As we approach the mid-point of the year, the next major open enrollment period is only several months away. A number of you have inquired about the possibility of partnering with a private exchange. It’s certainly a complex decision, and private exchanges seem to come in a variety of flavors. But, here are some things that are worth considering.

Today’s employee benefits marketplace is highly dynamic and rapidly changing. Principals of local and regional employee benefit firms face a myriad of strategic and financial challenges. For many, finding a way to survive is at the top of the list of business priorities.

One option is to remain an independent firm; however, that will likely mean going it alone with little assistance from any trusted, knowledgeable resources. The alternative may mean selling or merging with a much larger, more impersonal firm. Or worse yet, it might mean closing the doors and forgetting about the dream of a family-owned business legacy. Think about which scenario is most likely given your business circumstances.

Partnering with a private exchange might be a viable solution for your organization, provided the specific exchange is designed to support local benefit brokers, consultants and advisers while serving employers, their employees and consumers with an entire platform of insurance products, services, information, expertise and resources.

 Consider these reasons to partner with a private exchange:

  • Assure your independence: Partnering with a private exchange will enable you to maintain your independence and your business entity, though it will have morphed; have access to markets; provide continuity of service to your clients, and maintain a local sales presence.
  • Secure access to products and services: It is a reasonable expectation that carriers will restrict access to products to a select group of mostly larger distribution partners in the future. By partnering with a private exchange, you likely will assure that your firm will have access to market competitive products and services, including employer-paid benefits, voluntary benefits, executive benefits, retirement planning services, perhaps HR consulting services and maybe even individual consumer insurance products.
  • Leverage state-of-the-art technology: Most private exchanges provide electronic benefits communication, enrollment, and administrative capabilities to your clients and their employees without the enormous time and capital investment required. Partnering may permit you to provide exceptional connectivity and access to your clients, which will enable you to more effectively compete with larger, better capitalized firms. It should also enable you to accelerate your sales revenue growth.
  • Join a team: Aligning yourself with a  group of reputable, experienced insurance and benefit professionals may provide you access to one or more of the following: agent training, marketing expertise, sales support, state-of-the-art technology, improved service levels, potential operational efficiencies,  and perhaps even self-funded plan expertise.
  • Establish a business continuation plan: By joining a private exchange you may also have the opportunity to transfer ownership of your business to a trusted business partner, if and when it becomes of interest. Of course that depends upon whether you already have a succession plan in place. However, if you are like the overwhelming majority of benefits advisers, we know that is not the case.

There are revenue sharing considerations and number of emotional issues to consider when thinking about the future of your firm; and, change is difficult. But, sometimes you have to partner to prosper.
Kwicien is managing partner at Baltimore-based consulting and advisory services firm Daymark Advisors. Reach him at

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