A different view

The US has been extremely successful over the years when it comes to exporting its products. There would probably be rioting in the streets if - heaven forbid - some edict were passed banning such core US brands as Coca Cola, McDonalds, and Nike. It is not just the companies themselves that have been so successful over the years, however, as the US has also exported its way of going about business and managed to convince many operators in the UK that, quite simply, the US corporate ethic is best.

Of course when such corporate culture is talked about, one of the key agents of spreading the word has been that other astonishing import - the management consultant. Love them or loathe them, these consultants are now firmly embedded in UK business culture and have become an essential aid for some of the largest institutions, both public and private, in recent years.

Although management consultants have been used fairly extensively by some of the largest UK corporates, when it comes to smaller entities they are far less widely employed. Part of the reason for this is naturally one of expense, after all, a relatively small business cannot necessarily justify the expense of splashing out on third-party advice. Part of the reluctance is one of suspicion as to what exactly such consultants can really offer. It would appear that such suspicion is fairly deeply rooted among insurance brokers, many of whom are run by vastly experienced management who, justifiably, feel they know their market inside out. As one old hand bluntly told Professional Broking: "Having had several away days with consultants over the years, usually paid for by insurers, I can't help feeling that so much of it is just a load of old tosh."

Third-party advice

However, the world does not stand still, and for all that brokers might claim to know about their particular market, that does not alter the fact that they are now facing so many pressures that the appeal of third-party advice seems more relevant than ever. After all, with issues such as commoditisation, the internet, increasing consumer awareness, capital requirements, and the continuing pressure of the transformed regulatory environment, which insurance broker would really claim to be totally on top of things? It is here that the appeal of external consultants begins to make sense.

Stuart Reid, managing director of insurance broker Stuart Alexander, is relaxed in his approach to seeking third-party advice. He says: "The old adage is that most people run insurance brokers but they don't run businesses. We don't use management consultants but we recently undertook a leveraged buy out and have since acquired other businesses, and as part of that we have had due diligence undertaken by Mazars, which I suppose you could say was a management consultancy by proxy, and that was a valuable experience."

"Also there's been the advent of regulation by the Financial Services Authority, pointing out what's important, and of course insurance companies ensure we follow certain procedures," he adds. "However, we are a small company so costs are important, and we have a very experienced management team here and we have expertise in certain areas. That's not to say we wouldn't use management consultants, as it's something we have considered, particularly if we float. Using a consultant is a cost, however, at a time for brokers when the cost and the burden of doing business is extremely high."

Grant Ellis, the guiding light behind The Broker Network, is also measured in his approach to the use of consultants: "I have used them and we do use them but they tend to be industry-focused, such as Tony Cornell of Cornell Consulting, who is funded by Axa. There's a degree of scepticism about some management consultants and some tend to hear what you have to say and then regurgitate a report. However, you will find brokers using consultants to help with regulation."

Skills gap

Understandably, he suggests that one way of coping with the cost of using external advice is not to seek it on your own but as part of a wider group. "Small brokers do have a skills gap, so using outside help is a way of bridging that gap. Unfortunately it's expensive," he explains. "The network route is the best way here, as we employ those experts ourselves. What that means is that each member of our network is paying one-fiftieth of the price of a consultant.

"In the modern business world you need to bring in experts, and brokers need to be good business people now. However, you have to treat any consultant with a degree of scepticism, and my concern is that they must be industry-focused."

This desire by brokers to deal with people who come from and understand the industry they work in appears to have been heeded by those who seek to offer advice. While the largest London market players may occasionally look to the traditional management consultancy bigwigs, who offer advice to the financial services sector across the board, for the majority of insurance brokers in the UK the desire is to deal with people on their level. Outsiders, it seems, are certainly not welcome.

Those who do seek to work with insurance brokers on this level are not ignorant to such sensibilities, however, and those consultants employed to offer advice to small to medium-sized UK brokers are well known figures that intermediaries can feel comfortable with. Thus we have the aforementioned industry stalwart Tony Cornell of Cornell Consulting, or Claire Ryder, the ex development director at MMA, who heads Salient Solutions.

Challenging misconceptions

According to Ms Tilley, the work she tends to do encompasses management capabilities, employee capabilities, and product distribution. One thing she is adamant about, however, is that the consultant should not be viewed as an esoteric accessory for only the largest entities in the insurance arena.

"If you take the Financial Services Authority out of the equation, there's a misconception in the market that only the biggest companies can use consultants," she says. "One of the challenges is that there are a lot of good and talented people out there but they are short on resources, with little time to step back and think about how they can anticipate change and to consider where the market is going.

"A lot of smaller businesses would benefit from that. Just look at the trends in the personal lines market - if I were a broker I would want to think very seriously about that."

She understands why so many insurance brokers continue to look upon consultants with derision but seeks to debunk some of the myths: "Historically, the management consultant has had attached to it a certain meaning: a big bill and lots of flip charts but little practical details. However, that's far from the truth - good consultants are prepared to get their hands dirty. We are prepared to roll our sleeves up and to actually help people carry out our recommendations. So, increasingly, consultancy is much more flexible."

One thing she agrees with is that a consultant who just comes in for a very short time and then disappears, never to be seen again, is of very little value. "I've worked with one insurer for three days a week for five months. So, if you're looking to use a consultant make sure that they are someone who can fit in with your business."

A balanced view

Yet, as much as the consultants themselves may insist that they are attuned to the needs to the industry itself, of course the ultimate decision lies with the management of brokers themselves. Now that the old image of consultants as overpaid wordsmiths with an impressive array of jargon is being replaced by a more balanced view, perhaps brokers may begin to turn more readily for such external advice.

After all, in a world where the very existence of so many brokers continues to be threatened, what harm can there be in taking some decent advice from a third party - at the right price, naturally.

A CASE IN POINT: IAN RICHENS, CHIEF EXECUTIVE AT FM GREEN

We've listened to people telling us we should do it better but our sea-change was in the mid-1990s, when we decided we could be a national broker. I spent a year at Warwick Business School, which was a monthly course that was worth 100 days with a management consultant. We had a regular mentor each month, and met with successful business people like Dyson. There were 12 of us and each month we all visited the company of one of the people in the group. So when it came to me, they would look at FM Green, pull it apart and make suggestions as to how it could be run better. At first, you are naturally very defensive about such criticism but then you realise that we all share the same problems, so you change your mind from being so defensive.

It was brilliant and far, far better than many consultants who provide advice based on a day or so. I would recommend the Business School to anyone, as it gives a real insight into how to be a good businessman, and FM Green really took off after that.

One of the most important things it taught me was that if you have a customer from hell you will never turn that customer round. So, don't spend time building bridges. Instead we got rid of some customers from hell that we realised we could never make any money out of.

There was also a guy from Liverpool there, and one of things he said was "soar with the eagles, don't scratch around with the turkeys." Now all right, that sounds a bit American but it does make sense because what he meant was if you mix in the right environment and talk to the people who can help develop your business that's so much more important than just playing darts in the local pub. The School taught us simple business techniques like that, and we didn't have so many problems afterwards. We had the same team teaching us that Bill Clinton was taught by when he was in the UK. It cost FM Green £3000 but it was worth every penny.