2015 AA05 Contract State Farm. How Does It Work Exactly?

[wwgsrevo]

I am a 2nd year State Farm agent team member and am wondering exactly how it works. Before I believe all the hype about wanting to become a real State Farm agent. It seems like a really good opportunity but I have no clue what it is in actuality. What are the true commissions? How much do you really make as an agent 1st, 2nd, 3rd, 4th, 5th year?

I am an ultra high selling sales producer and csr, I sell about 70-80 policies a month, mostly consist of P&C, about 10-15 of the 70-80 that I sell a month are life and disability policies. So you can say I'm pretty dedicated and proficient with sales and a hard worker. I don't really want to ask my boss, the agent, because its not really a good idea to ask how much he makes.

Let me know. and please keep ideas of being an independent out of this thread, I just want to know about State Farm and their AA-05 contract?

 

[biaomaha]

Yes don't ask the agent / owner. There are many variables but if you are thinking about becoming an agency owner make sure you look in to other captives and highly consider independent.

Also are all the leads coming from current clients or are you bringing them in?

 

[bayoubelle]

You can do a search for the contract name on here.
There are a million threads about it...very informative.
It sounds like making a deal with the devil, from a common sense perspective.

 

[goldennugget]

Top producing 3rd sf agent - net about 175k

 

[Verbgravy]

I spent a long time with SF. Some of my friends are amongst the highest producing SF agents in the country. They net far more than $175K. Yes, there's a lot of info on here, but most of it's not that accurate.

Not to burst your bubble, but you're not an ultra high producer. Maybe in your market, but across the board, you're just a good/borderline really good producer. There's SF agencies closing over 200 life policies a month with 300 P&C to go with it. Look in the Nevada market for proof.

An ultra SF team member is writing 20+ life a month, 5+ bank, 80+ P&C, with a few health products sprinkled in. The agents big payoff is the scorecard bonus at the end of the year, and they have to unlock all of those categories to really make it worthwhile.

Here's the breakdown on AA05. It started as a terrible contract for the agents. After several modifications, it's finally become a contract that agents can make a nice living on, but it will NEVER be what it was 25-30 years ago to be a SF agent.

If you hit reasonable metrics, you're earning 10% on all P&C. That's new and renewal. On all life & health, be it 5 year terms, select 10, 20, 30, ROP, whole, UL, hospital income, or other disability, the agent is receiving 20% new, then a small servicing commission after that. Financial services products depend on the amount money placed. A credit card is $25 and a vehicle is roughly $50.

You have to sell life and financial services to make it. State Farm doesn't need you to sell home and auto. They could open a call center ala Geico and still have the massive market share the currently have.

Just qualifying for first time life travel isn't good enough. I see so many people that say "I qualified for life travel and still am not a successful agent." I think the current first time life travel requirement is 40 apps and $28K in earned premium. You should really be at 100+ life apps and over $60K in premium to earn anything on your scorecard bonus.

If you start a scratch agency, which previously was a terrible idea imo, but with the contract restructuring is much more viable, and live, eat, sleep, the agency with another good producer, you could write 1200-1500 apps year one. With your premium builder bonus you could earn $140K gross. Throw in life and financial services, scorecard bonus, you could gross $250K year 1. You won't though.

State Farm, just like every other opportunity in this industry, has all of these people that start out with these pie in the sky dreams about how well they're going to do. The majority of new agents, State Farm, independent, or other captive/semi-captive, are going to fail. You can make a TON of money in this industry, but if everyone that entered the industry was wildly successful, the top 10% wouldn't be making the killing that they are.

The most likely State Farm scenario, if you make it, you end up with an agency with 1500-2000 households and take home $120-150K with another $20K in scorecard. In comparison, one of my best friends scorecard bonus last year was over $400K. Her agency is in the top 10 in almost every LOB nationally. 99% of agents aren't capable of reaching that level. Remember at the end of it, you don't own your book of business, SF does. They do payout a generous amount based of production as a retirement bonus, but it still doesn't equal the equity value of the book.

I chose to leave SF and I opened an independent agency. I still think SF is a great opportunity, but I was never going to be the elite SF agent. I started out as a team member, just like you are now and my numbers were very comparable to yours, but I sold a ton of life, hospital income, and bank to go with it.

Through a lot of hard work and using a lot of what I learned at SF, my agency is all mine and we're doing well.

Hopefully you're wildly successful in your career, no matter what path you go down. If you ever want to talk, feel free to PM me.

 

[Cesar Ramos]

I know that your response was written several years ago, but I have to tell you that it is one of the most simplest ways to explain it. I am currently in the hiring process and have an upcoming interview for a position in just a few short days. I feel silly after reading this because I put my first years goal for Life at 80, but is seems to be the average in my area today in 2018. I appreciate your post.