows is an edited version of their remarks.
Eric Silverman: What keeps you and your family business engaged?
Derek Rine: I wanted to go into the business after seeing agency lifestyle. I started selling home and auto insurance and then went into the commercial property business. Then I shadowed some benefits brokers and saw that commissions were bigger; they had a good life.
When the ACA talks started, some older brokers said, ‘Why would I invest my time and effort relearning the industry and do strategies that would break the status quo?’ They said, ‘If I had the financial ability to get out, why wouldn't I?’
But we saw a lot of opportunity; we got lots of calls.
Taylor Lindsey: The average age for a producer is 55. If they weren't getting out, they were sitting still. But as a member of a family business I wanted to do more than maintain our clients. I saw an opportunity to grow.
It doesn't have to do with age, but if you look at the next generation, this is a career that provides a tremendous amount of opportunity. Seven or 10 years ago, the opportunity was compliance. Now it’s helping employers reduce their healthcare spend and provide higher quality healthcare.
Bob Gearhart Jr: If you look at the M&A model right now, this is the worst time to exit our business and the best time to be in our business. Firms are getting offered six-to-eight-times earnings by companies that trade as high as 24-to-44-times earnings. They are publicly traded, you can look it up.
If you sell for six-times earnings—as soon as the sale closes, you are now trading for 24-times earnings. If you are the business professional that took that deal—is that the person you want to work with? Is that the strategist who is going to guide one of your top 3 expenses? I think it’s ludicrous.
There has never been a better time to be independent. Anytime there is this much change, there is opportunity.
Moderator: What is the challenging part of handling the family dynamic?
Gearhart: For the first year-and-a-half, everything Bob Sr. did was antiquated and wrong and I had no idea because I didn't know what was going on. So, in terms of the family dynamic, coming to the middle ground was probably the most challenging thing we had to do.
As a country, we are proposing insurance solutions to a healthcare supply-chain problem, and we are asking why we have failed repeatedly. As an agency, we’ve had to reframe and think differently, and educate our client base to show them what the root cause of the problem is. We have to show them why changing an ER co-pay is going to do nothing to combat the fact that in the same health system, for the same procedure, you can have a forty-thousand-dollar swing in bill charges
Lindsey: We have had three or four decades of stagnation in this industry. But since the implementation of the ACA, this industry is changing faster than it ever has, and I think it will continue to evolve that way.
One challenge is to never be too comfortable with the solutions you are implementing and the size of your business. You have to make sure that the results you are driving are constantly improving.
Thirty years ago, they didn't have to reinvest back into the business. It was strictly a price-product relationship. I had a difficult conversation with myself to put my commissions on the line and to reinvest back into networks, collaboration, products, technology and strategy.
Moderator: what is the biggest challenge being so young in this industry?
Rine: It's tough being the young person in any industry, because you’re perceived differently. If I claim to be a healthcare consultant or strategist, and I walk into the room and they think I’m 12 years old, and their consultant or strategist has been doing this for 30 years—why in a million years would they ever go with me?
You have to have a different or a better conversation. You need to differentiate yourself, and that is really the same in any industry.
But right now, we’re seeing health costs get exponentially out of control and addressing the root of the problem is paramount. Otherwise, the healthcare industry is going to die.
Gearhart: We just underwent a total legislative overhaul to this industry in 2010 and we're talking about doing it again. With all due respect to the older professionals in the room, you had your shot and at this point it's a commentary on the industry that we're having to overhaul it.
Moderator: How do you feel about the prospect of the Amazon, Berkshire, JPMorgan and now Apple getting into the healthcare pricing game?
Rine: To be honest, it's so early in its development that I don't even know what to make of it. There're definitely some good components, but I think one thing we can do now is to be creative without having to create our own healthcare supply chain. We just have to renegotiate the price of healthcare on our end.
Lindsey: I agree, it's really too early, and they're not giving a whole lot of insight. But I
think they could be a very disruptive force in the industry, if they [work to] reduce the overall cost of healthcare and not just rely on their purchasing power—although that would also be beneficial.
I think that they will use their influence and the publicity they get to drive more change—just like we're doing. We all need to drive the industry future forward.