CharaCteristiCs and Qualities of t op performers...identify the characteristics and qualities of top-performing insurance agency leaders. Specifically, this study series is designed

CharaCteristiCs and Qualitiesof top performers

T H E R E AG A N C O N S U LT I N G L E A d E R S H I P S E R I E S

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R e a g a n C o n s u l t i n g L e a d e r s h i p

S e r i e s

Table of Contents Introduction & Methodology ............................................................................ 2

Hard-Wired Accountants .................................................................................. 3

Discerning Analysts ........................................................................................... 9

Focused Multi-Taskers .................................................................................... 12

Practical Strategists ........................................................................................ 17

Effective Translators ....................................................................................... 23

Additional Thoughts & Conclusions ................................................................ 25

Acknowledgements ........................................................................................ 28

Appendix ......................................................................................................... 29

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R e a g a n C o n s u l t i n g L e a d e r s h i p S e r i e s

Introduction & Methodology The Reagan Consulting Leadership Series was launched in an effort to identify the characteristics and qualities of top-performing insurance agency leaders. Specifically, this study series is designed to address two questions:

1. How can agency leaders improve their effectiveness? 2. What should a firm look for in selecting successors to its current

leadership team?

The Leading CFO Study is the second in this series and follows the 2011 release of the Leading CEO Study. In conducting this study, our first step was to identify the most successful CFOs in the industry. To this end, we solicited nominations from industry leaders, including leading CEOs, carriers, and industry consultants. Based on these nominations, we selected the Top CFOs and invited them to participate in a survey designed to better understand who they are, how they spend their time and what has enabled their success. A total of 70 Top CFOs participated in the survey, including 17 from firms with <$10 million in revenues, 20 from firms $10-25 million in revenues and 33 from firms >$25 million in revenues. In exchange for their thorough and candid responses, each survey participant was assured anonymity. While we acknowledge this nomination and selection process allows the potential for some highly-talented and successful CFOs to be excluded, we are confident the 70 CFOs included are top-performers. Before reviewing the findings from this study, some context will be helpful. First, it is useful to keep in mind that the role of CFO is not the same in every agency. In fact, it’s highly variable. Think of a continuum. On one end of the continuum is the “Controller Profile.” Here we find the CFO who is focused primarily on agency accounting, financial analysis and recordkeeping. At the other end of the continuum is the “Business Leader Profile.” The CFOs on this end of the spectrum bring all the analytical skills and accounting capabilities of their “Controller Profile” peers, but they also bring more. Much more. And these additional capabilities and characteristics enable them to assume a unique leadership role within their firm. The Top CFOs addressed in this study operate at the far-right on this continuum and possess five characteristics/capabilities that distinguish them from their peers. Specifically, these Top CFOs are:

1) hard-wired accountants, 2) discerning analysts, 3) focused multi-taskers, 4) practical strategists and 5) effective translators.

Each of these characteristics is explored further in the sections that follow.

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S e r i e s

Hard-Wired Accountants The Top CFOs aren’t merely competent accountants. They’re made for the role. It’s in their DNA. They’re hard-wired accountants who, in most cases, discovered their calling early enough in life for it to direct their educational choices. Overall, the group is well-educated, having earned nearly 100 college degrees collectively. Most (98%) earned an undergraduate degree and 37% continued on to earn a graduate degree.

Source: Reagan Consulting Leadership Series – CFO Survey Of note, however, is the consistency in undergraduate majors. More than two-thirds (70%) earned their degree in accounting, while an additional 12% earned a degree in finance and 7% earned a business administration degree. By contrast, only 3% received a liberal arts degree.

Source: Reagan Consulting Leadership Series – CFO Survey

High School

2%

Undergraduate 61%

Graduate - Business School

33%

Graduate - Other

4%

Highest completed level of education

Accounting 70%

Finance 12% Business

Administration 7%

Social Sciences 3%

Physical Sciences 3%

Other 11%

Undergraduate major

Liberal Arts 3%

Risk Management 1%

Actuarial Science 1%

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This “accounting in the bones” orientation was again evident among the Top CFOs that ventured on to graduate school. Of these, an overwhelming 90% earned their advanced degree in accounting, finance or business. Also of note is that all of the graduate degrees reported are held by CFOs in firms larger than $10 million in revenues. Most of the Top CFOs continued their preparation for financial leadership by pursuing a professional designation. Overall, 68% earned a CPA designation, although this rate slips to 47% for those in firms below $10 million in revenues. Other professional designations were also reported, however none are prevalent.

Source: Reagan Consulting Leadership Series – CFO Survey Upon graduation from college, the Top CFOs launched their careers across a broad array of industries with few entering the insurance brokerage business. In fact, most had no insurance industry experience prior to joining their current firm. Only 14% joined the firm from another insurance broker, and only 28% were hired from within the insurance industry. Nearly one-quarter joined from public accounting, and almost half came from other industries.

47%

70% 73%

Under $10M $10-$25M Above $25M

CPA designation attained (by revenue category) (CPA = Certified Public Accountant)

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S e r i e s


Before joining their current firm, most (61%) of the Top CFOs were working in a financial or accounting role. This includes 28% that were CFO of their prior employer and 13% that were serving as controller. Another 20% were working either as a public accountant or staff accountant. In addition, many in the remaining 39% were in a corporate finance or internal audit role, while others were serving in a general management or operations management capacity.

Source: Reagan Consulting Leadership Series – CFO Survey Despite only 28% of the Top CFOs having prior CFO experience, nearly half (48%) joined their current firm as CFO. Those in larger firms (>$25 million)

Public Accounting Insurance Other Industries

Where did you work immediately prior to joining your current firm?(excludes those in school)

Other 17%

Broker 14%

Non-Financial37%

“Big 4”6%

Carrier 11%

Financial12%

Other 3%23%28%

49%

Other Role 39%

CFO 28%

Accountant 20%

Controller 13%

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are the most likely (58%) to have been hired as CFO, while those in smaller firms (<$10 million) are the least likely (35%).

Source: Reagan Consulting Leadership Series – CFO Survey An additional one-quarter joined as controller. Less than 1-in-5 joined in a non-financial role, including a mere two that joined as a producer. For the 52% that did not join their current firm as CFO, most (61%) were serving as controller at the time they were selected to be CFO.

Source: Reagan Consulting Leadership Series – CFO Survey Therefore, four-of-five reached their current position via one of two paths. They were either 1) hired directly as CFO (48%) or 2) promoted to CFO from controller (32%).

CFO 48%

Controller 25%

Staff Accountant 6%

Bookkeeper 3%

Producer 3%

Other 15%

What was your first role upon joining your current firm?

Controller 61%

Other 24%

Branch Manager 6%

Product Line Manager

3%

Sales Manager 3%

Staff Accountant 3%

What was your role immediately prior to being selected CFO?

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S e r i e s

Most of those not hired by their current firm as CFO wasted little time getting there. For more than half, the promotion to CFO came within five years of being hired and for 83%, it came within ten years.

Source: Reagan Consulting Leadership Series – CFO Survey Summary of key points

The Top CFOs are accounting-oriented executives who happened to land in the insurance brokerage industry. The path to their current job was guided more by a wiring for accounting than a specific passion for insurance brokerage.

Previous insurance brokerage experience is not only non-essential to becoming a Top CFO, it is rare. Only 14% joined their current firm from another broker.

Most of the Top CFOs joined their current firm as a young but experienced accounting/finance professional who was ready (or nearly ready) to step into the CFO role. Nearly half were hired as CFO and most of the rest were promoted to the job within five years of joining the firm. One-fourth of the Top CFOs were in their current position by age 35 and three-fourths were there by age 45. The median age at which the Top CFOs took the financial helm of their current firm is only 41, falling within a tight range of 40 to 42 for all three revenues categories.

58%

25% 17%

<5years

5-10years

>10years

Tenure with agency prior to becoming CFO (excluding 48% that joined as CFO)

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4%

20% 22%

28%

17%

6% 3%

Under 30years

31-35years

36-40years

41-45years

46-50years

51-55years

Over 55years

At what age did you become CFO of your firm?

Median Age 41

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S e r i e s

Discerning Analysts As well-educated, experienced and hard-wired accountants, the leading CFOs have exceptional technical skills. But being a competent accountant is not enough to separate them from the rest of the field. Most agency CFOs are technically sound, as are most agency controllers. Therefore, to be a Top CFO, strong technical skills are merely the price of admission, not a distinguishing characteristic. What distinguishes the Top CFOs is their ability to apply these skills. More accurately, it is their ability to overlay these technical skills with a business-minded discernment. Within an insurance agency’s executive team, the CFO is typically the one charged with doing analyses related to current operations, budgets, potential acquisitions, and opportunities for expansion. It’s one thing to be able to “crunch the numbers,” but the Top CFOs take the analysis to a higher level through business savvy and intuition. When asked to identify the top three skills that have enabled their success, by a wide margin, the Top CFOs rated analytical skills first on the list.

Source: Reagan Consulting Leadership Series – CFO Survey However, the Top CFOs possess other key abilities that they are able to apply to their analytical skills. It is these additional abilities that leverage their technical competence and enable the Top CFOs to be business leaders. What are these additional abilities? First, they are able to understand what needs to be analyzed. This requires a sufficient general understanding of the insurance brokerage business, an intimate understanding of their firm, and a “business-owner” mentality.

7%

16%

48%

48%

48%

52%

81%

Negotiatingskills

Business-ownerexperience

Accountingskills

Strategicskills

Peopleskills

Communicationskills

Analyticalskills

What are your top three skills that have enabled your success as CFO?

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Next, they know how to utilize available data to get the analysis done thoroughly and accurately. The Top CFOs know how to extract key information from the wealth of proprietary data available within their own automation system, as well as how to tap into data available within the industry. Finally, they are able to effectively utilize this data to gain insight into an issue (e.g., track activity within a producer’s book of business, assess changes in clients’ year-to-year commissions, or identify problems within a new acquisition’s book or a department’s profitability). They can accurately evaluate the risks and benefits associated with a potential new program, additional office, acquisition or other initiative. And they can then reach the right conclusions about what needs to be done. Strong analytical skills are required to be a Top CFO, but it is their business-minded discernment that informs and directs their analysis and conclusions. This is reflected in what they believe to be their greatest contributions to the firm. Following are examples:

“Putting processes in place which make it easier to gather relevant input from stakeholders.” “Guiding the firm through times of expansive growth as well as economic turmoil.” “Development of an evolving budget process that improves each year and that has added quantifiable accountability to our branches, units and producers. This allows us to make informed decisions as we go.” “Bringing more complete information faster to the CEO so he can make better decisions.” “Automated forecasts to better predict the future.” “Regular and accurate analysis of our agency’s performance which allows our CEO to not have to worry about the financial element and allows him to sleep well.”

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S e r i e s

Summary of key points

The top CFOs are technically strong, but their ability to overlay their technical skills with a business-minded discernment is what distinguishes them and brings greater value to the firm.

The top CFOs have a fundamental knowledge of both the database information available and the analytical tools needed to discern vital insight for a wide variety of situations and issues.

The top CFOs are able to identify what needs to be analyzed, determine how to conduct the analysis, reach the right conclusions and encourage appropriate action.

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Focused Mult i -Taskers Although “Focused Multi-tasker” might be an oxymoron, it’s an apt description of another defining characteristic of the Top CFOs. The role of a CFO is perhaps one of the most diverse in an insurance agency. During a single day, a CFO may go from an Executive Committee meeting into a meeting with the firm’s auditors, followed by a meeting on IT issues and then an interview with a prospective producer. A CFO is a strategic member of the executive management team, yet virtually every detail of each financial transaction filters through the CFO’s responsibilities. Among the non-financial responsibilities frequently assumed by the Top CFOs are operations management, facilities management and information technology management.

Source: Reagan Consulting Leadership Series – CFO Survey As is indicated in the chart above, CFOs in smaller agencies are spread the thinnest. As the agency grows, additional management staff will be hired to take over some of the non-financial responsibilities. Yet approximately one-third to one-half of the Top CFOs in even the largest revenue category retain ultimate responsibility for those areas. Thus, there is rarely a “typical day” for a CFO as they move between various disciplines and multiple tasks – moving through issues in Commercial to Personal to Benefits, and from operations to IT to legal. We asked the Top CFOs to list their most important priorities. With all the activities in which they are involved, what are the ones that they feel are most important? The table below shows the priorities most commonly appearing in their “Top 5.”

36%

48%

48%

45%

55%

35%

40%

45%

40%

40%

82%

53%

71%

82%

76%

HR Mgt

Legal

IT Mgt

Facilities Mgt

Operations Mgt

What additional responsibilities do you have? (by revenue category)


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S e r i e s


Not surprisingly, these priorities varied depending on the size of the firm and the staffing of other management positions (e.g., HR manager, IT manager). As a firm grows, the typical CFO spends less time on actual accounting and more time in financial management/analysis, along with strategic planning and executive duties. In the larger firms, many of the Top CFOs are actively involved in mergers and acquisitions – from identifying potential acquisition candidates, to evaluating them, to performing due diligence and handling a

6%

21%

9%

27%

6%

9%

24%

13%

42%

30%

64%

55%

76%

91%

0%

0%

15%

5%

5%

25%

30%

25%

20%

70%

40%

65%

80%

80%

29%

0%

35%

18%

12%

47%

18%

59%

24%

18%

18%

35%

65%

76%

HR Mgmt

Firm legal functions

IT Management

Compensation plan design & admin

Recruiting producers

Firm's accounting

Mgmt of annual stock valuationprocess

Operations Mgmt

Managing Direct Reports

Budgeting

Mergers and Acquisitions

Executive functions

Strategic planning

Financial management/analysis

What are your highest priorities? (measured as frequency of mention among Top CFOs’

5 highest priorities – by revenue category)


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lot of the transaction closing and integration processes. Likewise, there is a consistent move away from IT and HR management roles. We also asked the Top CFOs how they spend their time and we found some misalignment between priorities and time allocation. Specifically, many expressed frustration with the amount of time they spend “in the trenches” helping to resolve accounting and operational issues.

Note: All other activities at 2% or less for each revenue category. These include business line management, firm marketing/advertising, recruiting (producers and non-producers), production/book of business/business development, benefits administration, stock plan design and administration, facilities management and investment management.


1%

3%

4%

2%

4%

4%

8%

5%

5%

5%

10%

8%

12%

17%

1%

3%

2%

3%

3%

5%

3%

9%

8%

6%

9%

10%

7%

24%

4%

0%

1%

5%

2%

5%

2%

4%

13%

14%

5%

9%

9%

16%

Sales management

Mgmt of annual stock valuation process


HR management

Compensation plan design & admin

IT management


Budgeting

Firm's accounting

Operations management

Strategic planning

Executive functions

Managing direct reports



How do you spend your time? (average % of time spent, based on a 50-hour work week – by revenue category)

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S e r i e s

In general, the Top CFOs would prefer to take time currently spent on accounting and certain operations and administration responsibilities and reallocate it to strategic planning and mergers/acquisitions.


-53%

-46%

-43%

-32%

-29%

-23%

-23%

-16%

-16%

-11%

-10%

-8%

-6%

-4%

-2%

5%

10%

13%

17%

17%

27%

51%

52%

-60% -40% -20% 0% 20% 40% 60%

Firm's accounting

Facilities management

Benefits administration

Production/book of bus/bus dev

IT management

HR management


Mgmt of annual stock valuation

Business line management

Operations management

Budgeting

Compensation plan admin

Sales management

Recruiting non-producers

Executive functions


Stock plan design and admin

Investment management

Managing direct reports

Recruiting producers

Firm marketing/advertising


Strategic planning

What Top CFOs want to spend more time / less time on (as a % of time currently spent)

LESS MORE

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The Top CFO has an ability to focus on multiple and diverse priorities, often concurrently.

In addition to managing traditional accounting and financial functions, a Top CFO is frequently responsible for other disciplines that include operations, facilities, IT, legal and HR. As the size of the firm increases, however, their direct responsibilities may decrease as direct managers are hired for those roles.

The role of CFO typically has “seasons,” as the CFO may be involved in an automation system conversion, the acquisition of another agency and its integration, and/or an office relocation/consolidation.

While the Top CFOs are focused multi-taskers, there is often a conflict between their desire and intent to focus on strategic issues, versus the realities of having to spend time on operational issues.

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S e r i e s

Practical Strategist s The image of CFO as steward is passé. This is not because the stewardship role has diminished, but because the job overall has expanded. More specifically, the strategic demands on the CFO have grown. Among the many hats an insurance agency CFO must wear is that of “practical strategist.” And the ability to effectively wear this hat is one of the hallmark characteristics that separate the Top CFOs from the rest of the field. The Top CFOs not only recognize strategic planning as part of their job, they identify it as one of their highest priorities, second only to “financial management / analysis.” Strategic planning was identified as a Top 5 priority by 74% of all of the Top CFOs and by nearly 80% of those in firms larger than $10 million in revenues.


The Top CFOs also acknowledged their influence on strategy when asked about their greatest contributions to the firm. Following are a few examples of the responses.

“Contributed to the strategic direction of the firm.” “Contributed to strategic decisions impacting the direction of the firm.”

“Influenced the strategic planning process.”

39%

46%

52%

74%

86%

Budgeting


Executive functions

Strategic planning


What are your highest priorities? (measured as frequency of mention among Top CFOs’

5 highest priorities)

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The role the Top CFOs play in the strategic planning process, however, is distinguished from that of other executives. It is unique and can generally be characterized as follows:

Early involvement. Most (74%) of the Top CFOs are on the team that takes the lead in developing strategy. This percentage varies little by agency size, ranging between 70% and 76% across the three revenue categories. For more than half (55%), this team includes the CEO plus other managers. And for nearly one-in-five, the CFO and CEO work one-on-one to initiate strategy.


Emphasis on influencing. While the CEO is often the lead vision-caster, the CFO plays the part of the pragmatist. They are the filter through which the vision must pass. The CFO considers the risks, costs and consequences and then influences strategy accordingly. By a wide margin, the term most identified by the Top CFOs as one others would use to describe them is “trustworthy.” They are trusted to protect the firm and its stakeholders by lending a discerning and objective eye to strategic planning.

Candid communication with CEO. Being the strategic filter is not synonymous with being a naysayer. The success of the Top CFOs can be measured in large part by their ability to help the CEO succeed. And this is accomplished as a strategy enabler, not as a consistent roadblock to strategic initiatives. A natural tension exists between the CEO’s focus on growth and the CFO’s concern for profitability, implementation requirements and risks. But the Top CFOs look for ways to make things happen, not reasons to shut them down. The relationship between CEO and CFO is unique. Most (62%) of the Top CFOs report directly to the

Combination of CEO and CFO

19%

Combination of CEO and other

managers, excluding CFO

3% Combination of CEO and other

managers, including CFO

55%

CEO and/or President

10%

Other 13%

Who/what group takes the lead in development of the agency’s strategy?

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S e r i e s

CEO and nearly half (49%) spend three hours per week or more one-on-one with the CEO.



The hallmark characteristic for this relationship is candor, with nearly all of the Top CFOs reporting a strong ability to be direct and candid in communicating with the CEO. Through this relationship, the Top CFOs complement and enable the success of the CEO.

CEO 62%

President 22%

Other 7%

Board of Directors 5%

COO 4%

To whom do you directly report?

Less than one hour 12%

1 to 2 hours 39%

3 to 5 hours 27%

More than 5 hours 22%

On average, how much one-on-one time do you spend with your firm’s CEO each week?

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Bridge to execution. Converting strategy to reality is a challenge. Resistance kicks in somewhere between “pie-in-the-sky” visioning and “nuts and bolts” execution. Therefore, someone must bridge the gap and steward each strategic initiative throughout its lifecycle. This includes implementation and beyond. A distinguishing characteristic of the Top CFOs is their ability to be this bridge and to get things done. This ability was referenced by the top CFOs when asked to cite their greatest contributions to the firm.

“My ability to move projects forward and get things completed/accomplished.”

“My ability to focus ideas and strategies into a workable and effective plan.”

Most of Top CFOs acknowledge the importance of their contribution to strategy and believe their strategic skills have been essential to their success. In fact, of the skills they believe to have enabled their success, only “analytical skills” and “communication skills” rank higher than “strategic skills.” This acknowledgement, however, should not be mistaken for gloating or over-confidence. Conversely, it should be noted that even the Top CFOs recognize they may need to make even a greater strategic contribution. Evidence of this recognition can be found in their responses when asked to identify the top 5 terms others would use to describe them. Only 29% included “strategic thinker” on their list. By contrast, when asked to identify the top 5 characteristics required of their firm’s next CFO, 54% listed “strategic thinker.”

0% 0% 3%

27%

70%

1 2 3 4 5

To what degree do you feel you are able to be completely open and candid with your CEO?

Lowest Level of Openness

Highest Level of Openness

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S e r i e s

Source: Reagan Consulting Leadership Series – CFO Survey Additionally, the Top CFOs acknowledge that strategy may not come to them quite as naturally as other aspects of the job. While they are confident in the strength of their financial orientation (8.9 on 10-point scale), they are far less sure of their strategic orientation (6.4 on 10-point scale).


19%

54%

42%

49%

62%

25%

29%

41%

44%

78%

Decision-maker

Strategic thinker

Team player

Leader

Trust-worthy

Top 5 Characteristics

Terms people would use to describe you Top characteristics for the next CFO

6.4

6.9

8.9

Strategic Orientation

Operational Orientation

Financial Orientation

How would you assess your personal orientation? (average score where 1 = weakest and 10 = strongest)

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Unlike many of their peers, the Top CFOs are able to influence the strategic direction of their firm. They do so less as a vision-caster than as a pragmatist who can anticipate the implementation of strategic initiatives and the related risks and requirements. However, rather than allowing risks or challenges to derail strategic initiatives, they find ways to overcome those challenges.

Most of the Top CFOs participate in the full range of strategy, starting with planning and continuing through execution and oversight.

For many of the Top CFOs, their role in influencing strategy may occasionally take them out of their comfort zone or away from their natural orientation. However, they embrace the role as they understand it is vital to the firm. They also recognize the strategic demands on agency CFOs are increasing. They acknowledge their own need to spend more time on strategic issues and believe it is essential for their eventual successor to be a “strategic thinker.”

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S e r i e s

Effective Translators As demands are increasing on the strategic thinking skills of agency CFOs, so are demands on their communication skills. Reflect for a moment on the traditional, stereotypical image of a CFO. Is the image that comes to mind that of a confident and competent communicator? Perhaps not. But the ability to communicate effectively is a key characteristic that distinguishes the leading agency CFOs.


The Top CFOs recognize their need to effectively communicate. In fact, among the skills they believe have most enabled their success, “communication skills” ranks second only to “analytical skills.” In addition, most believe their communication skills are strong. Only 16% characterize themselves as “excellent” communicators, however, more than three-quarters grade their communication skills as at least a 4 (on a 5-point scale).


48%

52%

81%

People skills / Strategic skills

Communication skills

Analytical skills

What are your top three skills that have enabled your success as CFO?

0% 0%

23%

61%

16%

1 2 3 4 5

How do you rate your overall communications skills on a scale of 1 to 5 (where 1 = poor and 5 = excellent)?

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But what are the specific communication requirements of a CFO in insurance brokerage? Unlike the CEO, the CFO is generally not called upon to be the public face of the company. Conversely, the CFO of a privately-held insurance agency must be skilled in communicating with internal constituents, such as shareholders and employees. As previously addressed, the Top CFOs are sufficiently skilled communicators to confidently and resolutely influence strategic decision-making. Once strategy is set, however, it is often the CFO who must advocate for the CEO’s strategic agenda throughout the organization. And this advocacy requires a different set of communication skills. Specifically, it requires the CFO to translate strategy for the rest of the firm, across a diversity of people, departments and disciplines. This requires the Top CFOs to not only understand the needs and concerns of all departments and key players, but to also be multilingual. They are able to speak all languages well enough to build consensus. But it doesn’t stop there. The Top CFOs effectively serve as a conduit between the CEO and the rest of the agency, with communication flowing in both directions. In one direction, strategy is interpreted for the rest of the firm. In the other direction, progress, results and obstacles are translated back to the CEO and management team. In this direction, the CFO helps management to “see what they see” through their analytical skills, business discernment and hands-on perspective. Summary of key points

The Top CFOs are effective communicators and believe their communication skills are among the most important enablers of their success.

The Top CFOs may or may not be polished presenters. More importantly they are effective translators, translating between the CEO/shareholders and the rest of the agency.

Among the characteristics that enable the Top CFOs to be effective translators are an in-depth knowledge of their firm, competence, trustworthiness, persuasiveness and consensus-building skills.

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S e r i e s

Addit ional Thoughts & Conclusions As addressed in the Introduction, the title of CFO can mean many things within the insurance brokerage business. Not all agency CFOs fill the same roles and, clearly, not all deliver the same value. The Top CFOs selected for this study stand out from the field because they are proven business leaders, not simply competent accountants. In general, they possess five characteristics that have enabled their success.

They are, first and foremost, hard-wired, technically-sound accountants.

They are inherently analytical and use this ability to synthesize and interpret data with a clarity that enables the management team to draw the right conclusions and make the best decisions.

They have the capacity to manage multiple tasks and priorities.

They take a practical view of the firm’s strategy and can convert that strategy to successful execution.

They have good communication skills and use those skills to bridge the divide between the various functions and personality types that are found in all insurance firms.

They also have an intimate understanding of their own organization. For example, one top CFO mentioned the importance of his “…ability to think creatively about growth (acquisition and footprint) without losing the agency’s culture.” These Top CFOs communicate across the agency, from management to administrative staff, and from producers to service staff. They understand the carrier relationships and the customer relationships. They understand the operational workflows and how the information flows through the automation system and its databases. They also understand and protect the dynamics of the organization’s various personality types (e.g., producers versus accountants) and can stand in the gap and build consensus. Conclusions Increasing demands are widening the divide between the “Controller Profile” CFOs and the “Business Leader Profile” CFOs. This has direct implications for agency CFOs, but also for agencies that need to identify their next financial leader. For the CFO that wants to increase his/her impact and function at the level of the Top CFOs, the following steps will move you forward:

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Develop a business-owner’s perspective of opportunities and risks.

Develop a well-rounded understanding of your firm’s operations.

Understand the CEO’s vision and find solutions to obstacles.

Understand all available sources of data and learn to use data analysis to inform strategic decisions.

Improve your communications skills. For the agency that needs to identify its next CFO, the profile of Top CFOs provided in this study should serve as a blueprint for the preferred background, orientation, characteristics and capabilities. It may also help to consider the opinions of the Top CFOs on this issue. Following is a summary of their responses to the question “What personal traits/characteristic/tendencies should your next CFO have?”


As for the best source for their successor, nearly half (48%) of the Top CFOs believe there is a range of viable options. Another 48% believe some external source would be best, while only 4% believe their successor should come from within the agency.

0%

1%

4%

12%

13%

13%

15%

16%

19%

42%

49%

54%

62%

Peace-maker

Empathetic

Disciplined task-master

Truth-teller

Wise counselor

Visionary

Fair

Influencer

Decision-maker

Team player

Leader

Strategic thinker

Trust-worthy

Which personal traits/characteristics/tendencies should your agency’s next CFO have? (measured by frequency of

mentions among Top CFOs’ top 3 choices)

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S e r i e s

Source: Reagan Consulting Leadership Series – CFO Survey Finally, in considering both the backgrounds of the Top CFOs, as well as their advice regarding their successor, it appears prior CFO experience is more important than an insurance brokerage industry background.

Any of the above 48% Outside the

agency AND outside the insurance brokerage industry

17%

Outside the agency BUT from

within the insurance brokerage industry

25%

From within the agency

4%

What do you consider to be the best source for CFOs of brokerage firms?

From a CPA firm BUT with insurance brokerage auditing experience

6%

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Acknowledgements The Reagan Consulting Leadership Series was conceived, conducted, written and produced by Reagan Consulting in an effort to stimulate meaningful discussions concerning leadership and to provide information and resources that can help senior officers of insurance agencies improve their performance. In addition, it is our intent to provide information and resources that help in the successful development and selection of the next generation of agency leaders. The future of our industry and, more specifically, the future of every agency and brokerage depends upon the quality of its future leadership. It would not have been possible for us to conduct and produce this study without the backing and support of four key strategic partners to the agent and broker community. These firms, through their financial commitment to this study, have tangibly demonstrated their support for the agents and brokers they serve and for our industry as a whole.

We also want to express our thanks and appreciation to The Council of Insurance Agents & Brokers for its sponsorship and support of this study.

In addition, we want to thank the many insurance industry leaders that provided thoughtful nominations of Top CFOs. And finally, to the 70 Top CFOs that participated in the study, we offer our gratitude for your willingness to thoughtfully and candidly respond to our exhaustive questions. Congratulations to each of you for being recognized as an outstanding industry leader.

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S e r i e s

Appendix The following exhibits are from the Reagan Consulting Leadership Series – CFO Survey.

10% 9%

23%

36%

19%

4%

Under 40 40-45 46-50 51-55 56-60 Over 60

Current age

Median Age 52

26% 32%

37%

5%

1 to 5 years 6 to 10 years 10 to 20 years Over 20 years

If you were CFO of another firm previously, for how many years?

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26%

33%

17%

9% 9% 4%

Less than 5 5-10 11-15 16-20 21-25 25-30

Years as CFO of current firm

Median Years 9

48%

30%

13%

3% 3% 3%

Joined asCFO

<5years

5-10years

11-15years

16-20years

>20years

Tenure with agency prior to becoming CFO

4%

20% 22%

28%

17%

6% 3%

Under 30years

31-35years

36-40years

41-45years

46-50years

51-55years

Over 55years

At what age did you become CFO of your firm?

Median Age 41

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S e r i e s

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60%

23% 17%

7%

A Board ofDirectors

comprised ofmanagement and

other insiders

An independentBoard of Directors

(which includessome firm

executives)

None ofthe above

An informalboard of advisors

Which of the following boards does your firm have?

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S e r i e s

How effective is your interaction with the Board of Directors in the following areas? (where 1 = not effective and 5 = very effective)

Yes67%

No33%

Interact with Board

2% 5% 7%

23%

64%

1 2 3 4 5

If yes, how effective?

Financial Management & Internal Controls

Weighted Average: 4.43

Yes86%

No14%

Interact with Board

2% 2%12%

37%47%

1 2 3 4 5


Business Strategy


Yes72%

No28%

Interact with Board

2% 6%

24%32% 36%

1 2 3 4 5


Compensation –Executive

Yes75%

No25%

Interact with Board

4% 4%

21%

38% 33%

1 2 3 4 5


Compensation –Producers

Weighted Average: 3.94 Weighted Average: 3.92

Yes80%

No20%

Interact with Board

5% 0%13%

33%

49%

1 2 3 4 5


Perpetuation and Other Shareholder Matters


Yes77%

No23%

Interact with Board

4% 4%

21%32%

40%

1 2 3 4 5


Compensation –Firm Staff


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S e r i e s

www.ReaganConsulting.com

One Piedmont Center, Suite 500 • Atlanta, Georgia 30305Phone: 404.233.5545 • Email: [email protected]

Documents

CharaCteristiCs and Qualities of t op performers...identify the characteristics and qualities of top-performing insurance agency leaders. Specifically, this study series is designed