Posted On: November 29, 2004, 3:26 pm CST

Posted By: Darrell Wells

I would like to believe the person who said this will all be solved by a massive return to competition among brokers for every account. However, I doubt that will happen.

The fact is that Risk Managers or others at the Accounts will continue to formally or informally appoint brokers-of-record because: (1) their boss told them to deal with Fred at Broke & Broker, OR (2) because generating an RFP, allocating markets, receiving proposals, analyzing them, creating apples and apples out of proposals with kumquats and hand grenades and then treading the political minefield of awarding to this one instead of that one--will ultimately be too fraught with anxiety or just plain work.

Some will simply continue to "trust" a single broker and hope that their trust will be rewarded with ethical consideration by people who understand that they have professional obligations, fiduciary responsibility and ethical imperatives. Most of the time, since the same people we expect ethical behavior from are under pressure to meet sales quotas, the result will be unhappy. However, we can always go back to ignoring that reality once Spitzer's investigation move on to some other moral lapse.

In the meantime, Marsh will continue to rely, as IBM did for so many years, on the fact that it's the biggest and, therefore, choosing them as sole broker is a defensible action by the Risk Manager (or CEO, or CFO, or Board Member--or whoever is calling the shots).