Book of business as an Asset

[ccfutureagent]

Hello everyone, I will try to keep this as short as possible. I was looking to start a business that is simple to start up, build it over time, then sell it as an asset. Basically flipping a business. I have friends who either are currently or have been involved with this industry. I have been told by one that this would be perfect for me to do that, and another that said the only real way to do that and have it be profitable is to get a contract as a GA or higher right out the gate and that can be very hard to do with some sort of proven track record as a sales manager.

I have been in the sales industry before so I know a lot of the success will depend on finding a good system and trainer within the industry, and I know that just me posting this I will get recruiters reaching out to me. I was just curious what other people in the industry thought about this. Thanks.

 

[bmarsh]

Life insurance doesn't pay very much renewals, unless you got into very high cash value policies that paid a % of the asset values. So if you were wanting to sell your book of business it would not have much residual value. So I would suggest you go with Money Management AUM, Medicare or ACA if you were wanting to sell your "book". Whatever product you decide to go with, it still takes years and years to build up your client base and book of business to be worth anything to another agent or investor.

 

[fed up]

Buying a Book of Business in insurance is the easy part. Building it up over time is a gradual process unless you are adding it to an established agency, so figure 3-4 years. Flipping it to make a profit could be a lost cause in the next few years regardless of the line of insurance you pick. P&C carriers are going mostly automated. The agency office on the corner may become a relic as carriers figure out ways to do away with an agent altogether. Government controls on health lines may also force agents to look elsewhere and people can thank the ACA for upsetting the apple cart when the internet is available to take your order. You might be better off buying homes and flipping them

 

[Todd King]

Hello everyone, I will try to keep this as short as possible. I was looking to start a business that is simple to start up, build it over time, then sell it as an asset. Basically flipping a business. I have friends who either are currently or have been involved with this industry. I have been told by one that this would be perfect for me to do that, and another that said the only real way to do that and have it be profitable is to get a contract as a GA or higher right out the gate and that can be very hard to do with some sort of proven track record as a sales manager.

I have been in the sales industry before so I know a lot of the success will depend on finding a good system and trainer within the industry, and I know that just me posting this I will get recruiters reaching out to me. I was just curious what other people in the industry thought about this. Thanks.

This is a business that you get into where you gain the trust of clients and help them. Sometimes that is a long term thing, which is what we all strive for because it keeps paying the bills.

If you are getting into this just for the money, then don't bother. There are other ventures out there where you can go into in the beginning knowing that you are going to build it and sell it, that don't involve making clients and then leaving them high and dry when you decide to sell out. Many agents sell out, don't get me wrong. However, they didn't go into it knowing that's what they were going to do and they stuck around long enough to build it. That's not what you're looking for.

 

[scagnt83]

"flipping" a BoB is not a common practice for many reasons. Im not sure how deeply involved your freinds were, or how long ago they were involved (a lot has changed in the past 15 years). But just buying a BoB is extremely rare on the life insurance side.... renewals for life insurance usually do not transfer to the new servicing agent, they are paid to the original writing agent.


Health & P&C are the industry sectors most common for a BoB to be sold. Mainly because renewals usually transfer to the new servicing agent... and because those policies require a lot more servicing vs. life/di/annuities.

But here is your problem. Insurance is more than sales, it requires knowledge and expertise about the products and their applications. Without that, you will lose clients... meaning your BoB will decrease in size (aka value). The only way to get what you need to run a whole BoB is experience.

All the friendly and prompt customer service in the world does not make up for a lack of insurance knowledge. And thats not something you gain in a few months, or just a year or two. A BoB is large, a new agent is lucky to have 100 clients after 12 months.... you will be a new agent starting out with 5-10 times that many clients. That is a lot of advice to give as a new agent... and a good bit of that advice is going to lack the depth and perspective an experienced agent would give.... and clients will see the difference and you will lose clients.



Then there is another large issue you face. I dont know of any serious agent that would actually sell their BoB to a green agent. Most agents care about their clients and want them to be well taken care of in the future. Meaning they would never put them with a inexperienced agent upon retiring.

Most BoB purchases include multiple payments over 2-4 years. Often agents want some type of residual off the deal. But what agent is going to trust an inexperienced agent to actually keep bringing in the same revenue?

Or trust them to even make it at all?? Are you aware that 90% of new agents fail in the first 2 years in this industry? Ive seen tons of "experienced sales people" fail miserably in this industry. So has every other experienced agent. That doesnt mean you will, but it does mean "being good at sales" is no guarantee for successful management of a huge BoB. Agents who own a BoB know this, and would never sell a BoB to a 1st year or 2nd year agent... especially one they had never worked with before.

 

[marindependent]

Health, Life, P&C, Commercial, Specialty - What are we talking about here. I am relatively certain that the answer will be completely different depending on the type of insurance.

 

[ccfutureagent]

Health, Life, P&C, Commercial, Specialty - What are we talking about here. I am relatively certain that the answer will be completely different depending on the type of insurance.

Life was the original thought because I have been told it is the simplest to get into versus P&C. I Heard P&C can be complicated and requires bonding and all that. Reading all the previous responses though I don't think this would be a good idea for what my plan is. I think I am better off flipping houses or even just starting an ebay store.

 

[ccfutureagent]

Thanks for your feedback guys.