Changing focus of benefits firm

[Madden9]

I am a one-person agency focused on employee benefits. I work with employers from 10 to 100 employees.
80% of my business is group benefits, and 20% is life, disability, annuities.

I am reasonably convinced that the small group market is not going to survive beyond the next 10 years. If it does survive, it will likely be a mess with all the different funding models and individual plans.

As of right now, my plan is to maintain my client base, and only take referrals moving forward. I would like to start focusing on a different area while I still have the luxury of renewal income from my group clients. I would like to remain independent and focus on something that will be viable for the next 30-40 years. I don't want to focus on life and annuities, because I personally find it to be a tough sales process.

What are your thoughts on these different avenues:
1. Commercial Insurance (P&C)
2. 401(k)
3. Financial Planning (RIA)
4. Sell my book of business and work for a national brokerage selling mid market benefits+commercial
5. Any ideas outside of what I've listed that I should consider? Doesn't have to be insurance

 

[leevena]

Madden, I do not agree with your premise that the small group market will not survive beyond 10 years. As I opined in another thread a few years ago, I remember hearing about the demise of group health insurance in 1982 or 1983 at a health underwriters meeting. It will be different, and for smaller shops as yours it will be more difficult.

If you do decide to remain in the benefits market you will need to adapt and at the very least add self-funding products, reference-based products, enrollment platform, and round out your product line to include all types of benefit plans.

Many brokers in the small group market are weak and lazy. They tend to rely on an outdated model of marketing benefits. They often believe they are consultants, when in fact they are not. They do not spend the time to understand risk, how different benefit designs can be helpful, and do not know how to partner with vendors effectively. If you can adjust to the new realities and requirements, you should be able to prosper.

Good luck with whatever you do.

 

[hunschuld]

If your group clients have existing 401k plans then you may be sitting on a very lucrative and simple way to protect them by managing the individual employee 401k accounts. This works best if you did not put the 401k in and are not the manager of the 401k. You do not take over the 401k you simply add a service that helps the employee and protects the employer.

 

[Christopher Davis]

Madden, I do not agree with your premise that the small group market will not survive beyond 10 years. As I opined in another thread a few years ago, I remember hearing about the demise of group health insurance in 1982 or 1983 at a health underwriters meeting. It will be different, and for smaller shops as yours it will be more difficult.

If you do decide to remain in the benefits market you will need to adapt and at the very least add self-funding products, reference-based products, enrollment platform, and round out your product line to include all types of benefit plans.

Many brokers in the small group market are weak and lazy. They tend to rely on an outdated model of marketing benefits. They often believe they are consultants, when in fact they are not. They do not spend the time to understand risk, how different benefit designs can be helpful, and do not know how to partner with vendors effectively. If you can adjust to the new realities and requirements, you should be able to prosper.

Good luck with whatever you do.

I'm in agreement with you on this one, leevana. Life/health (at least for me) is going exceedingly well during this time. I don't think the insurance giants will completely outsell the smaller agents, considering many individuals (and companies) value the smaller, more personable guys.

My incoming calls have gone way up, website form entries have slightly increased, and I've been able to close more business in VA. And I too am a one-person agency

 

[rousemark]

What about the Voluntary Benefits market? Don't believe that will go away and you would be working with the same type client with whom you work today. In fact many of your current clients may be prospects if you haven't been making VB available to them and their employees..