Consultative Broker Briefing - V. VI, No. 13 - What’s All The Hullabaloo?

The Consultative Broker™ Briefing
Volume VI, Number 13
A Free Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2004

What’s All The Hullabaloo?

In the past two weeks it seems that more has been written and said about our industry than in the past twenty years combined. If I had a thousand dollars for every pound of paper written on the Marsh contingency debacle, I could retire young (or younger!) So, I guess it’s time for the Consultative Broker Briefing to weigh in on this subject. We are politely asking the question: “What’s all the HULLABALOO?”

Here is what we all need to understand - The Marsh contingency flap was not about the typical agency agreement and contingency contract. These alleged payments concerned very specific overrides on specific placements. In some cases brokers are even being accused of steering business to certain companies because of higher commissions, or obtaining inflated quotes to justify placing business with the selected carriers.

Certainly a black eye for our industry, but not a deathblow to a successful Consultative Broker. In fact, out of this firestorm will come significant opportunities for those of you who understand how to work with Consultative Brokerage and communicate your Value Proposition through Total Cost of Risk (TCOR.)

Here is why:

Buyers will become wary. The more astute buyers will start asking the question, “What is your total income on my account?”

Brokers will become more “transparent.” It will become important to allow clients to fully understand the brokerage compensation equation.

Total Cost of Risk will become more critical. Brokers who understand how to effectively communicate TCOR will be able to offset the sticker shock that some clients may feel after the broker’s income is revealed.

Mega-Brokers will look inward – and falter. Over the course of the coming months, some Mega-Brokers will be paralyzed with fear and uncertainty. Their profit streams will dry up and their focus will shift to cost reductions (eliminating people and services) rather than client focus. They will be in full damage control mode. This will create tremendous opportunities for those of you who are nimble!

As the contingency litigation winds down (and it will,) the winners will be firms and brokers that know how to charge for their services and communicate their true value. It really won’t matter what the compensation system looks like. Consultative Brokers will always be able to stand tall and not shrink from a client discussion about their income. They will continue to prosper, write new accounts, and retain their largest accounts at no reduction in revenues. They too will be asking the question of the rest of the industry: “What’s all the HULLABALOO?”

By the way, last month C.R. Ekern & Company hosted its annual Private Client Sales Manager's Conference in Scottsdale, AZ. This high level meeting was attended by 20 firms that generate over $450,000,000 in annual revenues. Our Private Clients practice Consultative Brokerage as part of their business model and Value Proposition. At the Sales Manager's Conference we asked our Private Clients how the Consultative Brokerage Methodology has impacted their large account efforts. We thought you might be interested in seeing their response.

Best regards to all Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company

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Thank you.
C.R. Ekern & Company