Last month, the leaders of well-respected broker and AR network McLardy McShane Group moved into executive board roles and handed the business reins to a new generation. Don McLardy and Mike McShane, who launched the business together in 2007, were instrumental in building its strong industry reputation and impressive growth. McLardy revealed to Insurance Business pivotal decisions that shaped the direction and philosophy of the brokerage - insights that offer some valuable lessons for insurance brokers navigating today’s evolving landscape.
The first important move came in the late 1970s when McLardy started his insurance career. Not by design, but by circumstance. “I was a bit of a failure at university and at school for that matter,” he admitted. “I was probably smart enough to pass but just didn't like studying.”
His dad, a chartered accountant, found him a job at an accounting firm, leading to an introduction to OAMPS Insurance Brokers, then a small start-up. The founders, Peter Claringbold and Terry Lane, soon offered McLardy a job as their first accountant. “After about six months helping with their finances, Peter Claringbold said to me, ‘You should become an insurance broker,’” McLardy said. “He sent me out into their little work room and I started a desk with a few clients and learnt my way into insurance.”
Like many insurance leaders, Don McLardy fell into a career in the industry. He spent nearly 20 years at OAMPS and became its managing director during the 1990s.
During the 1980s he met Mike McShane at OAMPS. They pursued separate careers and, by the 2000s, both men were running their own brokerages and were actively involved in the AR network, Insurance Advisernet. “Then, in 2007 Mike and I, who were great friends, were sitting having a wine one night and said, ‘Why don't we put our two little AR businesses together?’ We did and we called it McLardy McShane.”
Starting with about six employees, they remained an AR within Insurance Advisernet until 2010. As their business grew, they transitioned to Steadfast Group with their own license — a move that enabled further expansion.
Before joining Steadfast, McLardy and McShane made another big decision that determined the future direction of the business. “Our plan was to build a good Melbourne brokerage and we didn't want to run an AR network,” said McLardy. He said many of their business contacts and friends were in Victoria’s capital.
However, a call from a contact in a rural town changed their trajectory. “Then it was only about three months after we'd launched as McLardy McShane that I got a call from someone I previously knew in a rural town who said, ‘I want to start a business - would you help me?’” he said. This opportunity resonated with McLardy’s belief in shared ownership.
“I'd always been someone who believed in equity, so we started having equity branches where we’d go into business 50-50 with people in rural areas,” he said.
This approach fuelled rapid expansion beyond Melbourne and into regional Victoria.
“Then in 2013 came another pivotal time,” said McLardy. They were coming to the end of a three-year non-compete agreement with Insurance Advisernet to not have any ARs. “That was perfectly reasonable because we helped build that AR network and we didn't actually want to have ARs,” said McLardy.
But when McShane received a phone call from a business contact who asked if they could join McLardy McShane as an AR, they had a rethink. “We had to decide, do we want to go into the AR business?” McLardy said. “We thought we would, but we were going to do it differently.”
One key difference, he said, was deciding not to have expensive exit fees. “We always thought that the AR exit fees - which are still around today - were absolutely counterproductive,” said McLardy. He said by the time the business relationship is at the point where someone wants to leave it, there are obviously some issues.
“Then by forcing people to pay $50 grand or $100 grand to get out, it becomes acrimonious,” said McLardy.
When they discussed this no-exit fees approach, some industry colleagues warned them against it and said it could jeopardise building anything with value. McLardy and McShane argued an AR network partnership should be more about building a strong and trusting relationship and if that’s not working, why stay together? “If we're not doing what people want and supporting them as they want and they don't like us then why on earth would we want to have them with us?” McLardy said.
He said this way of thinking became part of the business philosophy underpinning their network. “We were able to build a different AR business that was about saying, ‘We think we're good people to deal with, we'll look after you and if you ever think we're not, you're welcome to leave.’”
The AR network is now about 150 strong, he said, and still growing.
Another pivotal decision, he said, is making sure all ARs that join have a similar people and culture to his firm. McLardy said it’s hard to articulate who fits and who doesn’t in concrete terms. “That's really a gut feel judgment as much as anything,” he said. “It's really hard to explain.”
For the last 10 years that judgement had been made by McLardy and Meg Long, who became CEO of McLardy McShane Partners (MMP) when McLardy moved into a board role. One way of approaching an explanation, he suggested, is knowing what sort of firm he doesn’t want joining his network. “They can't be too selfish and too driven for money’s sake,” said McLardy. “They’ve also got to respect what we do and what we think.”
He said a mercenary style of broker with too much focus on money wouldn’t fit. He said, in his opinion, this isn’t the right way to run a business. “But they can, if they're good salespeople, go really well and make good money - but they're very mercenary about it and they don't build anything,” said McLardy. “We're trying to get past all that.”
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