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A Road Less Traveled

Are You Focused on the Quick Flip, Or Are You Building Long-Term Value?

Everything in our world is a product of its beginnings. We grow, evolve and transform—but it’s how we first enter the world, and the DNA with which we begin our journey that truly defines our evolution.

A firm’s corporate DNA is really about its purpose. Ours is pretty straightforward—build the premier, benefits and human capital management advisory firm for small and mid-sized employers in the country. Period.

In this way we can positively impact the lives of millions of Americans each and every day. No firm has followed a similar path as ours. It truly is a road less traveled.

OneDigital Health and Benefits has a distinctive lineage; we are unlike any other company. We are not a large P&C firm that also does benefits or one of a myriad of private equity-backed firms gobbling up agencies by the hundreds in a race against time to grow and flip to the next guy. In fact, our timeline is focused on building a disruptive competitive advantage. We believe the true health of a firm is measured in selling and retaining one client at a time, not by acquisitions.

Our leadership team is comprised of builders, not flippers, with a true emphasis on culture.

We seek like-minded leaders and teams who fit our culture, love the benefits business and would much rather play offense than defense.

As we move forward into 2017, it’s worth taking a trip back in time to help agency owners, their teams and industry influencers understand what happened at the moment of our inception and during the early years of our development. It’s a story no other business can tell and is at the core of our future competitive advantage.

Our company started in the dot-com heyday, an exciting time that spawned a proliferation of ideas and Internet-based businesses. Our concept was to create the best benefits firm in the country by selling online. In reality, there were a host of other players chasing the same dot-com dream.

Digital Insurance was established in 2000. That same year, the tech dot-com bubble burst. Most companies that launched during this era no longer exist. Fast forward to 2017 and we are thriving far beyond what we imagined possible at the turn of the century. It was this initial phase of our development that enabled us to aspire to be the premier firm in the nation. What has become ingrained in our DNA is adaptability to whatever the regulatory environment or changing market dynamics throw at us. Keep in mind, the same management team since our inception has just expanded through the acquisition of firms and talent over time.

We quickly realized that selling benefits, without a human connection, wasn’t a good idea. It seems obvious in retrospect, but in the craze of the times, it really wasn’t. It’s ironic when you look at some of the travails of more recent tech-based starts ups, that history has a way of repeating itself.

However, our willingness to invest in technology for the benefits industry, long before anyone else did, is one of the reasons we are unique in the marketplace.

Once we realized we had to morph our business model, we did something no one else was doing. We knocked on the doors of the largest benefits firms and asked to manage their smallest accounts. We created the industry’s only outsource solution and focused on operations. We were smart enough to know if you were getting paid 50 percent or less of each commission dollar, you’d better get efficient.

This created numerous unforeseen advantages: We learned the best ways to truly partner with other agencies, we built the infrastructure that enables us to manage benefits more efficiently and, most importantly, we developed a clear understanding of what to do and not to do when acquiring agencies. We live culture (The Power of Corporate Culture as a Competitive Advantage); we don’t just sprinkle the words around like falling leaves on an autumn day in New England.

Early on in our evolution, we had no idea we were creating a company with all the attributes necessary to prosper in a post-ACA environment. We were building an advanced technological benefits platform and integrated shared service model that created a significant cost advantage over EVERY firm in the country. At some point all we needed to do was add talented teams around the country to leverage this platform.

Our sustained 35% growth over the last several years has been achieved through a combination of organic sales and the acquisition of reputable teams who see the world through a similar lens. This sustained momentum has brought with it a few important evolutions. For example, we quickly moved past a solitary focus on small business. We now serve mid-sized and large employers, which now represent a majority of our revenue and the fastest-growing segment of our business.

Even though there is a lot of competition in the middle market, because of the way our company is built, no one is better positioned to change the economics of this segment than OneDigital. Very simply, a key goal for the next several years is to take what we have learned operationally in our service to small employers and build similar efficiencies up market to deliver services for clients of all sizes at a lower price point.

Over the years we also grew into our name; after the dot-com crash, it was no longer applicable. Today, the “digital” portion of our name represents data management, analysis and integration. It’s also a nod to the tech experience that today’s consumer expects to receive. Last year we changed our company's name to OneDigital, appropriately reflecting the value we deliver across the spectrum of our services, with a particular emphasis on the word “one.” One, in our minds, articulates our relentless commitment to standing as one with our clients, and our focus on a person-first cultural model.

While many things have changed, our foundation has not. Our DNA will always include managing as much small business as we possibly can. DNA contains the blueprint an organism needs to grow and evolve. From the beginning, these were the elements in our genetic makeup:

  • Treat people the way you want to be treated and show up as personally dedicated to each other, our clients and the individuals they serve;
  • Be the best, most invested partner possible--to colleagues, firms that join us and to our clients;
  • Invest in fresh thinking approaches to technology, solutions and talent for the long term;
  • Focus on strategic operational efficiency and building a cost advantage; and
  • Continually adapt in the benefits space faster and more responsively than any other firm

My goal in sharing these thoughts is to begin a two-way conversation that is thought-provoking and invites comment. I believe there is so much noise in the marketplace about culture, timelines, competitiveness and valuations of agencies, it is difficult to understand some pretty basic trade-offs.

For example, you can pay substantially more for firms overall if you aren’t investing in strategic, operational enhancements that will increase their value over the long term. You absolutely cannot talk about your culture when you are acquiring 5-10 firms a month. It just does not happen that way. Firms focused on building for the long term are not less competitive than flippers in terms of valuations. Like us, they are instead realigning some of the proceeds for investment to build a forward thinking, long-term competitive advantage.

Investing in talented teams, firms and solutions to build value over the long-term for our clients is at the core of our DNA.

I’m sure there are others like us who are also taking the road less traveled—there must be. If there are—they are helping to raise the bar for our industry and put people and value at the core of the health and benefits business model. Are you?

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  1. Our transition from a four person agency to a part of OneDigital is still less than a year old. Of course there were concerns... the same ones that have been mentioned in previous comments on this post. After discontinuing a dialogue with OneDigital several years earlier, I rejoined it last year as it was clear that they were a leader in the market we serve and want to continue serving. The process of "dating" OneDigital was never rushed. We both had the time to explore each other's culture, processes, and commitment to our clients. The level of effort and desire to improve on what we do for our groups is the same among all the people in the company, from mail-room employee to CEO. Amazing, but true in my experience! Our move to OneDigital was absolutely the best choice for our agency.

  2. We joined OneDigital in May, 2016. We were not looking to sell at the time but our business was growing so fast through our Association programs because they are so unique. I wanted to grow them more and develop more programs at the same time. I did not want to join one of the traditional National Houses because I have been in that environment before. They are mainly focused on Property & Casualty and employee benefits is looked at as a bonus. Sure, they throw money at some resources for the benefits department but most of the agents do not even know how to use them or the resources available were not suitable in the first place. That is because their management teams are almost exclusively made up of individuals that come from a Property & Casualty background. Very smart people but you can not be an expert in all areas of Insurance and these are the individuals making decisions on benefit resources, personnel, etc. That is one reason why a benefits only operation made me first open up to the possibility of selling our agency. The whole executive team from top to bottom has spent most of their professional lives in this arena. They speak the same language and they know what a broker needs to sell a case and they are singularly focused. They make excellent judgements on what resources are worthwhile and which ones don't have any substance or real value at all. Obviously, there were a lot of other determining factors for our sale: compliance help, increased negotiating ability, better opportunities for our people, etc. I have to say that although it has not been quite a year yet, it was one of the best decision my wife, Audrey, and I every made. We have had significant growth since the sale, our employees seem to be a little more motivated, our operations have become more streamlined and our running a little smoother, etc. Lastly, we really like the people in Atlanta (right now at least, lol). You really have to enjoy the people you work for and also respect them. We have already established good friendships with most of the management and the lines of communication are always open. We are in a better place than we were last year. Regards, Brian Stevenson

  3. We were first approached about joining OneDigital about two years before we made the move. We were nervous to be part of a much larger agency and wondered how that would impact our clients and our business. As time went by and we got to know the leadership and the vision OneDigital has for their place in our industry it became obvious that we wanted to partner with them and be a part of that vision. I go to work each day with a new found optimism that I am a part of something great and that we are bringing great value to our clients. I feel like I can help businesses owners and their employees and make an impact on the health of my community in a way that would never have been possible before.

  4. Prior to acquisition, I was a partner (2nd generation) in an agency that started in the mid 1970's. My father was the managing partner and about 15 years after I joined the firm the two of us started talking about succession plans. As the two of us dialogued about the future, OneDigital approached us about an acquisition. The more we talked with the OneDigital leadership team, the more we realized our values were aligned (i.e. treat people the way you would want to be treated) and that OneDigital had the final version of our vision (better resources for clients, greater efficiencies, more career development opportunities for staff, greater training resources, etc). For those reason, it made a lot of sense to join the OneDigital family. I'm thankful to be part of a team that not only strives for excellence, but truly cares about people.

  5. Kirstin Kleinschmidt
    February 16, 2017 at 9:00 pm

    My company was acquired by OneDigital on December 1, 2016. I have both Benefits and HR consulting clients in my book of business. Before I came on-board with OneDigital I was a little apprehensive about the culture of being with a large firm. Would it be too corporate? Would we be able to grow and learn and lean on others? My experience mirrors that of other firms that have been brought into the fold, that of respect, integrity, responsibility, genuine caring about others and top notch service. At OneDigital everyone looks at better ways to serve the clients and improved efficiencies. I am so glad I made the decision to join OneDigital and I am excited to help take the Human Capital Solutions services to other OneDigital clients. I am very happy to be a part of OneDigital and look forward to going down the road less traveled.

  6. Though there likely would be lively debate as to our "reputable team" qualifications, Mike's summary of the OneDigital advantages hits all of the high notes as to why our Hartford office (previously - Ovation Benefits Group) made the decision (9/13) we did.

    As a seller of an agency, it is so tempting to get lost in the deal (multiples of EBITDA, pro-forma assumptions, earn out terms -- CAGR etc.) only to lose sight of what likely will mean the most in the end to both you, your clients and employees ---- who did I marry?

    If you are not satisfied simply moving into a house and appreciate the difference between a house and a home ---give us a call.

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