Beware the Rule of One!

The Rule of One says that most brokers and their firms are just one incident away from disaster on their largest accounts. These are the accounts that provide them their largest incomes. In some cases, they may be the single account that feeds a broker, or they may be the accounts that make up the firm’s Franchise Account revenue stream.

As some of you may be aware, there has recently been a great deal of press around the ‘near misses’ of comets and asteroids to our planet.  The scientists and media have made a big deal about how devastating it would be if a collision were to occur.  Some, if not most, believe that the dinosaurs fell victim to just one of these incidents.

I liken this to what I call the ‘Rule of One.’   Ready?  The Rule of One says that most brokers and their firms are just one incident away from disaster on their largest accounts.  These are the accounts that provide them their largest incomes.  In some cases, they may be the single account that feeds a broker, or they may be the accounts that make up the firm’s Franchise Account revenue stream (the 4% numerically that feeds 50% of their commercial revenue stream.)

Here’s how the Rule of One operates:  You will probably lose your largest account if just one of these things occurs:

    • A Large Unresolved Claim Problem – Creates a potential loss of trust

    • The New CFO – A new buyer who does not have any history with you

    • A Private Equity Firm appears or a Merger occurs – The other broker may be in the driver’s seat

    • An Economic Downturn – ‘Survival Mode’ means all former bets are off

Every working broker I know (including myself) has fallen victim to the Rule of One.  It happens in a heartbeat and some don’t see it coming.  That is because their entire business model is based solely around the commodity and the relationship. Therefore, when the Rule of One occurs, they have no safety net to cushion the blow.

Here is how a successful broker protects his or her largest accounts from the Rule of One:

  1. They take the spotlight off themselves – They utilize the resources of their firm and institutionalize the client, thereby creating a sense of trust that goes far beyond simply one relationship and the commodity.


  1. They deliver Stewardship ValueReports™ - By creating a Stewardship ValueReport for the new CFO, a successful broker is able to demonstrate how she has impacted the financial performance of the client.


  1. They tie their results to Shareholder Value Creation – They create a quantifiable Value Proposition that is tied to a number of KPI’s (Key Performance Indicators.)  One of the most important KPI’s is the Shareholder Value that is created by the multiple of the Value Proposition.


  1. They focus on the financial impact of Stewardship – During an economic downturn, many client CFO’s ask the question:  “How are you helping us with our margins?”  The brokers who can’t answer the question with quantifiable statistics and results will find themselves at risk.

Here is the bottom line...  The Rule of One is at work in many of your largest accounts.  Today, everything looks rosy and perfect and the stars are aligned in your favor.  But, there may be an asteroid headed your way.  If it hits, life as you know it may change.

So, protect yourself from the Rule of One.  Ask yourself, what quantified value have we created for our clients? How have we shown it to them? And possibly the most important question: Do they know it?

If you can’t answer those questions, then you better get out of the way.  

Those are not the stars you are seeing, but a line of comets hurtling toward you.  Don’t go out with the Dinosaurs!


All the best to Consultative Brokers®,

Rob Ekern

President/CEO

C.R. Ekern & Company


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