Opportunities are afoot for independent brokers to secure the cream of the crop in broking talent as consolidation tsunami leaves talent ‘deeply disenfranchised’ with new ownership

Following the boom of broker consolidation that has taken place over 2020 and 2021 so far, “there’s a lot of talent stranded within global brokers and consolidation vehicles that frankly didn’t choose to be there”, meaning that independent brokers have a unique opportunity to attract “deeply disenfranchised”, “dissatisfied” yet “entrepreneurial” staff for their own growing businesses.

One such broker subscribing to this view is Phil Barton, chief executive of Partners&. He continued: “We think there’s a lot of talent stranded within global brokers and consolidation vehicles that frankly didn’t choose to be there.

“They’ve ended up [there] de facto by the incessant M&A that’s taking place in the industry and that leaves many of them deeply disenfranchised.”

London market broker Lonmar also senses that this market landscape is a “great opportunity” to become an “employer of choice”.

Lonmar chief executive David Pexton told Insurance Times: “There’s so much going on within the sector within the larger brokers that it provides us great opportunity and we’re fast becoming an employer of choice for people who really want to get into looking after and being passionate about their clients.

“It’s a good place to be at the moment to hire some really cracking people with great skills to come and join a like-minded organisation that provides them with the platform they need to actually look after their clients’ needs.

“With what’s going on in the market at the moment almost weekly, that opportunity to bring in new teams is becoming greater.”

McCarron Coates director Luigi Maggio agreed: “We see that’s where we benefit as an independent broker because there will naturally be some fallout from [broker consolidation].

“Not all people want to go and work for the larger, multinational businesses and we see us offering a model where you can flourish, you can be empowered.”

Howard Lickens, executive chairman of The Clear Group, added that now is definitely the time for brokers to “splash the cash” on talent acquisition.

“I do think now is the time for independents to splash the cash and bring in new talent,” he said.

Breaking rocks or building?

But why would broking staff look for pastures new following their firm being bought?

For Barton, it all comes down to culture, with consolidators often “on the hamster wheel of undertaking acquisition for scale” and failing to use sensitivity when integrating businesses post-acquisition.

He explained: “Culture is classically different in a global broker compared with an entrepreneurial, fast-moving, independent broker. The cultural change is very significant and unless the integration is handled sensitively, there will be significant collateral damage.

“If you believe that a broking business is all about people, then you have to handle the integration incredibly sensitively in a collaborative way. Most of the large consolidation vehicles don’t do that.

“They are interested in creating cost synergies and, as a consequence, are prepared to accept collateral damage in terms of people leaving. They see it as a natural by-product of M&A that people will leave.”

Consolidation, therefore, becomes “a blunt instrument” because businesses cannot make “multiple acquisitions on a monthly, weekly basis and have the same sensitivity to the integration of those acquisitions”.

In Barton’s experience, what “happens is that those large brokers impose narrow placement strategies, which brokers don’t like. They typically move smaller business into call centre operations and break some relationships that producers have with their clients, which is clearly unpopular.

“Often, they are looking to take cost savings out of marketing, claims – the proposition, perversely, becomes weaker rather than stronger.

“You then overlay things like the bureaucracy, the aggressive regulatory stance adopted by some of the larger players and the inability for talented individuals to influence outcomes.

“That is a deeply dissatisfying place to be for someone who’s been entrepreneurial in the past.

“There’s an awful lot of talent in those consolidation vehicles that are simply breaking rocks at the side of the road rather than building a cathedral.”

Lickens agreed with Barton’s take. He added: “Joining a larger group can be positive - access to more markets, specialists and facilities which provide support - but if that turns into bureaucracy, strict placement edicts, offices closing and a blame culture, good brokers will vote with their feet and so they should.

“Independents don’t always get it right, but we can be a bit more flexible and a bit more human – we have values.”

However, Lickens added that “it’s a double-edged sword as [a] loss of talent means the larger brokers are now targeting independents to fill their vacancies”.

Put into practice

Although broker leaders have noted this talent acquisition opportunity, has it been borne out in practice?

Barton certainly believes so, labelling this approach to talent attraction as “core” to his firm’s strategy. When Partners& launched in April 2020, the startup broker had 150 staff on its payroll. By July 2021, the company had 320 employees.

Barton explained: “The people we’ve attracted are, frankly, the very best talent from the industry. We’ve largely recruited from consolidators and global brokers and we continue to be discerning in attracting the very best talent from those firms.

“The theory has been proven over the last 15 months – an independent broker with the right proposition for clients and the right culture for the team can attract some incredible talent.

“It’s a big, big part of our strategy and I’m sure others are adopting a similar strategy.”

Specialist Risk Group’s chief executive Warren Downey added that his firm has been “inundated” with job applications following the uptick in broker consolidation, while Lickens said he has seen the same trend “at Clear and we’ve seen it with fellow Brokerbility members” too.

No ‘wholesale exodus’

However, Sara Fardon, managing director of Willis Towers Watson Networks, said she has “not seen [a] wholesale exodus or changes because of consolidation”, but has instead noted “growth in the appointed representative (AR) arena”.

“The loss of talent that one may expect with consolidation we do not feel is happening and the natural churn that happens in such circumstances is outweighed by the number of developing opportunities that are arising,” she said.

For Fardon, these opportunities include more career progression options being available within a larger firm, as well as “more opportunities for niche specialist brokers to grow and make a name for themselves, attracting talent of interest”.

As for the increased popularity around AR arrangements, this enables brokers to take “the opportunity to start their own business under a more established broker umbrella”, Fardon added.

Lickens also noted: ”Consolidators are not all the same and a number of us treat staff retention as an absolute priority.”

Are independent brokers the only firms that can benefit from consolidators’ talent fallout?

Despite acknowledging that “fantastic, talented people are definitely considering their options following the spate of large broker consolidation”, Specialist Risk Group (SRG) chief executive Warren Downey noted that “independence alone does not guarantee positive working environments and cultures”.

Warren Downey 2

Warren Downey

Plus, “independent firms are often smaller in scale”, he added.

SRG was bought by US private equity firm HGGC back in December 2020. In 2021 so far, the insurance group has made six acquisitions thanks to this investment firepower.

According to Downey, SRG’s talent attraction strategy has been focused on “developing a differentiated culture to go along with our increasing scale and relevance in the market so that we become the natural home for specialist people”.

He continued: “Diminishing client choice combined with big company cultures has encouraged entrepreneurial people to think about the right home for them.

“Our position as an unashamedly people and culture driven company is proving an attractive alternative.”

According to Sara Fardon, managing director of Willis Towers Watson Networks, “there is a movement between insurers into the broker arena”.

She continued: “There could be many reasons for such moves, but it should not be seen a down gearing of a career - more [an] opportunity to make a personal impact and fulfill personal ambitions.

“Pay and salary packages paid by brokers now can often match, or even beat, the large corporates and perhaps there may be slightly more freedom from process and management tiers within a broker.”