Advanced Commissions

[DayTimer]

But it's not like Advisors that likely (or possibly) earn more over the course of several years by selling back load or fee based as opposed to front load, or am I wrong or missing something here? For life insurance, don't they pay out the same regardless of if you take the advance or not?

You will net a bit more as there will be no finance charge as you have with the advance. Admittedly current interest rates are low, so it will not make a huge difference.

For me, the key benefit is that you have a stable monthly cash flow you can count on before you even get out of bed to work your first lead that month. Also, you remove the occasional need to plug the hole in the charge back bucket so that every policy you sell that week/month you get paid on, rather than having to write an app or two to cover a policy that lapsed for good before you renew your cash flow.

 

[DayTimer]

Be careful before you switch to as earned with Trans. This is something you should know before making the switch.... If you have a debit balance with them it will have to be paid first before they will send you any more money. I guess the way they look at it is that if you are as earned you shouldn't have any kind of a debit balance.

Now, this is the way they "used" to do it, so you might want to call them to see if they changed.

You are correct, and thank you for pointing that out in case I had not been aware of it. In anticipation of this change I had dialed back my use of Trans over the past few months so my debit balance is not terribly large at this point. I have a few policies ready to draft mid-December that will cover more than half the remaining debit balance. I will be having my IMO make the change request to Trans after the 3rd as I have a small recent charge back and I am going to let the new biz scheduled to pay next week cover that charge back.

 

[Todd King]

You are correct, and thank you for pointing that out in case I had not been aware of it. In anticipation of this change I had dialed back my use of Trans over the past few months so my debit balance is not terribly large at this point. I have a few policies ready to draft mid-December that will cover more than half the remaining debit balance. I will be having my IMO make the change request to Trans after the 3rd as I have a small recent charge back and I am going to let the new biz scheduled to pay next week cover that charge back.

Good deal! I'm glad you did know that, otherwise you can mess yourself up!

 

[DayTimer]

Good deal! I'm glad you did know that, otherwise you can mess yourself up!

The alternative would be simply to make Trans my main carrier, stay advanced, and let the unique way that Trans does the pay through build up in addition to renewals. If I placed $1K in monthly premium with Trans for 12 months, the pay through would accrue to a nice level. I believe that that is what Tim Winders did when he was writing a ton of business on his own pen. According to the interview he did with Newby, his monthly pay through had reached low 5 figures with Trans.

 

[rousemark]

You will net a bit more as there will be no finance charge as you have with the advance. Admittedly current interest rates are low, so it will not make a huge difference.

For me, the key benefit is that you have a stable monthly cash flow you can count on before you even get out of bed to work your first lead that month. Also, you remove the occasional need to plug the hole in the charge back bucket so that every policy you sell that week/month you get paid on, rather than having to write an app or two to cover a policy that lapsed for good before you renew your cash flow.

Not all companies charge interest on advance balances..

 

[Todd King]

I remember going from advances to as earned with them too. It was tough giving up that $5K a month for about 6 months! Sure was nice when it started back though!

 

[FinalExpenseDojo.com]

You will net a bit more as there will be no finance charge as you have with the advance. Admittedly current interest rates are low, so it will not make a huge difference.

For me, the key benefit is that you have a stable monthly cash flow you can count on before you even get out of bed to work your first lead that month. Also, you remove the occasional need to plug the hole in the charge back bucket so that every policy you sell that week/month you get paid on, rather than having to write an app or two to cover a policy that lapsed for good before you renew your cash flow.

Thanks for bringing this up!

Most agents have no idea that some carriers charge interest. For that reason alone I tell agents to take a maximum 50% advance!

 

[NSRH]

Other than the carriers that charge interest on advances, I've really never understood the notion that going as earned is a better business model.

It reminds me of people that get excited during tax season for their refund.

Having other people hold your money, regardless if its the IRS or a carrier, is not advice I'd give to anyone, regardless of how much money you got in the bank.

 

[DayTimer]

Thanks for bringing this up!

Most agents have no idea that some carriers charge interest. For that reason alone I tell agents to take a maximum 50% advance!

I had also considered simply dropping my advance level to 6 months. That always seemed to work out very well when I did some "back of the napkin" figuring. Dropping the advance to six months also would not affect the current debit balance so as to bring about the requirement that the debit balance be paid in full before new commissions could be earned.

 

[rousemark]

I had also considered simply dropping my advance level to 6 months. That always seemed to work out very well when I did some "back of the napkin" figuring. Dropping the advance to six months also would not affect the current debit balance so as to bring about the requirement that the debit balance be paid in full before new commissions could be earned.

I have always preferred 6 mos advance.. Wouldn't take advance at all but when people started to pay monthly instead of annually, I started to take advance because I have a hard time making myself chase a $50.00 commission... but a $300.00 commission is a different story.