Becoming a State Farm Agent

[Jinc]

I am sorry, I don't think you read my post very closely. The question was dealing with the changes that have been made on the contact since it came out. Every change that has been made on the contract since I came out (I was one of the first) has been in the agent's favor. I am sure if you posed the question to your former AFS friend she would have to agree that each change has been better for the agent. A few come to mind: moving base from 7% to 8% - yes it was 7%. Three year rolling average on smvc or the better of current year - nice change and that isn't what happened for me. I dropped like a rock. Second year bonus - I didn't get that either. I could go on, but I think you get the point. There hasn't been one change that has been bad for the agent since rolling out the contract in 2004. Now the second part of your comment is curious. The 33% your are referring to is comprised of three sections. One in auto, one in Fire, and one is financial services (bank, mutual funds, life, health). Your pay does not go up and down by 33% because of bank products? SMVC (3%) is by far the biggest challenge in dealing with the AA05 contract, but it shouldn't be misrepresented.

Thanks for clarifying some points but scorecard says if you do not make enough points across the board... Instead of 11% are you not making 8% - a 33% cut, correct?

Is that misrepresenting that part? I never heard about the 7% since I have been in the pool... But all the AFS (as they were called at the time) said was she got the contract, left because she could not afford to stay!

 

[Mickey Marrone]

Thanks for clarifying some points but scorecard says if you do not make enough points across the board... Instead of 11% are you not making 8% - a 33% cut, correct?

Is that misrepresenting that part? I never heard about the 7% since I have been in the pool... But all the AFS (as they were called at the time) said was she got the contract, left because she could not afford to stay!

The scorecard is a different bonus that agents can qualify for and is separate than the smvc feature of our contract. However, you are correct in speaking about the smvc. Our base is 8% (now...thanks to a contract change). If you hit all three categories that they measure then you can make up to 11% on all renewals and new p&c business. However, the metrics are determined by them and they can control how many agents hit the targets in any given year. There was a memo that accidently went out that stated the goal of the company is 9.5% for the contract. Some agents do great and make 11% and some are making 8%. Then there is everyone else in between.


I am sorry to hear about your AFS friend. State Farm's success rate used to be in the high 80's and now that is not the case. It is much more difficult to get an agency off the ground here than in years past. It is very possible however, and there are many agents who are doing just that. You get a lot of help here at State Farm, but in the end the numbers have to work just as in any small business.

 

[Jinc]

My experience with interviewing was they wanted you to come in with a lot of money for marketing, and if you made it fine, if not - oh well!

 

[Mickey Marrone]

My experience with interviewing was they wanted you to come in with a lot of money for marketing, and if you made it fine, if not - oh well!

I am not sure what you might consider a lot of money. You do need to be prepared to spend some money. If you don't have it, you really shouldn't be considering opening a small business at this time. Do yourself a favor and save more money before trying to launch a business. The failure rate for small businesses in the first 5 years is high. Couple it with the challenges of this economy and you must be realistic in order to succeed.

State Farm invest a lot of money into new candidates. The pay for training and benefits. They pay a salary that matches what you were making before you become a training agent (up to $120,000 when I went through). They provide a first and a second year bonus to help get you off the ground. They provide a line of credit and discount furniture purchase packages. They do a lot of other things as well. I say that to say this...nobody at the company is saying "Oh well" if you don't make it. They go through a lot of trouble and expense to see that you do make it. However, you are on a year to year contract during this period of time for a reason. Once they issue the permanent contract that is it...unless your do something illegal or unethical.

 

[32fever]

SF no longer pays for your licensing, you must get your own P&C and L&H prior to starting now. And, they changed the salary range to start. It used to have a min (I think 48k?) but no there isn't one. Maybe the changes have been better for the agent, but some changes have not benefited the prospective candidates. I think they just aligned with the competition in that respect. But it is a change that is not as lucrative as it was. My opinion is that, the candidate with the largest amount to invest has the best chance at being selected.

 

[Mickey Marrone]

SF no longer pays for your licensing, you must get your own P&C and L&H prior to starting now. And, they changed the salary range to start. It used to have a min (I think 48k?) but no there isn't one. Maybe the changes have been better for the agent, but some changes have not benefited the prospective candidates. I think they just aligned with the competition in that respect. But it is a change that is not as lucrative as it was. My opinion is that, the candidate with the largest amount to invest has the best chance at being selected.

Thank you for the updates. It has been over a decade since I went through that program.

Interesting opinion on the selection process. I am sure that what you are saying is reflective in some way of the process. I would think that having a "proper" amount to invest in the opportunity would be considered. It was when I went through. However, I don't think that it is anyone's ace in the hole type of thing. There have been people who had plenty to invest and were turned down. I think it is all weighted and then the company tries to make the best decision possible. I would reiterate the point I made earlier. Don't try to open a business without any capital to invest. You are setting yourself up for failure.

 

[32fever]

Thank you for the updates. It has been over a decade since I went through that program.

Interesting opinion on the selection process. I am sure that what you are saying is reflective in some way of the process. I would think that having a "proper" amount to invest in the opportunity would be considered. It was when I went through. However, I don't think that it is anyone's ace in the hole type of thing. There have been people who had plenty to invest and were turned down. I think it is all weighted and then the company tries to make the best decision possible. I would reiterate the point I made earlier. Don't try to open a business without any capital to invest. You are setting yourself up for failure.

I don't believe they will even interview you if you don't have an investment, they want proof of that prior to an interview.

I already own a successful business in an unrelated industry. I made sure that they were okay with me having this business and they were and I'm in the "pool" technically at the moment, although not pursuing anything with them. In my situation, I'd actually need to take no salary at all from an agency in addition to using money I'd have to invest. However, my opinion is that, for example, if I have 30k and someone else has 60k, that weighs a LOT more in their minds than anyone really thinks. And they don't care that I need zero out in the future to live on, and someone else needs 40k. In my opp, they would prefer to have that extra 30k spent in SF branding and figure the person can figure out their personal finances somehow. So, if you feel I'm jaded in that I am broke and am tainted in my views of them, I'm not "that guy".

You do have to bleed red or blue, etc. with captives, and I do believe that is something they really try to look for in an interview and through the whole process.

But they have done what I'd refer to as "lower their standards" for folks entering. And I believe they're not looking so much for guys like me with business experience, executive and sales experience, an MBA, etc. as they are for the hungry person with some cash to burn. Back when you went in, they were more interested in that MBA, top level person, etc. I believe that has changed now.

I don't believe they really want an "agency business owner" anymore like they used to, they want a producer willing to manage a couple people. And they ideally want that producer with the biggest nest egg to use. You will have a great chance as a past producer with an agent who saved up some cash.

Not that this is a bad thing. Anyone can be successful if they put in the effort and work hard, but SF no longer gives that impression that they're "searching for the best of the best" as they once did.

I don't know this is significant for anything, other than I just am realizing a change from when I had someone recruit me 10 years ago and had someone do the same recently. SF is a great Company, and are making decisions from a high level on how they select and pull agents in. I'm just stating my perspective of that. And I think the investment, or perhaps even the willingness to run up a substantial line of credit is weighted a lot more than the rest of the factors. I think the marketing/branding aspect is a huge piece, and throwing money at it is how they view it being successful from the ivory towers.

 

[FirstTimer]

Thanks for the info, Antfarm. Freedom is a major motivator for me, as well. I'll keep the premium thresh hold in mind if/when an opportunity opens, and be very cognizant about spending capital. I'm sure you heard; they revamped the recruiting process, so I have to get licensed before I can interview; and they no longer assist with employee training and office set up during training (which is now 17 weeks vs 34 ).

I definitely understand what you're saying about the AA97 agents' income vs today's opportunity. I'll keep it mind when in discussions with '97 agents.

Thanks again for for your candor and advice.

 

[sf agent]

have followed some of the post but have not seen many talk about the change in SF. I have been an agent for 20 yrs and have done very well despite all the roadblocks put forth by SF corporate. The opportunity is not nearly what it was just 3-4 years ago. The company has devalued the agents and does not treat you well anymore. Since Tipsord has been running the company it seems all they care about is profits. In the last 4 years SF has increased its net worth by 20 billion. they have made this by increasing agent goals and paying us less. they have also decreased all of our incentives and cut out most support for agents. Each year we hit the goals and they increase them again. the worst part is you can be fired for anything now. You are supposed to own your own agency but you can only use SF system which suck because they never have any new technology and they track everything you do. You can build a good business and they can fire you and take it away. Your family gets nothing.

For the new agents don't do it they are hiring them on like mad thats the reason the training period is so short. when I went through it was a year now its two months. They started loosing tons of money when the success rate went down to 60%. I can't even imagine how bad it will be in a couple years.

The top agents in the company only make good money if they are in high premium areas. Now all they care about is financial services (life health bank) but they pay us 1/2 the industry average. The product that actually makes you money (auto) they don't want you to sell. SO MUCH HAS CHANGED.

Don't get fooled every contract with any company is better than SF. If I could do it over I would go independent.

 

[Mickey Marrone]

have followed some of the post but have not seen many talk about the change in SF. I have been an agent for 20 yrs and have done very well despite all the roadblocks put forth by SF corporate. The opportunity is not nearly what it was just 3-4 years ago. The company has devalued the agents and does not treat you well anymore. Since Tipsord has been running the company it seems all they care about is profits. In the last 4 years SF has increased its net worth by 20 billion. they have made this by increasing agent goals and paying us less. they have also decreased all of our incentives and cut out most support for agents. Each year we hit the goals and they increase them again. the worst part is you can be fired for anything now. You are supposed to own your own agency but you can only use SF system which suck because they never have any new technology and they track everything you do. You can build a good business and they can fire you and take it away. Your family gets nothing.

For the new agents don't do it they are hiring them on like mad thats the reason the training period is so short. when I went through it was a year now its two months. They started loosing tons of money when the success rate went down to 60%. I can't even imagine how bad it will be in a couple years.

The top agents in the company only make good money if they are in high premium areas. Now all they care about is financial services (life health bank) but they pay us 1/2 the industry average. The product that actually makes you money (auto) they don't want you to sell. SO MUCH HAS CHANGED.

Don't get fooled every contract with any company is better than SF. If I could do it over I would go independent.

It is obvious you are not happy with the way things have turned out for you. I am sorry that is the case. Although, being an agent on the AA05 contract makes it hard for me to show too much empathy for someone on a much more lucrative agent contract.

Some of what you said is true. The company is not the same in some regards, neither is the industry. However, much of what makes State Farm a good company to be associated with is still here. It just might not look the way you were used to it. With that said, you put a lot of conjecture and anecdotal evidence in this post. I only bring it up as a caution because I think some of your important points could be presented...better.