Anyone Willing to Take the Time and Answer my Questions?

[microscopes]

WARNING: I have little to NO knowledge of the insurance industry, so treat me with kid gloves, please.

I have been in the auto sales (manager at a dealership) industry for many years. I make decent money (70k-ish). But I'm looking for a change. I would like to be self employed and own my own business. I have an acquaintance who owns an agency, but I think he would be uncomfortable answering these questions. With that in mind, I have a few questions for those who are willing to answer.

1) What's the difference in practicality between owning your own agency (Microsocopes insurance agency) vs owning a national brand (Geico Insurance Agency, franchised by Microscopes)? Pros and Cons?

2) I know this depends on the market I'm in, but how long on AVERAGE does it take until the agency will profit a livable wage (over $50k). Another way of asking this would be, how much money do I need to have saved (or borrow) to live on, until income is stable?

3) Pro's and Con's of starting fresh vs purchasing a book of business? Is this even possible nowadays?

4) Is it even possible to get licensed and start your own agency? Or do you have to work for another company first? I see lots of info out there about trouble getting appointments

I appreciate those who are willing to answer my incredible naive questions!

 

[indienoise]

1. Depends, there are several ways to go about this. Outfits like geico or liberty mutual, you are an employee and are paid as such. You are on a hamster wheel. Nationwide, state farm, allstate, etc. you are contracted exclusively by the carrier as an independent contractor. You are self employed but don't do or sell anything except what they want you to, and may or may not be able to sell your business or pass it on to your kids. You can also be an independent agent. Practically speaking, you can't do this on your own without experience. More on this in my response to #4. As a newby, you either join a franchise or cluster, if they will have you, and are able to sell more carriers and products, and may be able to sell or pass on your business, as long as you satisfy the group's financial interest in your business.

2. Depends on your production. Exclusive carriers like all state may pay you large enhanced commission the first couple of years, then scales back significantly. So you could go from making bank to starving again.

3. Finding a BOB to purchase is challenging. You would want to put in the contract that the owner stays on for some time to train you if you don't have experience. You likely wouldn't keep appointments with their carriers anyway otherwise.

4. Only a captive carrier will appoint you as a fresh agent. They provide you training, but it will cost you in commissions and freedom. You Might be able to start an indy agency via a wholesaler or cluster, but there would be significant hand-holding taking place, if the group even takes you on. No guarantees there. "Appointment" is simply the industry term for having a contract with a carrier and being authorized to sell their products.

There is a really great thread already on this forum about starting in the industry, then starting an agency. Seek it out, it has much of the information you need. Honestly you will also need a mentor, or just to work for an agency for a while so you know what you are doing. You won't be ready to go on your own after just a couple of weeks or anything like that.

Best of luck. I still hold an interest in a large BHPH lot, and own an indy agency as well. It can be done. It is a process.

 

[microscopes]

1. Depends, there are several ways to go about this. Outfits like geico or liberty mutual, you are an employee and are paid as such. You are on a hamster wheel. Nationwide, state farm, allstate, etc. you are contracted exclusively by the carrier as an independent contractor. You are self employed but don't do or sell anything except what they want you to, and may or may not be able to sell your business or pass it on to your kids. You can also be an independent agent. Practically speaking, you can't do this on your own without experience. More on this in my response to #4. As a newby, you either join a franchise or cluster, if they will have you, and are able to sell more carriers and products, and may be able to sell or pass on your business, as long as you satisfy the group's financial interest in your business.

2. Depends on your production. Exclusive carriers like all state may pay you large enhanced commission the first couple of years, then scales back significantly. So you could go from making bank to starving again.

3. Finding a BOB to purchase is challenging. You would want to put in the contract that the owner stays on for some time to train you if you don't have experience. You likely wouldn't keep appointments with their carriers anyway otherwise.

4. Only a captive carrier will appoint you as a fresh agent. They provide you training, but it will cost you in commissions and freedom. You Might be able to start an indy agency via a wholesaler or cluster, but there would be significant hand-holding taking place, if the group even takes you on. No guarantees there. "Appointment" is simply the industry term for having a contract with a carrier and being authorized to sell their products.

There is a really great thread already on this forum about starting in the industry, then starting an agency. Seek it out, it has much of the information you need. Honestly you will also need a mentor, or just to work for an agency for a while so you know what you are doing. You won't be ready to go on your own after just a couple of weeks or anything like that.

Best of luck. I still hold an interest in a large BHPH lot, and own an indy agency as well. It can be done. It is a process.

I really appreciate the help and honest answers.

BHPH's are fun, aren't they?

I'll check out that thread you referenced. Do you have any info or links I can check out concerning "clusters" (never heard of them before)?

 

[1963]

Welcome to the Forum, Scopes!
The central issue to all your questions is your lack of experience. Without experience, most of the rest of your plan is much less likely to happen. This is not to discourage you, but to inform you on the venture you embarking on. Indie has given you some solid advice; I'm just playing devil's advocate based on my own experience. By the numbers:
1. Your future success is only happening if you gain the insurance experience and training needed to be successful. A national brand with a good training program is more likely to provide this as opposed to an independent with no training. Besides, not many (if any) carriers will appoint a new agent with no experience.
2. This is a function of carrier commission scales and your amount of production. For me, it took 2 years, but I was experienced as an agent, and I had a mentor who advised me along the way, so my transition was smoother.
3. Starting fresh is possible, but not advisable at all. To purchase a book of business will give you a foundation to work from, but you will need an experienced agent to secure and maintain carrier appointments.
4. It is a must for you to start out as a captive agent due to lack of experience. Your commission levels will be decreased compared to independent agent commission, but the tradeoff is the experience and knowledge gained.
I hope I have given you a picture that is realistic, and I'll end by encouraging you to follow your plan, but sacrifice some of your independent plans for the good of experience and knowledge gained. It is definitely a realistic plan, but those steps must be part of the process. I wish you luck, and encourage you to enjoy and learn from the Forum. Welcome, and good luck!

 

[Mike Siegal]

Good thread...thanks pros.

As a newby, i would REALLY like to know, who makes it and who doesn't and WHY?

-who doesn't make it in the biz? (apparently there is a 90% fail rate).