When you talk with Erik Fredriksen, you’ll hear the word “we” a lot.
Fredriksen, broker and heir apparent of Fredriksen Health Insurance, a Boise, Idaho-based independent agency, isn’t one to separate the business entity from his own career. In fact, the two seem indelibly linked. When asked about personal accomplishments, he can’t help but refer to the accomplishments of the business. In fact, every part of conversation is peppered with a team-focused mentality.
That’s a unique approach for a young agent who wasn’t in line to take over the business. In fact, the elder Fredriksen, Steve, who’d started the agency in 1980, wasn’t thinking that succession planning would involve his kids. Yet an aging employee base, coupled with the new federal health care option, led Steve to look for young talent. The search ended with his own children.
As the agency transitions from father to children, the younger Fredriksen, who is 31, says the focus will remain on what his father started — working with individuals and businesses in his state to provide health care options. It’s a focus he believes is critical in today’s post-Affordable Care Act environment.
The path to insurance
Fredriksen’s path to insurance was not direct. After attending college in Spokane, Washington, for business management and accounting, he returned to Boise to work as a public accountant for KPMG. After a few years, he transitioned to Boise Cascade as a public internal auditor, then as a controller in one of the company’s packaging locations. That’s when he got his first encounter with the health benefits business. “During that time,” he says, “the Affordable Care Act had been passed. Costs and other changes made the benefits side of things more confusing.”
Also during that time, the company he was working for was acquired by a Chicago-based company. Fredriksen was faced with a choice. “If I wanted to move up in the company, I’d have to be in a different town or be a corporate guy in Chicago, which I have no interest in.”
That, along with seeing his father accomplish much locally helped Fredriksen come to what he says was a fairly easy decision. “My father helped a tremendous amount of people through not only the health insurance business, but also by being able to support the community through the wealth that has been generated here. It’s been an appealing thing for me to watch from the sidelines.”
An agent for two years now, Fredriksen has seen plenty of challenges. One of the larger issues he’s fought to overcome is the way customers and veteran agents view millennials. “There’s a dynamic where the millennials are painted in a certain light. You have baby boomers exiting the workforce and millennials are beginning to inherit it. Being able to be taken seriously, speak professionally and work side-by-side with the age dynamic can sometimes be challenging. They’ve been in the industry for so long, you’re trying to learn it; they have the knowledge, you’re trying to gain it.”
A definite challenge, but Fredriksen says there’s also opportunity. He says he listens and learns, and it’s helped him establish his own approach. “You look at things a little differently, but you listen to them and put your little spin on it.”
Another challenge — and what he thinks is the biggest one — is helping individuals and businesses navigate the new health care climate. The ACA, he says, has added a tremendous amount of strain on insurance. Carriers in the individual and small group markets, he says, have been losing millions each year. “With that, they have to find ways to cut costs. One way they do that is to cut broker commissions.”
That impacts his own profits, and eventually, the industry, he predicts. “How can we continue to serve our customers as well as be able to turn a profit? If they can’t find a way to effectively price health insurance products, will they end the broker model? Right now, I think the answer is no. It’s too confusing and complex for individuals or a business owner to navigate this.”
That’s where Fredriksen believes the agent’s value lies. Individuals who don’t qualify for tax credits are left with unaffordable options. With health insurance rates about to increase an average 30 percent in 2017, he thinks more people will turn to agents looking for guidance.
“We’re trying to find a good fit for these folks to go on to a small group plan rather than an individual,” Fredriksen says. “That’s not going to work for everyone. For those individuals, we’re going to turn over every rock and every stone to make sure they don’t have a tax credit somewhere. If they don’t, we identify the best fit for them so they’re not overpaying or, if they have a lot of medical needs, that they’re not getting a plan that’s not going to satisfy that need.”
Challenges beget opportunity
Particularly when it comes to health care, Fredriksen says the time is perfect for young agents to enter the market. While there’s much a younger agent can learn from the more experienced agent population, most of that knowledge is pre-ACA, he says. “This is almost a new frontier for everyone. This is a great time for folks to get into the industry. A lot of that has been reset to zero.”
Yet with so many brokers and insurers leaving the individual markets, he says there are fewer sources of guidance. In Idaho, however, Fredriksen says his family’s business is there, despite lower profit margins. “It’s easy for a carrier or broker (to exit the individual health market). They don’t make any money on them but this is their health insurance. This is their livelihood you’re holding in your hands. So if you mess that up or you don’t listen to their story and find the best solution possible, you could literally be affecting their life.”
The health care industry, he says, continues to evolve as the federal agencies make changes that create more complexity in the industry. Despite the pressure on agents and brokers, Fredriksen says he’s here to stay. “We’re going to be able to help the individual and those on Medicare, even if it’s not as profitable. We find it’s better to help everyone and treat everyone as though they’re the only customer we have. What comes around goes around.”
Know a great young advisor who is making a difference in the industry? Nominate them to be featured in The Succession Initative or LifeHealthPro’s 30 under 30 feature by emailing email@example.com.