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Listen to the old-timers in the business, and they'll tell you that folks just kind of fell into insurance brokering in their day.

But ask 30-somethings, 40-somethings and even 50-somethings how they got in, and you start to get a different impression. They might mention how well their father did in the business, and how their sons, daughters, sisters, cousins and uncles are succeeding as brokers too.

Few families in the industry can match the success of the Locktons and the Gallaghers.

The brokerage that Arthur J. Gallagher started in 1927 is now the fourth largest in the country, a highly competitive, publicly held and diversified corporation. J. Patrick Gallagher Jr., grandson of the founder and now current chairman of the board, CEO, and president, recalled how his father John believed that their family was in the greatest business on earth.

"If you can dream it, and it makes sense to the client, you can make something work," Gallagher explains, evoking the instilled enthusiasm that prompted him to join his father and uncle Bob in the business in 1974.

Gallagher stresses that AJG is not a family outfit hiding in the guise of a publicly traded company by any stretch. But one of its intriguing aspects is a culture that encourages other family trees to grow as strong as oaks. One such tree is his own; four of his children work there.

Gallagher refers to this ethos as "benevolent nepotism," which means "getting first crack at the good people along a family tree."

"And we like that," he says.

One way is through the firm's internship program, says Gallagher, which was started in the mid-60s in cooperation with an independent life insurance agent named Warren Van der Voort. Van der Voort volunteered up his sons Warren Jr. and Gary as the guinea pigs.

Other Van der Voorts eventually followed their path into the brokerage, according to Gary, including his younger brother Craig, as well as three of Warren Jr.'s kids, Gary's three kids and Craig's second oldest. (Gary is currently area chairman of Miami operations and managing director of niche efforts. Warren Jr. is retired.)

To this day, employee family members fill some slots in the program, though recruiting on campuses and elsewhere brings in most prospects.

AJG has also transplanted family trees into its company. Since 1986, Gallagher says, the company has made a couple hundred acquisitions and, "by and large, these acquisitions are family businesses." He says in the corporation it's "culturally OK" to allow these companies to continue bringing in relations into the fold.

Lockton, a family company that's risen to be the top private brokerage firm in the world, also wields its strong cultural identity in the way it hires. That culture is instilled in the "Lockton-grown people" that the company recruits outside the brokerage world. And in that regard, it's as much about adopting new members into the company's one big family tree as it is growing others.

The Locktonian view comes straight from the founder of the company, Dave's brother Jack, who passed away in 2004. It's the idea of putting the community and the customer ahead of the bottom line.

"Here, how you make yourself valuable to Lockton is by making yourself indispensable to the client," says Dave Lockton.

So no matter who you are in the Lockton extended family--or even if your last name is Lockton, like Dave's nephews Ron, Steve and Don--you succeed by producing in a way that Lockton the man and the company considers "morally right."

And therein perhaps lies the "why" of family success in brokering. The business offers a quantifiable, objective way to measure success, no matter a producer's lineage.

Nepotism and employee hiring, after all, are key challenges, says Barbara Spector, editor in chief of Family Business magazine. Todd Millay, executive director at the Wharton Global Family Alliance, the Philadelphia-based research center on family business governance, wealth management and philanthropy, says a clear and credible process of developing family-member employees is crucial.

Millay and Spector refer here specifically to family businesses, but the same surely can be said of family members working together in other people's companies.

"I don't think any one way is better than any other," says Millay. "But it's important to have a way."

The brokerage business already has a built-in way to measure employees and negate talk of the N word. It's a meritocracy that makes sure bigger rewards go to producers who develop the bigger books of business, says Van der Voort.

That's why the Gallagher intern program has succeeded, and why family agencies have been integrated into the firm without much of a hitch, says Gallagher.

"This is no halfway house," Gallagher says about letting new branches of a tree into the business. "Every one of us understands that this has to be right for the company and right for the shareholder."

As for these second and third generations, they don't expect halfway houses or easy expectations. They want the opposite, to prove their mettle through hard work.

Roger Schenone Jr. worked with his father for a couple years in the early 1990s at Marsh's New York City office, before the son left for an opportunity in the casualty division in Boston.

"I wanted to make my own breaks," Schenone explains part of his motivation for moving.

Schenone's grandfather worked in insurance, as did his father, followed by his brother Robert, his brother-in-law, his sister, and his wife, whom he met at work.

"We both grew up knowing all about Marsh," he says about him and his brother, so working at the broker "seemed like a good opportunity right out of college." Schenone seems to have been right. He's now managing director of Marsh's real estate practice out of the firm's New York office, no doubt emulating the success of Roger Sr., a property specialist who eventually came to run the Marsh New York operation.

Same for his brother Rob, who tried to blaze his own trail for the first post-college years but eventually joined Marsh and is now managing director of its aviation practice out of New York.

Jennifer Bierbaum Thorpe joined Aon after trying her hand for a bit after college in a career in collegiate athletics. Her dad Don Bierbaum, an executive vice president with Aon Global Americas, has been in the business for nearly 38 years.

He says Aon doesn't necessarily encourage family hires, though there is a family "pocket" here and there and the firm "handles this situation very well." As his daughter says, she doesn't think she's been held back by her name.

"The last name probably hasn't hurt within Aon," her father adds, though it might have raised the occasional eyebrow.

"At the end of the day, I've got to do my job." She'd like to think it's that work ethic in the last 11 years that's gotten her to the rank of vice president and team leader of the Aon Financial Services Group.

Bob Lane Jr. shares her sentiment. He got into insurance right out of school, after watching his father Robert O. Lane grow an insurance agency from 1979 until Beecher Carlson acquired it in 2005. Now son is senior vice president, while father is a managing director at Beecher's Atlanta office.

But Bob still remembers how he felt having to prove himself because of, or despite, his last name. "I probably expected more of myself," he says.

Given such positive experiences of family members, and the benefit to the firms employing them, it might behoove all firms to till their talent and cultivate more such trees.

"If we can bring good, talented family members into the business, there's nothing wrong with it," says the elder Bierbaum, after pointing out the "dearth" of talent in the business in the 30 to 50 age bracket.

"I think the insurance agencies that discourage that are making a big mistake," says Gallagher's Van der Voort.

MATTHEW BRODSKY is Web editor/senior editor of Risk & Insurance®.

February 14, 2008

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