Building an Agency from Scratch

Season 2 Episode 15

Building an Agency from Scratch with Rick Holmes

Season 2 Episode 15


Intro/Outro: Welcome to the Insurance Leadership Podcast. The podcast designed to bring new perspectives and principles from leaders in the life and health insurance industry. We trust you will enjoy today's episode.

Ryan Eaton: Welcome to another episode of the Insurance Leadership Podcast, I'm Ryan Eaton your host, and honored to have you listening in with us. Today, we have an awesome episode. We have Rick Holmes, who is the president and founder of Lake Shore Benefits out of Birmingham, Alabama on the show. Rick is a friend, a mentor, a buddy, and someone I think you'll love listening to today.

His energy and his passion for insurance is pretty awesome. He's been doing it since 1990. He is not someone who just works on a business, but he works in a business on a daily basis. So the reason we wanted to bring him in was to talk about how you start an agency from scratch. We've gotten some emails, we've gotten some calls saying that you would love a podcast kind of on this subject.

So I think you'll be pretty entertained by Rick today and I know you'll learn something. So with that, Rick Holmes, welcome to show my friend. 

Rick Holmes: Nice seeing you, man. 

Ryan Eaton: Glad to have you on today. How's everything over in Birmingham? 

Rick Holmes: Man, could not be better. We are just, I call it blowing and going. So hang on. Just trying to get, can keep up and fulfill everything we promise people. 

Ryan Eaton: Man, that's a good thing. Well, look, Rick, how long have you been in the insurance industry? 

Rick Holmes: Actually, May 1st was 32 years. I just celebrated my 32-year anniversary and just said, time goes by fast when you're having fun. So, it's all good. 

Ryan Eaton: Well, Rick, you built a, you built an amazing shop. Why don't you to everybody on the show today? Kind of what got you into the industry. Kind of tell a little bit about your agency now and kind of how everything's moving forward. 

Rick Holmes: Okay, well, I'd say what got me in the industry was I wanted to own my own business, be in control of my own time. I knew that when I first started at 24 years old, I knew I was young.

I was energetic and I wanted to work a ton of hours and make it happen. And the one thing I always feared that if I was in sales, working for someone that I would build up a big block of business. And then as I turned 40, 45, a lot of times they're going to split up your territory because they want to continue to grow the business.

And they've used it for your youth. You know, honestly, is I want to something that I could control, continue to work hard and benefit from my efforts. And of course, my business has changed. My first, probably 15 to 18 years, we did a lot of life insurance and disability insurance and key man insurance and built a lot, a lot, a lot of business in that area.

And then probably in 1995, I sold my first group health insurance. And when I saw that case, I liked the way that you had the recurring revenue. And it was something that you could just count as long as it stays on the books, that is. You just count it coming in religiously month after month after month.

And so, you know, I said, you never give up your apple cart. You know, the things that, you know, that pay your bills, life, disability. And so did that and continue to do that. And then one thing I noticed was is, is that my income was here and then my group health, dental, vision, and over about an eight or nine or 10 year period, it actually equaled that.

And then it started to excel that, and then health care reform hit and about 12 years ago. And then at that point, it was just like, I don't have time to do life and disability anymore, even though we had a very, very, very, you know, top of table type practice that did a ton of work, but a ton of insurance sales.

I just needed to focus strictly on the group benefits and have been doing that now for 12 years and just hanging on, man. 

Ryan Eaton: That is awesome. Well look, Rick as I kind of told you the other day, we've had different emails and calls coming in, asking about starting your agency from scratch and hearing that you started your agency at 24.

And obviously, it's had some, some different colors and different things you've done over over the years. One of the things I've seen with people starting their own business. You hear a lot of people talking about it, but then I guess that fear of failure kind of creeps in on people. Did you have any, or were you nervous when you first started? Were you, were you married at the time or do you have any kids at the time when you first started?

And, and if you did overcome that fear, what did that look like? 

Rick Holmes: So it's always scary whenever you start your own business, but you know, one thing just in playing sports and just having other successes through out my career, whether it be sports, whether it be just other issues. The one thing that kept me going was I'm like, I never felt anything at lot in life.

And so I'm going to take a chance to make it happen. Yeah. It panned out and worked out well. But you know, one thing that was a little bit different about us was because of our background with the life and the disability. We had a lot of insurance companies that we did a lot of business with that would give us some seed money.

And so basically just knowing what they were going to help out with. Cause they wanted to see us successful because the more success that we had that means they were successful. So we got seed money there. And then also there was no substitute to having that recurring revenue and that all say, and spend a whole lot less than what you make.

So just because you make it doesn't mean you got to spend it. So, you know, we pretty much were very religious about keeping our expenses low so that, you know, no debt just said, Hey, we're just gonna be lean and mean, and that way, you know, if things get tight, then. Yeah, because we spend less than what we make.

It's not going to be an issue 

Ryan Eaton: That's all, you just keep that model still to this day, don't you? 

Rick Holmes: Oh yeah, absolutely. We talked about that. Same. Not like that. Don't have any debt not going to have any debt. 

Ryan Eaton: I love that, man. So look, so you get, your agency started you're 24 years old. Get your bank accounts set up, got your, your licenses in place, your LLC formed or whatever type of corporation you set up.

What's kind of the next steps? 

Rick Holmes: So from there, you know, we continue to sell life insurance, the disability insurance, and then probably 12 years ago was when we said we can't do any more life. We're going to make that strategic change over to doing nothing but group benefits. And then of course, you know, went from, you know, everybody's heard of health insurance and dental and vision and life and short-term and long-term disability.

But very few people have heard. And of course, you did not pay me to say this, but the gap business, we call it the secondary business. It is just so untapped and no one has heard about it. And so for us to come in and really demonstrate that we can be a solution to the rising healthcare costs. It's just been great.

So, you know, now I'm going to say, we probably do. 90% in the secondary business slash gap business. And then we still do a lot of the other ancillary lines, dental and vision, life, and short term and health insurance and so forth, man. 

Ryan Eaton: That's awesome. So look, for a new agency starting out. What would you suggest?

You know you get everything rolling like you mentioned kind of on a shoestring. I don't have a lot of extra finances trying to spend less than you make. How do you kind of get that ball rolling from a business generation standpoint, getting your first group, getting your first client, and then kind of after that, how do you keep that ball rolling to make sure you keep that pipeline of, of sales full so that you get money coming in down the road?

Rick Holmes: Well, so, you know, there's no substitute for activity, you gotta have activity. And you know what I believe, and what I've actually convinced myself is is that every single person that we come into, what it was when we were selling life insurance, I know that there's a needs that they have. But it's just helping uncover those needs.

And can you, you know, generate that concern to make them want to, you know, buy some insurance, same thing applies to a business, you know, every business that we deal with, I know for a fact they're getting 10, 15, 20, 30, 40% rate increases. So, you know, my famous line that I would always say. Whenever I'd call.

And I mean, there's no substitute to cold calling and that is, I call him up and I'd say, you know, Hey, this is Rick Holmes. Did I catch you at a bad time? And they'd say no, or yes. And if they said yes, then I'd follow it back whenever they told me to. But then when they said, no, I said, well, the purpose of that purpose of the call is to have the opportunity to meet you.

And if nothing else make a new friend and half the time, they wouldn't even know why I was calling. I didn't say

I'd like to meet you and if nothing else make a new friend and then as I will, exactly what do you do now? If you're like every one of the clients that we work with, I am not kidding. Every one of them are getting 10, 15, 20% rate increases. And I say, they're scratching their head going on. You know, how am I going to help mitigate that?

I said, well, that's the thing is, is when they meet me, I will help them do that. One thing after this meeting, we get through, you're going to say, I'm so glad I met Rick Holmes. And so that's what I would say to him. And before we left, I'd say you remember that statement that doesn't want to get you to say the one thing you don't want to do is you don't want to waste that business.

Owner's time. They have already met with a hundred people. Exactly like you. So you gotta be prepared and be ready to show them something that they go. That was very well worth my time. 

Ryan Eaton: I love that. Love it. And I can say this, if you ever meet Rick Holmes in person, and you will love the time you spend with them, the guy's full of energy.

And and I tell you this too Rick and you've been a mentor to me for so many years, or I guess probably four years now I have enjoyed how much wisdom I've gleaned from you. And, and you're right. When you tell someone, you need some of their time, you don't want. And you treat them right. And you help them with the information, and you've done the same thing with us.

So over the years we've worked together. So I appreciate that in you. So look, my next question. I'm going to jump over to kind of something that we got this in the other day from a customer and they were asking kind of, they were looking to kind of start their own agency and they were asking, how do we pick our carriers when we're wanting to start our own agency?

And you could tell that. You, and I know the type of things that look for. We know, you know, about carriers. We know about distribution; we know kind of TPA type stuff. We know kind of things to look for commission schedules to evaluate, but the guy coming directly into the market wanting to start his own agency, he might not know all this.

What would you recommend to someone getting into the market who hasn't spent, maybe the time that we have looking to pick which carriers to kind of hook their wagon to so. 

Rick Holmes: That's a very good question, because I mean, if you have, you know, you and maybe two or three guys that are starting an agency, you know, you can get stretched thin.

And so, you know I've often said that I say no to a lot of folks, just so that way it does. The plate my time, because Tom is the most valuable asset that you have. So, I mean, literally picking, you know, when it comes to dental insurance, you're going to pick one or two, maybe three, you're going to have ones that have a good network, whether it be, you know, guardian or Delta or United and quarters once where you just found out from my best, who is the best app.

When it comes to dental and then when it comes to vision, you know, you're gonna say, you know, that's going to probably be BSP or Davis vision. And then you're going to say, you know, when it comes to group life short-term and long-term, that might be a, met a Prudential, a standard. And just say, I'm going to have.

Three, no more than three, because what happens is, is you can also dilute your block of business. So you want to find one or two of those carriers where one's a no one's B one C and then the C is always trying to raise up to a, but the more business that you do with these carriers, then you can also get, you know, where a block bonus that some of that block bonus can really help pay for your overhead.

For all your guys throughout the whole year. And so then you actually go there's money on the table. So when you dilute yourself by going to too many carriers, you know, it's not doing you really any good. So just your top tier ones like those. And then of course did the same thing with Morgan white and the secondary.

And. No you know, build some really good relationships and bought a lot 

Ryan Eaton: of business with. And Rick that's one thing I liked you. You were honest with us from the beginning and said, look, I'm not putting all my gap business with one carrier, and I'm not asking you to mention a carrier's name here, but you almost had it as a defensive strategy.

Because you said one time in the market, you had a situation where you got burned and had a lot of business with one specific carrier, and that shows all the more reasons to have a 1, 2, 3, would you mind not mentioning carriers, but just kind of talk big picture, kind of what that looks like from a defensive standpoint?

Rick Holmes: Well, the versifying is so important in anything. Don't put all your eggs in one basket and I've seen it. I've been in the business 32 years. And I've seen where you have some life, particularly not. I mean, this is just insurance talking about long-term short-term disability. You know, my Unum rep we're like how in the world are they able to sell that short-term long-term disability right at?

That is like, then, you know, they ended up getting bought and they're just trying to grow a big block of business. So the other thing I found is is, is that whenever you have competition is going to provide the best value, the best price, the best service and the overall best experience. So, you know, when you have competition and what I found is there's carriers where.

You know, maybe they've met their capacity and they just say, you know, Hey, we can't sell it for that anymore. But then someone else comes into the market and they don't have that capacity yet. And they're, they're giving it away. Do you go do business with them? I mean, I don't know, but you know, just having several different options so that.

If you get future writing prices, you know, a good solution to continue to help your 

Ryan Eaton: clients. No, that's great. Rick, so look, someone coming into the market nowadays, things obviously have changed from pre COVID. You were one of the first people I know have to adapt to zoom meetings and not saying you weren't doing them pre COVID, but I remember you were doing eight to nine a day.

When COVID hit, I remember us talking. And you said as like, Rick, you sound tired, your voice sounds gone. You said I've been on nine zoom meetings back to back. What would you say? And I know that's not necessarily a company differential, but when you're looking at it from an agency standpoint, someone coming into the market or someone who's already in the market, You're looking at a product you're looking at service, you're looking at technology.

You've really attached hold to the gap strategy and secondary insurance and a leader across the country in that. What would you say to suggest to someone looking at trying to differentiate their ideal? 

Rick Holmes: Well, I mean, and that's, what's tough because if you go into an employer, every one of them heard about health insurance, dental, insurance, vision, insurance, life insurance, short time, they have an incumbent broker in there, but the one thing that they may not have talked about is the secondary.

So, I mean like going, it doesn't matter whether you're a broker in Georgia or you're a broker Mississippi, there's so much opportunity out there and it's just so untapped. And half the folks have never even heard of it. So when you say secondary they've heard of ATSA, they've heard of HRS, but I would say that is the one differential that can set you apart and get you at least an audience in front of some.

And then you show them a solution. Then after you show them that solution and you get them as a client, then you can go after that, on the vision. And more than likely you would get the help if you get the secondary. So, you know, go after those other ancillary lines is what I've always told my brokers to do.

And it's worked out well. 

Ryan Eaton: So Rick, when we're looking at hiring, when you first started your agency, this is another question that we got is when do you know is the right time to bring the next person on? You know, I think about your shop and you have first-class people throughout your organization.

They're smart, they're professional. They're just good folks. Good, fun to be around. When you see it in your office, you see it in the hallways and just everyone has a good time to get an. Spend time with each other outside of work. Right. So I look at that. How do you know when it's time to hire someone and how do you try to bring the right people on that kind of fits your organization mode that you're looking at?

Rick Holmes: So when we started ours and together for like 20 plus years, all moved over in one time. So we knew each other backwards and forwards. And then when I look at the folks that we've actually brought on board one of them was a colonial rep that basically every time that they bumped into us, we won.

And finally they started selling our gap plan. And then when colonial found out about it, they kind of gave him an ultimatum. And I said, I'm thinking how yet you, you, you're what we're looking for. You come on board with us and you got a place with us. And so the other one was a gentleman that in our office that he had a trainer at a iron tribe.

And when you're working out with someone, you get into some really good conversations. And so, you know, I'll be honest with you. We look for people who are believers. So that way we have a certain standard that we want to obtain. And so they got into the conversation. He's a little younger, so. I think what I found and I wish I could define this.

And this is the only way I can say, but when I look at our agents, What's amazing is, is we have a 25 year old, a third year old who are Conda iron pushing arm. Then we have a 39 year old and a 43 year old kind of pushing each other. Then we have a 53 year old I'm 55 and then a 58 year old kind of pushing each other.

And then we have a 65 year old and a 67 year old kind of pushing each other. And what's amazing is you got all these different generations. And then the 67 year old pumped his head into the, into my office today, it just said, You know, cause if he walks by and he doesn't say a low, I call him out on it. I said, you got to say hello.

And so, I mean, it's, it's one that we have all different kinds of generations. And so when it comes to those younger generations that come in and fix my computer, they fixed everything for me because I mean, they just know technology. And so we just have it from all. And it's work is jailed. So that, that way we don't have 10 people who are all in the same 41 to 44 range.

So it's just, you learn from each other and we all get along. I'm going to flip 

Ryan Eaton: this a little bit and thinking, not for the person looking to start their agency, but for the person who's maybe in their fifties, maybe in their sixties and they have an agency and they have, like you said, they have different age bands throughout their organization.

Do you spend time? Specifically trying to devote to help maybe take certain people on sales calls or pour different wisdom into them that you've learned over the years. And how does that look? How do you try to do that with your team? 

Rick Holmes: So we do a lot of joint work where we work jointly, where, you know, we're so busy that you know, we'll say, Hey, can you work this case with me?

And then we'll just split it 50. Helps them. So we have a lot of different folks that do joint work and we have one guy that's still in the life insurance business and we refer all our business, the life insurance business to him. And he's happy with that. And then when he has a group case, then he'll bring somebody in the organization to handle that and he gets 50, we get 50.

And so, you know, we do a lot of joint work, so I'd say that's how we kinda continue to keep everybody's a coffer full that's. Exactly. 

Ryan Eaton: Right. So when you first started bringing people on, did you have the job descriptions? Did you have the. The Ben admin systems to kind of help you keep everything together.

And how'd you do payroll? Was that something that you just kinda, you won't get it first or how'd you do that? 

Rick Holmes: So we did not have like any kind of agency management system, so a did not have that did not have any kind of. Benefit admin system that would help do it all that it just kind of, you know, in the last five years it's almost been important and it was important to our clients.

And then we said, you know, let's, you know, look at the different ones, whether it be an employee navigator, you know, you name it, you know, we're, we're providing that level of service, but it just kind of, as our clients have. In order for us to stay at resource to our clients and we've gone out there and gotten it.

But we do have a agency management system. We have the benefit admin system, which I don't use either one of them. I'm too busy, I'm old school, but we do use it. And as long as we use it, I don't mind paying for it. So I hate paying for things that a. You know, the next time I will never pay for something three or four years in advance and say it and pay for a contract in order to get a better deal.

I'd rather pay a higher for 12 months. And then if I use it, I don't mind paying it for the next 12 months or the next 24 months. That's right. Most of our contracts are using. 

Ryan Eaton: If it's bringing value, you'll pay for it. Right. Right. So do you think in today's time that someone has to have a brick and mortar agency, do you think they have to have a physical office?

Do you think they just need a meeting room? Can they work from the home? What's your take on that? 

Rick Holmes: You know, when COVID hit, my staff was able to work from home and they did just as good a job. And they, when we brought them back in, they finally talked me into letting them work maybe once a day and once a week at home where they could be working, put a wash of a load of wash hands.

So I don't think that you have to have a brick and mortar agency in order to be successful at all. I mean, I think I'm seeing us do zoom meetings and especially during COVID, but even after COVID, I mean, all my renewals. I will always say, we can do a face to face. We can do zoom, whichever you prefer.

And they'll say, let's just do zoom. That's easy. So they're kind of used to it. And what's so great about that. You know, I used to have, you know, two or three appointments a day and like you said, Ryan, sometimes I can have eight or nine and it's just so much more. You know, cost-effective you get right to the point.

And I mean, employers are okay with, you know, eventually they want to meet you. I mean, I I've been surprised at million dollar premiums that we've sold right. On a zoom meeting and never met me in person, 

Ryan Eaton: but that's what I call the Rick Holmes effect. Not everybody's got that. 

Rick Holmes: It's been great. And so I will say that zoom.

Is when I first started the insurance business in 1990. Okay. That was may of 1990 for the first five years. I didn't have a cell phone. And then when I got my cell phone that I could pay $50 for unlimited roaming, as long as I called now about my business tripled, because I was on the phone, I was on the phone all the time, driving the hospital, driving.

You know, mobile, wherever it may be, but I never stopped that phone was my lifeline. And so I saw the business drunk from here to here and then it has continued to go up. And then when Zune came along, That technology. I saw the exact same thing happening with being able to have meetings because she could have multiple meetings all across the country.

And so where normally I would never leave Alabama. Now, you know, we've got clients that we're developing everywhere now. Pretty hard to get me out of Alabama, but I still. Zoom. I can go anywhere to California, anywhere to, to have a opportunity to make somebody and provide them a solution. 

Ryan Eaton: I love it. That's an efficiency and effectiveness combined to me.

It making the best use of your time being effective with it, getting the sales closed. I love that, Rick. So look, last question for you today that I have is if you had to give anyone who was running an agency had been running it for years or something. Who was just getting their agency started. What advice would you give to them in the insurance industry?

Rick Holmes: I would say that enthusiasm is probably one of the most important things, because if you're not excited about what you do, you know, it's going to be hard to recruit and, you know, I think enthusiasm, hard work, knowledge, a little bit of sales ability. Just being excited about what you do and the help. And I mean, I'll tell ya when I go to the doctor, which is not that often, unless I do something stupid wrestling or something like that, when I go there, I literally sit the closest person to the desk.

Cause I want to see how many people are laying down. Secondary cars to help them pay their out-of-pocket costs. And so when I see the number of, I mean, I'm going to say out of 10 people, maybe six out of 10 are going to lay down a secondary card and in Birmingham and where I'm going at least, it I'm like no we're making an impact.

And everybody is trying to find, you know, what can we do to for solution? What can we do? And that the think that you can come in and you can help people. I mean, I get, I wake up every morning, just so fired up, ready to say, okay, who are we going to help today? So, It's been, it's been fun, developing a lot of cases with brokers and I still developed a lot of cases myself, cause I want to stay sharp and make it happen.

So it's been great. 

Ryan Eaton: That's awesome. Well, your passion shows you got an all-star agency and I can't thank you enough for being on the show today. 

Rick Holmes: Hey Ryan. Thank you. 

Ryan Eaton: Look, we appreciate it, buddy. Thank you, man. 

Rick Holmes: Bye-bye.

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