IBC: How have BFL’s business models contributed to your firm’s success?
Barry Lorenzetti: This year marks our 30th anniversary in the business. Back in the day we put together a business model that has stood the test of time – and that has been the encouragement of employees to become shareholders, and through the years we have facilitated that path for them.
I know that one of the biggest assets of our firm is that we have been able to hold on to our employees because of this particular model. We feel that the biggest challenge in our industry today is that many companies fail at engaging their employees. I read an article recently by a president of one of our competitors in which he stated that the biggest challenge for our business was the engagement of employees. In order for our organization to continuously grow, and meet its challenging objectives, we must continue the push for enhancement of share value and the engagement of employees is crucial as they are the major contributors to our success.
IBC: Why is it important for brokerages to remain independent and Canadian-owned?
BL: In the last few years there have been many acquisitions of Canadian companies by US companies in our industry. I find it rather sad that Canadian firms can’t find a Canadian broker to align with, even if it’s a competitor. What that tells me is that these firms don’t have the right perpetuation plan, they don’t have the right business model, and they haven’t fully thought about what serves in the best interests of their shareholders and employees. In many of these firms, the shareholders have been in the business for many, many years and may be reluctant to give up shares, and that has effectively been their downfall. By not giving up shares, they haven’t created a succession plan. Eventually it gets to a point when they decide to sell because it serves in the best interests of employees, but I ask you, does it really? Wouldn’t it better if those employees had been given an opportunity of becoming shareholders and had a say in the destiny of their firms. Perhaps one option would be to keep the company independent?
IBC: What is a big challenge facing brokers today?
BL: I see many challenges ahead but two that come to mind from my perspective deals firstly with technology in our business and the ongoing threat of insurers who are acquiring brokers and paying ridiculously high multiples in order to expand upon their distribution network.
More than ever technology will play an even greater role in our industry – so much so that I have often heard the phrase, we are entering a tech arms race. The general consensus is that the winners in the tech arms race will be the firms that have a proven ability to adapt to tech advancements, synthesize client data, leverage software that streamlines back office support and invest in human capital to manage its investment.
In respect to my comment on insurers I know I am not alone in thinking that there could be a conflict of interest in these companies buying brokerages, who in turn sell the products of that particular insurer. Consumers should have access to all markets and all insurance companies. What surprises me is that there has not been enough dialogue about this trend in our industry.
IBC: What is one lesson you have learned over the years that you would like to share with other brokers?
BL: Henry Ford said it best: “Failure is simply the opportunity to begin again, this time more intelligently.” I have a failed a number of times, but I always remember how important it is to learn from those failures. One thing I have always done as a leader and entrepreneur has been to surround myself with people who are more qualified and experienced than I am in certain disciplines.
BFL is an organization that prides itself on the number of leaders we have, and what is interesting is that all of these leaders share in this philosophy of surrounding themselves with people who compliment their talents. This team effort has certainly worked and is one of the many reasons why BFL has remained so successful throughout the years.
