The Right Mix

The financial planning world is often divided between insurance brokers and investment advisers, rarely mixing well.

But that division has blurred over the years as more companies sell both kinds of financial products.

One firm that successfully straddles both worlds is Alliance Financial Group, a Fort Myers-based life insurance brokerage firm that is growing rapidly throughout the state by combining life insurance products and investments.

The word “insurance” isn't splashed in its name or marketing materials, but that's been Alliance's traditional business since it was established in 1994. Alliance doesn't disclose revenues, but it earned Guardian Life Insurance's award for the top-rated agency in the country in its category last year for sales and growth, among other measures.

“Last year was the best we ever had,” says Michael Kochis, associate general agent with Alliance.

Kochis, 50, and business partner Jerry Hemmer, 35, are buying the business from its founders over the next year. They plan to grow the firm's presence in Fort Myers, Orlando, West Palm Beach, Boca Raton, and Miami. The firm currently employs 58 agents and will hire a total of 12 more this year.

Roughly half of Alliance's business comes from income on the sale of life-insurance products and half from the sale of investment securities such as mutual funds. Through the end of July, life insurance sales (in premium dollars) were up 22.5% compared with the same period last year, and sales of investments such as mutual funds are up 38%. “Our business has skyrocketed,” says Kochis.

There are several reasons for the growth, Kochis and Hemmer explain.

One is that insurance has become more appealing because of the certainty of payouts, particularly for retirees who need to withdraw from their accounts to fund their lifestyle. The challenge for retirees is longevity means they have to make their money last for 20 or 30 years, and some prefer the certainty of insurance payouts to the unpredictable returns of the stock market.

In many cases, retirement accounts such as IRAs require retirees to take distributions. To make their money last, planners often suggest that retirees reinvest a portion of that money.

Insurance was less appealing during the boom years as investors chased returns from real estate and stocks. “People were chasing performance-based assets,” says Hemmer. Now, after the recession of recent years, retirees and younger people are willing to pay for the more certain payouts from insurance policies.

Another reason for Alliance's success has been the firm's emphasis on employee training, the firm's principals say. For example, Alliance executives spend Mondays from 7:45 a.m. until 1 p.m. in training.

In the first hour, for instance, the firm's employees gather together in a conference room and bring their tough cases to the meeting so they can help each other resolve more difficult issues. “It's all recorded on video so they can watch it,” Kochis says. “It's our culture of constantly giving back to each other.”

Typically, insurance agents work independently. But at Alliance, there's always two people assigned to each client. “You're always working with someone else,” Kochis says. He reasons: “You're going to do better than doing it yourself.”