Aldeen’s Sunday Morning Bathroom Read

The best method for fee based insurance consultants to maximize revenue is to duplicate status quo brokerage fees. When a prospect says “Your fees are too high!” simply respond “Mr. Prospect, you’re may be right! Why don’t we just duplicate your current broker fees!

Doug Aldeen• ERISA Healthcare Attorney and General Counsel

A recent Gallagher 10-K contains the following caveat to investors:

“Our ability to generate premium-based commission revenue may also be challenged by the growing desire of some clients to compensate brokers based upon flat fees rather than variable commission rates. This could negatively impact us because fees are generally not indexed for inflation and do not automatically increase with premiums as commissions do.”

A few thoughts:

A) If I was an investor/shareholder, this would cause either sleepless nights or a diarrhetic event;
B) Commissions are tacked onto the underwriting process and could reduce premiums by seven percent or more;
C) This should create opportunties in the market for other value based advisors;
D) Awkward conversations on the golf course once plan sponsors realize that they have been overpaying for brokerage services for years.