Why should a benefits adviser pay close attention to forging strategic alliances? There are quite a few very good reasons.
Forging the right alliances can help an adviser adapt to market conditions, enhance his (or her) value proposition and broaden his client offerings without having to build or buy additional resources and skills. Longer term, the right alliance partner might be a great merger candidate at some point in the future, and such an alliance could serve as an adviser’s personal succession plan or exit strategy.
But who best to partner with? That will largely depend on each individual adviser’s strengths, weaknesses and opportunities. Evaluating potential candidates is about finding business partners with complementary practices. This way both businesses benefit from not having to spend time or money building new capabilities.
An ideal alliance partner should possess at least some of the following characteristics:
- Complementary domain expertise
- Synergistic products or services
- Different sales channels or markets
- Non-duplicative carrier relationships
- Compatible technological capabilities
- A compatible management style, business model, structure and corporate culture
- A shared vision for the future of the businesses
The nature of an adviser’s business will largely determine who would be the ideal alliance partner, and evaluating potential partners is largely about determining which ones have complementary or synergistic business practices.
For example, if an adviser currently offers group benefits but is missing out on opportunities to offer voluntary benefits, partnering with a firm that specializes in these product lines might make sense. On the flip side, a prospective partner may be looking to affiliate with a larger firm that has benefits plan design expertise, access to a different set of carrier relationships and a large number of group benefits clients, who are liable to have coverage gaps that could be satisfied by voluntary benefits offerings. Working together would create synergies for both of these businesses, since each stands to reap substantial benefits from the other’s network and expertise.
Here are some of the key strategic benefits that can result from a strong strategic alliance:
- A stronger management team
- New skills and expertise
- A broader product set or service offering
- Greater top-line revenue potential and accelerated growth
- Greater operational efficiencies
- Improved profitability
- More lucrative carrier contracts and contingencies
- Enhanced technology capabilities
- A future merger candidate
- A potential exit strategy for one of the advisers
Advisers shouldn’t be afraid to “think outside the box” when it comes to considering potential alliance candidates. Today’s competitor or vendor may be tomorrow’s ideal strategic partner. The key question is, what set of skills and services will the adviser’s clients be looking for in the future?
Yesterday’s message will not resonate amidst today’s clamor about reform and change, and advisers need to position themselves as a change agents, capable of providing prudent advice and expertise during a period of uncertainty. This requires a certain amount of adaptation and change, keeping in mind that Darwinian logic applies to the benefits industry: The strong and the prepared will survive.
Speed is essential, but it’s also relative. To survive, an antelope doesn’t have to be faster than a lion; it just needs to be faster than some of the other antelopes in the herd. To rapidly adapt to the onrush of new market realities, advisers should consider forming strategic alliances.