Producer Groups Can Open Doors

For ambitious career agents, the allure of setting up an independent practice can be hard to resist. The ability to source products from multiple manufacturers, charge fees and run a business unfettered by carrier restrictions are among the many attractions. Yet, going independent also carries a downside: Advisors stand to lose the support structure and services they enjoyed while wedded to their career agency.

Enter the producer group: a gathering of independent advisors who, at the most basic level, provide a forum for sharing expertise, best practices and a framework through which to collaborate on cases. The largest producer groups–First Financial Resources, M Financial Group, National Financial Partners and Sagemark Consulting Private Wealth Services, among them–have achieved such size that, their proponents argue, the groups effectively substitute for much that is lost when transitioning to independence.

“The producer group has to a significant degree taken the place of the culture, collegiality and sense of belonging associated with the career agency system,” says Jim Gelder, CEO of NFP Insurance Services, Inc. and executive vice president of National Financial Partners, New York, which has 225-plus members. “Within the group, the producer remains independent while securing access to services and expertise that would be difficult to obtain operating on their own.”

“I could duplicate the resources and structure of a producer group, but it would be time-consuming and very expensive,” adds Patrick Murphy, a partner and relationship manager at Lenox Advisors, a New York-based firm and an NFP member company. “To be able to tap into this model provides a tremendous leg up.”

High among the advantages available to members of such producer groups, sources tell National Underwriter, is the ability to quickly secure insurance and financial services expertise not available in one’s own practice. Advisors increasingly require such outside skills because of the expanding body of knowledge required to competently service clients in such areas as wealth transfer, business succession planning, executive benefits and asset management.

To assist a client requiring an employee stock ownership plan, for example, Lenox Advisors connected with an NFP member firm that has advanced expertise in ESOPs, a complicated planning area in which relatively few advisors are knowledgeable. Jim McClure, a partner with Murphy at Lenox Advisors’ Chicago-based office, acknowledges that his firm could have allied with an unaffiliated company having the requisite expertise.

But, he says, the process was far quicker working through NFP because the member firm’s capabilities had already been vetted. Being part of a family of practices also tends to align the interests of companies within the group. An unaffiliated firm, notes Murphy, might have given low priority to the ESOP request–or turned it down–if the client engagement were deemed to be insufficiently profitable.

Beyond access to third-party expertise, another attraction of producer groups is the ability to learn about best practices. Jim Niedzinski, a principal of The Capstone Group, a Southfield, Mich.-based member firm of Lincoln Financial Advisors, Philadelphia, Pa., says he’s gained exposure to practice management techniques through a Lincoln Financial producer group catering to the high net worth. The unit, Sagemark Consulting Private Wealth Services, claims some 200 members among Lincoln’s 7,200-plus affiliated advisors.

That exposure has prompted Niedzinski to make changes to his business. He has, for example, adopted a rigid fee structure to help qualify prospects and filter out those who don’t meet his client profile. Niedzinski now also avails clients of a password-protected online “vault,” where they can go to store and download key estate planning documents, such as wills, trusts and healthcare proxies. The Web access came in handy recently, he says, when hospital personnel needed to retrieve a power of attorney document on behalf of an incapacitated client.

“My affiliation with Sagemark has been a tremendously positive experience,” says Niedzinski. “The ideas-sharing has been priceless, as has been the culture of the group, which is caught, not taught. It’s like catching a good disease.”

McClure, too, says his experience with NFP has been equally enlightening. “When I joined, I got a real education,” he says. “I’m a more astute business person than I was five years ago.”

Advisors aren’t the only ones benefiting from the sharing of intellectual capital. Company staff–office managers, paraplanners, marketing and back-office professionals–also frequently learn about productivity-enhancing practices through conventions, in-classroom instruction, conference calls and online forums hosted by their producer groups.