To help independent agents combat the pressures in today's marketplace, The Rough Notes Company, Inc., represented here by its CEO Walter J. Gdowski (standing second from left), has formed an alliance with Taylor Haffner Consulting Group whose managing directors, Richard D. Hayes and Henry Bechard, Jr., appear at right. Other Taylor Haffner advisors include Donald S. Balser (standing left) and Dennis S. Ruffner (seated left).
As we approach the new millennium, independent agents confront a landscape that's vastly altered from that of just a few years ago. The ongoing consolidation of leading carriers, the entry of banks and other financial institutions into the insurance business, and the quantum leaps in automation technology are just a few of the forces that are putting intense pressure on independent agents in today's marketplace. For agency owners and managers who face the challenge of responding to these changes, the most valuable tool unquestionably would be a map to guide them through what often seems to be uncharted territory.
Enter Taylor Haffner, a consulting firm that was formed to do exactly that. In a unique partnership with The Rough Notes Company, Taylor Haffner will offer its comprehensive menu of services to agents, starting this month. In this article we'll talk with the firm's principals to find out how they're identifying and addressing agency owners' concerns, and how this ground-breaking partnership will benefit agents.
A wealth of experience
Taylor Haffner was established last year for the specific purpose of helping independent agency owners and managers ascertain their current situation, identify their objectives for the future, and pursue those objectives in the most efficient, cost-effective manner. The firm's four principals bring to the table a wealth of experience from both the agency and company field, combined with solid credentials as consultants to insurance industry clients.
"It takes a partnership between the consultant and the agent to identify the problem and work together to find solutions."
--Henry Bechard
Henry Bechard, Jr., CIC, began his insurance career in 1963 as a salesperson for a small family-owned agency in New England. He purchased the agency in 1983 and in 1995 merged it with USI, a leading insurance agency system. He currently serves as a consultant to USI/NE in the areas of acquisitions, retention, sales and marketing strategies, and niche development. He also consults with companies both inside and outside the insurance industry on the development of alternative distribution networks. In addition to being a managing partner of Taylor Haffner, Bechard is a managing partner of The Access Group (TAG), a brokerage agency that specializes in national marketing programs for professional employment organizations.
Donald S. Balser has enjoyed a distinguished 33-year career in the insurance industry, 30 years of which were with Holyoke Mutual Insurance Company in Salem, Massachusetts. He served as vice president and manager of marketing and also held management positions in the underwriting, office services, and administrative departments. After retiring from Holyoke, Balser joined Insurance Technology Services of America, Inc. (ITSA), where he was president for two years. He also served as vice chairman of Insurance Holdings of America, Inc., parent company of ITSA. Currently involved in several consulting projects, he is nationally known for his presentations on Internet solutions for the insurance industry.
Dennis S. Ruffner, CLU, ChFC, is the principal of DSR Management Services, a sales and marketing consulting firm in Dallas. He has over 25 years of sales and sales management experience in both the independent and captive insurance distribution systems. A veteran of Allstate Insurance, he held a variety of sales management positions and then served as national sales director for PMI Mortgage Insurance Co. He then joined Royal & Sun Alliance Insurance as personal lines marketing vice president, where he led the sales, marketing, and automation efforts. From there, Ruffner joined Insurance Holdings of America to help bring Internet technology and efficient affinity marketing programs to the independent agency system. He established DSR Management Services in 1998.
Richard Hayes has more than 25 years of experience in the insurance industry, having worked in the underwriting and marketing departments of both Aetna Life & Casualty and Commercial Union. He also owned and operated an agency in the Greater Boston area for 15 years. More recently he has been involved in the development of insurance software systems which can be deployed on a variety of distribution platforms including the Internet. He and Don Balser marketed Internet technology developed by Insurance Technology Services of America. Currently as vice president of sales and marketing for Axint Technologies, Inc., a Massachusetts- based software developer, he has been coordinating national sales for their "point of sale" and legacy integration technology.
Walt Gdowski, chairman and CEO ofThe Rough Notes Company, says, "Agents increasingly tell us they are looking for guidance on a variety of management issues including valuation, perpetuation, acquisitions, mergers and automation. Until now we have not made consultant recommendations. However, with our alliance with the newly formed Taylor Haffner Consulting Group, that has changed. Their president, Henry Bechard, is a very successful independent agent who is just as concerned about independent agents as we are. We are confident that Taylor Haffner can provide a full range of consulting services and that they will act with the agent's best interest in mind. The Rough Notes Company has been committed to serving independent agents for more than 120 years, and we believe this alliance will provide an important additional service to agents."
Partners in serving agents
Teaming up with The Rough Notes Company to offer its consulting services seems like an unbeatable formula for Taylor Haffner, Henry Bechard says. "Rough Notes is the preeminent insurance publication in the United States. Its credibility, honesty, and integrity are qualities we value highly. Rough Notes helps agents recognize the factors that affect their future." Like Taylor Haffner, he comments, "The Rough Notes Company is also a provider of services. It has received many questions about the issues agents have told us are their major concerns. Rough Notes and Taylor Haffner are totally dedicated to the survival and growth of independent agencies."
To many business owners, consultants often seem to inhabit another planet, in the sense that they sometimes make recommendations based more on theory than on reality. That's definitely not the case with Taylor Haffner. "Over the past several months, we've talked with agents and brokers throughout the country, asking them their opinion of the industry, their vision of the future, their desires and objectives--and their opinion of consultants," Bechard says. "We asked them what information and services they want from a consultant. They helped us identify the services agents need, and we've made a commitment to provide those services." As an agency owner for more than 30 years, he observes, "I wasn't always able to see the big picture in the way I can now. Because of the pressures of the market, agents aren't always aware of what's going on around them. That's where we can help."
Balser, who has worked with Bechard for the past year, explains why he became involved in the consulting venture. "I believe strongly in the insurance industry, and it's currently undergoing a tremendous transition," he says. "Agents and others need to be aware of what's happening and how it's affecting the way they function in the marketplace." As an illustration, he cites the paradigm shift in the orientation of markets for all goods and services including insurance. "In the past, manufacturers and other businesses designed products and services offerings, created marketing plans, and then deployed and implemented sales and services programs, making their own determination as to the offerings for consumers. Today the market is much more consumer centered, and distributors must create 'touchpoints'--points of contact that the consumer wants and expects," he explains. Consumers complete online purchases, having made their own determination of product, based upon a wide array of options and choices. "For example, consumers contact Dell computer centers online and provide all information for the PC configuration of their choice. Since Dell maintains no inventory requiring retrofitting before distribution, the PC unit is assembled within two days and shipped directly to the consumer, ready to plug and play!"
The insurance industry, Balser asserts, "must deliver its products and services with a sharper focus, and technology will be a key factor in how we communicate, deal with, and deliver our products to the customer."
That brings up another major concern of independent agency owners: the combined opportunity and challenge presented by marketing via the Internet. "Many agents are trying to determine how to establish a presence on the Net and drive customers and prospects to their Web sites," Hayes observes. "With our collective experience in Internet insurance technology we are able to work with these agencies to recommend the proper strategies and solutions."
In discussions with both agents and insurers, Balser says, "we're sensing a great deal of confusion about the potential of the Internet. Agents need to understand both the pitfalls and the possibilities of communicating and selling over the Net and how they can develop appropriate platforms if they decide to establish a presence on the Web."
Dennis Ruffner also cites changes in the marketplace as a key factor in the formation of Taylor Haffner. "Consumer habits are changing; there are many ways consumers can get insurance information, rates, and advice that weren't available five years ago," he says. "The problem is, many agencies are distributing their products as if it were five years ago. Agents need to understand their options. For example, do you want to offer insurance over the Internet? If not, you need to develop an alternative strategy to compensate for the market share you'll be losing if you don't sell online." Taylor Haffner can help agency owners identify and evaluate their options, then create a blueprint for achieving their desired objectives. "A big part of strategic planning is knowing who you are," he says. "It's equally important to know who you are not."
Grow, sell, merge, cluster?
The ongoing consolidation in the insurance industry, Hayes notes, presents a new and formidable set of challenges to independent agency owners. "As the industry continues to consolidate, agents have concerns about their futures," he comments. "Should they try to grow and reach a degree of critical mass? Sell their agency? Or take the middle road and join a cluster? As the insurance industry landscape rapidly changes, agency owners need direction and guidance. Agents have several options, and our aim is to be a resource for them. Having been involved in the sale and acquisition of several agencies, we feel we are able to assist agents evaluate their options."
Many agency owners, particularly those in their 50s and 60s, Hayes says, have reached the point where they are considering selling, and they need guidance in developing and implementing an effective exit strategy. "One of our clients wishing to sell their agency, is negotiating with three potential buyers: a bank, an insurance company, and another agency," he says. "We have identified each of these potential purchasers as solid, qualified prospects, thereby providing our client with a choice of several attractive offers for their agency."
A key focus of Taylor Haffner's efforts is offering agency owners direction on whether and how to merge with, acquire, or sell to another entity. "The trend toward mergers and acquisitions is putting significant pressure on agencies and brokerages," Bechard remarks. "Banks are entering insurance; they have both the desire and the money to purchase agencies and brokerages. Insurance companies also are acquiring agencies, not only as a tool for growth but also to protect blocks of business because of the consolidation among insurers. Merged carriers are finding they have a huge field force and are realizing they can't work with all of their producers, so they're starting to weed some out. A lot of smaller agents with great books of business are out in the marketplace looking for markets, and sometimes markets are hard to find unless you have a substantial book of business. Most of us have been small agents, so we understand the pressures--and we can use our experience to help agents devise effective solutions."
Menu of services
In response to agents' needs and concerns, Taylor Haffner has structured its services into a set of consulting components. For each component the firm has created what it calls an Agreement of Service, which spells out the specific services the firm will provide, the scope of the work, the time allocated for delivery of each service, and the estimated cost. The consulting components planned for the initial launch of the program are:
* Strategic evaluation
* Strategic planning process and retreat
* Sales management development programs
* Automation strategies
* Merger and acquisition consultation
* Agency perpetuation planning
* Agency Internet strategy and site development
* Specialty programs and niche marketing
* Agency valuation and appraisals
* Clustering
* Loss control
* E-commerce solutions
A key tool for an agency that wants to assess its situation and evaluate its options, Ruffner says, is developing a strategic plan. "A good strategic planning process will stretch and challenge agency owners--it will even make them a little uncomfortable," he comments. What's more, he adds, "Strategic planning is not just an event--it's a process. We help the agency build a plan step by step, guiding it from objectives to implementation to follow-up, measurement, evaluation, and the creation of a new plan to begin the next year. We design a five-year plan, but every year we review and revise it. An agency should never be in the second year of a five-year plan."
To understand how Taylor Haffner approaches this task, let's look at the elements of the firm's strategic planning process.
1. Kickoff meeting. T/H facilitates a comprehensive discussion of current agency operations. This "current state" is the basis for all future cost-benefit analyses in the project.
2. Creation of the desired state. T/H conducts a brainstorming session with agency principals and employees to determine "how things should be done," or the "desired state."
3. Position review. T/H prepares a comprehensive review of the discussions of the current state and desired state.
4. Interview session ("interrogative"). T/H meets with agency management and other personnel to review a series of questions concerning conditions and situations within the agency. All questions pertain to the ultimate development of recommendations and action items or steps in the evaluation process.
5. Strategic retreat. Based on the information developed above, T/H will facilitate the strategic discussions of agency management. The goal is to develop five-year targets, key strategic initiatives, and annual benchmarks. This plan becomes the basis for the agency's annual operational plan.
6. Strategic evaluation report and review session. T/H modifies the agency's strategic and annual planning processes as needed, then provides a complete evaluation report, including recommendations and benchmark actions and positions.
Ongoing relationship
The principals of Taylor Haffner view their consulting components not as stand-alone modules but as elements that overlap and interact to enhance all aspects of an agency's operations. Equally important, the principals envision creating long-term relationships with their agency clients. "A major way we differentiate ourselves from other consulting firms is in the ongoing nature of our services--and also the way those services interact with each other," Ruffner says. "For example, a merger or acquisition leads into a strategic planning process for the new entity and also may involve automation considerations. We follow up with our clients on a regular basis and evaluate the year's results at the strategic planning retreat. We don't just throw a book on the table and leave."
Many agencies, Bechard observes, don't call on a consultant until they've given up on resolving situations on their own. "When a client requests our services, it's usually because they've tried solving problems on their own, like losing a carrier or dealing with a powerful competitor. When we come in, the problem has already existed for some time--and it's going to take some time to solve. Our job is to determine what the client wants and help the firm devise strategies to achieve it. It takes a partnership between the consultant and the agent to identify the problem and work together to find solutions. That can take three to six months. At the end of that time, if the partnership is working well, we'll continue it."
At the end of the day, Bechard emphasizes, "Taylor Haffner is providing services that our interviews show agents need and want--that's how we built the firm. It's for agents. If they're successful, we're successful."
Helping independent agents survive today's challenges and move confidently into the future requires experience, knowledge, skill, and commitment--and that's exactly what agents can expect from this powerful new partnership between Taylor Haffner and The Rough Notes Company. *
©COPYRIGHT: The Rough Notes Magazine, 1999