David(s) vs. Goliath and the Pursuit (or neglect) of Legacy

This week, I posted about the Marsh acquisition of McGriff, and it certainly sparked a lot of interest.

The consolidation and roll-up of the insurance brokerage space is clearly a contentious topic, drawing concern from advisors across the U.S. and beyond. The financial incentives driving these mergers are evident and seem to reward the shareholders of these mega-brokers.

But who else benefits beyond the shareholders? Are employees gaining from this? I highly doubt it. Reducing competition rarely results in positive outcomes for employees. What about customers? It’s unlikely. With such one-sided benefits, it raises the question: will Lina Khan and her mission to preserve competitiveness in U.S. business ever turn their attention to the insurance brokerage industry?

This issue underscores a fundamental flaw in our industry’s succession planning—and perhaps our society’s as a whole—in terms of nurturing entrepreneurship. Historically, the drive to build a legacy was a cornerstone for many companies in America. Today, entrepreneurs have made a notable "trade" in values. The focus on legacy has been replaced entirely by a focus on money. Given the soaring valuations, this shift is understandable. However, it has eroded a sustainable private business model, especially for smaller firms, which are often the targets of these acquisitions. Personally, I’d prefer a little entrepreneurial narcissism over the rampant willingness to sell out.

There is, however, a silver lining. The consolidation led by Marsh, Aon, Brown & Brown, and USI is pushing smaller brokers, who still value their legacy, to specialize. Few businesses truly benefit from the mega-broker model. Most clients have two primary needs: service and specialty. If you’re not among the top 1,000 clients that these large firms prioritize, you probably don’t fit neatly into their box. For the rest of us, this leaves ample opportunity to differentiate ourselves by delivering the personalized service and niche expertise that smaller brokers excel at.

Another challenge facing the mega-brokers is their compensation structure for sales and production teams. Companies like Marsh, Aon, and Willis sell to "brand buyers," relying heavily on Account Executives and the strength of their name, rather than a dedicated salesforce. Their strategy in acquiring firms like McGriff is to gain entry into the "middle market." Yet, despite this strategic shift, their compensation model remains aligned with their broader brand strategy. Eventually, this misalignment will need to be addressed; otherwise, it risks cannibalizing their core business. Why does this matter? Because top-quality producers won’t stick around at these firms for long—unless they’re looking to coast in a place where underperformance can hide behind a big name.

For the rest of us, this means the talent pool is growing, offering an opportunity for organic expansion for those focused on building a lasting legacy. Every good entrepreneur needs a bit of narcissism, and that’s not necessarily a bad thing. If it promotes sustainability, legacy, and long-term succession planning for our industry—then bring on the narcissists. Let’s go!

feeling the pinch of this? If you are a perturbed client or a broker wanting something more sustainable and something with legacy - reach out.

cheers and have a great weekend! Please remember to subscribe to this newsletter and our podcast, RiskCellar

Brandon Schuh