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Local insurance agents and CPAs who want to take back their profits and
markets from professional employer organizations (PEOs) have a new
ally—the Total HR Network, a division of J. A. Schlueter & Company,
Inc.
According to James Harwood, COO of the Total HR Network, the new
division is a means for local insurance producers and other business
advisors to gain the resources of a PEO without weakening their primary
business line.
“The Network effectively carves out the local agent’s business line from the Network service and wraps the rest of the package around their service,” Harwood explained. “Thus, the employer gains the benefit of the PEO while being able to maintain the trusted relationship they developed with the local agent over the years. What’s more, the producer keeps their primary business while gaining an entire new source of commissionable revenue that in all likelihood will double their income. Everyone wins.”
A couple factors drove the creation of the Total HR Network. First, according to James Schlueter, president of the Network, the current market is one of the toughest and most competitive markets in many years. “The soft insurance market and slowing economy is showing few signs of firming; many estimates predict it continuing through 2009,” he said.
Second, Schlueter noted, PEOs are taking a larger share of the market traditionally held by local insurance agents and other business advisors. PEOs enjoyed gross revenues of $61 billion in 2007 and are growing at a rate of 20 percent per year. They are snatching up the traditional workers’ compensation and employee benefits market because they offer a one-stop shop for employers short on time. Thus, competition to retain and attract clients has never been tougher.
Small and mid-sized employers comprise at least 70 percent of America’s workforce, Schlueter pointed out. These employers have seen a significant increase in governmental regulation. Add to that the struggling economy and tightening workforce, and employers are driven to search for ways to make their business more efficient—such as services that manage HR issues and dealing with vendors for them.
The question is, will small businesses keep turning to PEOs, or go back to local agents who can meet this need?
“At the end of the day, those producers that recognize this shift and respond proactively will find not only effective client retention rates, but new business growth as well,” Schlueter said. “Those that don’t will find a shrunken market even when the soft market eventually begins to firm.”
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