“All are but parts of one stupendous whole,” wrote Alexander Pope almost 300 years ago. The Cambridge Group, Inc., seems born of this concept. The Michigan-based group is comprised of three distinct companies, each focused on a particular segment of financial security offerings to manufacturing companies and their employees, primarily in Midwestern states.
The Cambridge Group takes confusing – and sometimes overwhelmingly intimidating – issues like insurance, health benefits, estate planning and risk management, and offers manufacturing companies and their employees easy-to-understand programs. When members of the group conclude a client-company presentation, those employees and executives completely understand the intricacies of how financial plans will affect his or her financial future. How Cambridge achieves this degree of comfort with all levels of employees is a story of the group’s synergistic strength.
Three Easy Pieces
The principal owner-founders of each company within The Cambridge Group have long been colleagues, working together as the need for specific financial guidance arose. Just last October, they decided to formally come together as a group, for the purpose of bringing their separate strengths and areas of expertise to the tables of numerous companies while cross-marketing to each other’s clients. The group works with Tier One and Tier Two suppliers to the automotive industry, including stamping plants, robotics companies and electronics manufacturers.
The Cambridge Group is an exclusive team of advisors, technical specialists, plan designers, certified public accountants and attorneys. The group’s three member companies are Cambridge Financial Services, Inc., Cambridge Underwriters Ltd., and PensionTrend, Inc. The group is one of the largest independent financial service organizations in the Midwest, providing executive benefits programs, employee benefits programs, estate planning, risk management review and assessment, and qualified plan design, implementation and administration.
Cambridge Financial Services, Inc., provides financial strategies and financial products. Cambridge Underwriters provides property and casualty insurance. PensionTrend provides third-party administration services for qualified and non-qualified retirement plans.
As we age as a society, more and more of us are concerned about our future financial security. Even younger employees are showing a keen interest in 401(k) plans. “We truly believe that the only things proprietary in our business are our service and our ideas,” says Albert Papa, chairman and chief executive officer of Troy, Mich.-based Cambridge Financial Services. “You can buy the same product from a number of sources, but it’s our service and our ideas that separate us from others out there.”
Cambridge Financial Services, Inc. founded in 1985 by Papa and Ralph Eagle, president, Cambridge Financial Services is a financial services firm structured “like an accounting or law firm, with groups of specialists in a number of areas,” explains Papa. The company is fueled by three divisions: employee benefit planning, executive benefits planning and estate and business continuation planning.
One of the largest cost items facing manufacturing companies is employee health-care costs. Under the direction of Papa’s partner, Eagle, Cambridge Financial works with human resources directors and chief financial officers to design programs that benefit companies and their employees. “Most often, this is done through the cafeteria-plan approach to provide a menu of employee benefits,” says Eagle. “We found that employees are willing to participate in the cost of benefits if they have the choices offered through cafeteria plans. About 60 percent of the employees we work with gravitate to the best plan available, and they are willing to share in the cost.”
Eagle says that when he first started in the cafeteria business more than 10 years ago, the company had lots of policyholders who shopped benefits every year, trying to discover cost savings. “When we began designing cafeteria plans, we actually converted these policyholders into clients,” he says. “And clients are people who sit on the same side of the table with us.” Companies now use cafeteria plans as financial tools, which enable them to offer diverse choices to their employees without increasing the companies’ costs.
Cambridge Financial also helps companies identify those individuals within a company most responsible for its growth, development and profitability. “We then design compensation systems to attract and retain those key individuals,” explains Papa. “We might suggest deferred compensation arrangements, phantom stock plans or supplemental retirement plans, just to name a few.” The firm also designs estate and business continuation plans for owners of family businesses. “Because of the confiscatory nature of the federal estate tax system, one of our clients’ major concerns is how to keep their businesses in the family,” explains Papa.
Another part of the financial security equation is the element of keeping companies insured against financial jeopardy. Cambridge Underwriters, Ltd., in business under this name since 1974, handles property and casualty insurance including fire, liability, car and business insurance.
What do Cambridge Underwriters’ clients desire from the company’s expertise? “They look to us to do more than just sell them an insurance policy,” says Michael Hale, president of the Livonia, Mich.-based company. “They are looking for us to be part of their risk management team of advisors. They have their attorney and their accounting firm, and we as their insurance brokerage firm form the third piece of the puzzle that helps them limit the risks to their organizations.”
In its role of risk manager, Cambridge Underwriters helps companies review contracts and leases. “We are unique in that we use our attorneys as account executives in our risk management approach,” says Hale. “We are not aware of any other agency in the Midwest offering this kind of service.”
Any company, whether thriving or starting up, worries about potentially damaging risk exposures. Cambridge Underwriters assuages these worries through careful assessments of potential risks. “The risk of fire is a primary concern,” says Hale. The number of potential risk exposures are many and include premises liability claims (if someone slips and falls on your premises), product liability claims, workers’ compensation and employment practices that protect organizations from situations including lawsuits for firing employees, harassment suits and discrimination suits.
“The way you address those exposures is through appropriately designed insurance programs,” says Hale. For example, if a company is renting or leasing manufacturing space, the liability can be transferred to the tenant from the landlord.
The Edge Against Aging
Anyone remembering the financial magic discovered in college economics classes will appreciate what Lansing, Mich.-based PensionTrend, Inc., is doing to help manufacturing employees and executives accumulate wealth as a hedge against the concerns of retirement. “Our focus is to help participants accumulate wealth for successful retirements,” says Jon Murray, president.
PensionTrend conducts structured 401(k) workshops at client-companies. “It typically requires a three-year cycle before employees begin to fully understand their programs,” says Murray. “We start with the basic goal establishment and then we show the impact of what inflation can do to your life style over time.”
PensionTrend focuses on educating employees on how they can accumulate wealth within a retirement plan. “Once they understand this, it tends to reduce turnover by producing longer-term employees for companies offering these plans to their employees,” says Murray. “They grow more comfortable with the longer view of their careers.”
Murray says the employees he works closely with perceive fringe benefits equal to or even greater than a pay raise, once they understand the economics of the plans offered by The Cambridge Group. “The demographics have changed in the last 10 years and people are now more interested in medical plans and 401(k) plans,” says Murray, noting that 401(k)s are the driving force for many union negotiations.
Knowledge is power, and if there is one thing The Cambridge Group takes as seriously as its areas of expertise, it is the group’s sense of responsibility to educate, educate, educate to offer that power to its clients. Although the group’s client companies might have a concept of what they want for their companies and their employees, they often need help in reaching that concept.
“Our approach is to provide a turnkey approach to identify what the issues are. Then we design a program to reach the objectives,” says Cambridge Financial’s Papa. But it doesn’t end there. “We then implement the program and provide ongoing service and communication for whatever program they choose.”
“We often discover that companies are paying the full cost of employee benefits,” says Cambridge Financial’s Eagle. “Employees don’t really understand what that means, so they usually don’t really appreciate what their companies are doing for them. We show company executives how to make the dollars they are spending have more of an impact through cafeteria planning. When the employees understand the plans and the choices they have, they are more than happy to participate in the cost.”
“The biggest challenge facing us is the education of participants, primarily in 401(k) plans,” says PensionTrend’s Murray, whose company has two training teams. “One trains the administrative staff and the other conducts workshops for our clients’ employees.”
“Working as attorneys, we handle these insurance and risk management programs a lot differently from the insurance agent down the street,” says Cambridge Underwriters’ Hale. “We have to educate our clients so they understand that we don’t just want to sell them an insurance policy. We help them understand their overall needs so we can help them limit their risk exposures.”
The Group’s team approach to offering financial security is best understood by examining the synergistic advantages of The Cambridge Group, which is greater than the sum of its parts. Together, these experts – who thoroughly understand their areas of endeavor – develop solutions and services that are customized to the unique needs of their clients. Their goal is simple: to provide a total business package, beginning with a complete analysis of a current employee benefits package and ending with a qualified 401(k) plan and health coverage.
After a complete analysis of total cost for these packages, these experts may suggest a cost-effective strategy for the retention of key executives, using the cost savings from the other areas of coverage. When all of the advisors are working together in a collective, this positive synergy is passed on to the client by presenting a winning bottom line, with a focus on cost control completely instilled in the operations of the company.
“There really are not many other agencies with the levels of education and professional experience that The Cambridge Group has collectively,” says Hale. “Our expertise allows for our team to work collectively with companies’ existing teams of CPAs and attorneys as advisors to complete the full circle of service. When competition between financial service companies is eliminated, the complete focus is on the client and its specific needs.”
Is the Group’s synergy magic? Perhaps. The Cambridge Group’s phenomenal growth rate of 25 percent per year over the past five years underscores the team approach and the success of cross-marketing each other’s superior talents.