Marketing Agency of the Month

The next generation comes home

Third generation expands this Vermont agency toward regional agency status

By Dennis H. Pillsbury

“It’s not what you do; it’s how you do it,” Ben Taggard quotes Roger Sitkins and Larry Linne to explain part of the direction being taken by The Richards Group, Brattleboro, Vermont. Ben is part of a triumvirate of 30-somethings that includes Peter Richards and Drew Richards, which has taken the responsibility for running the agency from Mark Richards, who continues to serve the agency as president, and Henry Taggard, who is a vice president in the financial services and benefits division.

The Richards Group was started in 1947 by Mark’s father, Edward, in a one-room office on the second story on Main Street in Brattleboro. He and one part-time employee provided property/casualty insurance to individuals and businesses in Brattleboro and the surrounding communities. Mark and his brother-in-law, Henry Taggard, joined the agency in the 1970s and began building through acquisition and writing new business in its marketing territory.

All three of the agency’s 30-somethings struck out on their own before returning to Brattleboro and the family agency, despite the fact that “none of us had visions of entering the business,” Drew points out. Drew wound up in investment banking in New York City and then private equity in Boston, later receiving an MBA from Dartmouth College. Peter worked at an investment bank in New Orleans, specializing in oil and gas and the gaming industries after receiving an MBA from Tulane University. And Ben worked out of Boston as an analyst for a chemical company where he gained expertise in international markets, after receiving a Masters in Finance from Boston College.

“Dad encouraged us to go out into the world and find out what was out there,” Peter says. “At the same time, he let us know that he would also be very happy if we decided to return to Brattleboro and work in the agency.”

Drew notes: “When we joined the agency, Dad was very supportive of our new ideas and gave us the opportunity to try new avenues for growth. We were able to ask questions like ‘Why do we do it this way?’ And the response often was ‘Because we’ve always done it that way.’ When we suggested that there might be better ways to do certain things, Dad said, ‘Sounds good. Do it.’ ”

“We reached the conclusion that past success would not lead to future success,” Peter says, pointing out that the agency had pretty much saturated southeastern Vermont and that the cost of acquisitions was rising. “We have just under $10 million in revenue and 65 employees. It is clear that, if we want to grow...and we do, then we need to expand beyond our marketing territory.”

Self-evaluation

“We went through a thorough self-evaluation that included benchmarking ourselves to competing firms and hiring a firm to survey our current clients,” Ben points out. “We were looking for ways to grow into a regional firm by identifying our strengths and our weaknesses. We needed to understand why our clients stayed with us and what we had to offer that could allow us to be competitive outside of our traditional marketing territory.”

Drew explains: “In many ways, our evolution over the years has created an ‘island’ mentality in terms of how we’ve traditionally confronted challenges with growing and expanding the agency. That being said, the challenges we face are not unique to the Richards Group, or even to running an agency in a rural state like Vermont.

“We were looking for ways to get off the island and leverage the experience of other agencies, which led us to our involvement with the Sitkins Group,” Drew continues. “Our relationship with Sitkins has been a huge advancement. It has helped us sharpen our focus and allows us to speak openly and candidly to other successful agencies and pick their brains.”

“It’s refreshing to know that we don’t have to develop all our own solutions,” Ben adds. “The commoditization of the insurance product had made it difficult to compete for business in the old-fashioned way of shopping for our clients. Sitkins and our customer survey opened our eyes to the fact that it was value-added service that kept our retention levels high and could give us a competitive edge going forward.”

At the same time, Peter explains, “We recognized that there were opportunities for us to grow the business we provided to our current clients. We started out as strictly a property/casualty agency, but quickly realized that we needed to add employee benefits and investment and retirement services to our portfolio if we were truly going to become the trusted financial advisors for our clients.

“We teamed up with United Benefit Advisors and Cambridge Investment Research to broaden the portfolio of services and capabilities that we could offer to our clients,” Peter continues. “Today, 20% of our business comes from benefits and another 10% from investments and retirement planning.”

Ben, who heads up the investments section of the agency, notes that the addition of investment planning has been a “tremendous help with our retention. Investments really have become important. We focus on 401(k), 403(b) and other retirement plans and have purposely stayed away from an insurance focus in these areas. We want our clients to recognize that we are looking at all investment opportunities for them and that we have their best interest in mind, not ours. In fact, one of the aspects of Cambridge Investment Research that we found attractive was that it is not an insurance-affiliated broker dealer.”

The team approach

“Our challenge is to capture opportunities,” Peter says. “We are working on getting out of the silo mentality, but there’s still a long way to go. We need to get our offerings on our customers’ radar screen. The idea is to become trusted advisors for all our clients, especially our ‘A’ clients. We need to provide each of those clients with a plan to lower their total cost of risk. We are becoming more sophisticated with our management system so we can begin to use its capabilities to contact clients electronically with information about our other products and services.”

“We’ve also instituted a referral fee in order to encourage cross-selling,” Drew says, “but it is not systematic.”

“We have regular group meetings with all employees and meet twice a month with the sales group and emphasize the need for a consultative approach,” Peter adds. “We have our 16 producers work together on accounts in order to emphasize the need for a team effort so that we round out each account.

“We are lucky to have individuals who have a tremendous amount of expertise in several key markets. It’s good that they specialize, but they are starting to recognize that there are opportunities with their clients that are outside of their areas of expertise. Team selling will, allow us to better meet these clients’ needs,” Peter notes.

Drew continues: “This focus on managing the total risk of our clients also has placed us in a perfect position to expand into other areas. The team-selling concept and the value-added platform that gives us works well in any marketing territory.”

The expansion begins

“We’re just a three wood away from New Hampshire,” Drew quips, pointing across the Connecticut River. “Cheshire County, New Hampshire, is about twice the size of Windham County, Vermont, where we’re located, and it’s right next door. A number of our employees live in New Hampshire, and we see an opportunity to expand in that direction.”

In fact, the agency just opened a sales office in Keene, New Hampshire, to test the waters. “This is a big move for us,” Peter says. “But we think we have the processes in place to compete successfully in that marketplace. One of our challenges has been to grow in a no-growth economy. We see this as one way we can do so.”

At the same time, the agency just acquired a benefits-only agency in Norwich, Vermont. Chip Rammel will remain with the agency as a benefits producer. “We also partnered with Tom Scull from CIGNA to help grow that office and to serve as large group producer and account executive in Vermont and New Hampshire. Tom has a tremendous amount of capability in underwriting and sales in the group benefits arena,” Drew notes. “We plan to add property/casualty coverages to the agency’s portfolio. It will be interesting to lead with benefits.”

The agency also just hired a CPA, who will be a producer in the investment and retirement plan area, in addition to an attorney who will work as a consultant to retirement plan and employee benefits clients. “This gives us a level of sophistication that will be hard to beat,” Peter points out. “They will be a integral part of our team selling approach.”

The independent advantage

“One of our biggest advantages is that we can think long term,” Drew says. “We don’t have to manage to short-term horizons. And now we have the advantage of a depth of management that allows us to spend time planning and determining the best way to grow. The older generation continues to be active in running the company and offering ideas. We greatly value their input and also the fact that they are willing to let us take some chances and learn by doing.”

Peter adds that “we have been very fortunate to come into an agency that has a great team of employees. We couldn’t even think about expanding if it weren’t for them. We have tremendous employee loyalty, shown by the large number of employees with more than 20 years at the agency. They have unparalleled knowledge about insurance and about the best way to service our clients. In a lot of cases, we’re just tweaking those capabilities to take advantage of new technologies and new market dynamics.”

“They’ve also been very supportive in accepting our ideas for change and growth,” Ben points out. “This is a really good team; they have contributed to our success every step of the way.”

The Richards Group clearly is on the path to reach a new level, and we look forward to following its progress. We are pleased to recognize its accomplishments thus far by recognizing them as the Rough Notes Marketing Agency of the Month.