Commission Split Renegotiation

[Championpatriot]

This is amazing, the same thing happen a few years back when I joined the forum and looked for some advice..You just get more neigh-sayers responses than constructive ..Funny back then I think those were telling me the same thing I could not get anywhere..yet I negotiated 70/70 for some time...Only reason it changed again later is because all our other agents tanked so who do you go to..where the money is made. This was also when I was in the office, taking all the service calls, making sales, dealing with every aspect of the agency a true sales agent should not handle.

Again going back to my original question, the 80/80 was just a thought on trying to establish a plan for us to come to a new agreement. I was looking for thoughts on how you if you are an agency owner would prefer I as the 1099 agent would come to you and propose a win win situation. Keeping in mind I have no intention of asking the current client base, where the money is now at 50%..What risk does one have going forward then? Whats the worst case scenario..I keep selling the same amount of policies I do now you and make a little less money on those new renewal..the upside is way more worth it..If I increase my sales as expected your bonuses increase. Win.Win.

What is up with you guys and this "go out on your own business"..I do not have this pride issue where I need to call something mine, say I am "the boss", they are not my "partner" ..Which by the way if you 1099 someone you are in fact partnering with them. They are not your employee. You do not pay their taxes and they do part of the work you contracted out to get done. So if you provide them with an office overhead, leads , CSR etc then that's the extent of your partnership in which allows you to take the larger split. If they are an employee and you pay workers comp, half their taxes , overhead etc then then of course they should make less splits because you are actually taking on a risk here. You can say it all you want but an experienced 1099 agent at 100% commission has a substantially lower risk than a w-2. And if you find the right 1099 agent you would be a fool not the listen to their offers when they bring it up. Just as a reminder, there is a reason I was able to negotiate 70/70 before. The only reason it dropped is I took one for the team because the agency comes first to me. As long as its strong we have the foundation to keep building.

So if any of you could open your mind for moment here and try to imagine some things you as an agency owner would entertain please do...For example, what if I said I will give you an up front lump sum payment of $20-30K..or a monthly sum to a total amount...or paid you a flat fee of $500 a month etc.. Get creative.

Be serious, don't be so quick to say ..oh just go out on your own..try it there and see how hard it is!! You can pull that BS on a new producer whom has no leverage in an established agency that has nothing to back up challenging the status quo yet. Don't put me in this category, I have been here from the start helped put this agency where it is, and I want to make it better. The only way to do that is for me hire my own service/sales rep. I know this for a fact, let me put it this way. If you are 8 years into the ownership of your agency and you are still writing your own policies then you are either really happy selling or you simply haven't utilized or nurtured the producers you have the the fullest potential. Or lack their of "producers".

Why would I start my own agency if I can do the same thing from within, we both win. So I came here to see if anyone can help me brainstorm so I can create a roadmap.

 

[Jbbarea]

This is amazing, the same thing happen a few years back when I joined the forum and looked for some advice..You just get more neigh-sayers responses than constructive ..Funny back then I think those were telling me the same thing I could not get anywhere..yet I negotiated 70/70 for some time...Only reason it changed again later is because all our other agents tanked so who do you go to..where the money is made. This was also when I was in the office, taking all the service calls, making sales, dealing with every aspect of the agency a true sales agent should not handle.

Again going back to my original question, the 80/80 was just a thought on trying to establish a plan for us to come to a new agreement. I was looking for thoughts on how you if you are an agency owner would prefer I as the 1099 agent would come to you and propose a win win situation. Keeping in mind I have no intention of asking the current client base, where the money is now at 50%..What risk does one have going forward then? Whats the worst case scenario..I keep selling the same amount of policies I do now you and make a little less money on those new renewal..the upside is way more worth it..If I increase my sales as expected your bonuses increase. Win.Win.

What is up with you guys and this "go out on your own business"..I do not have this pride issue where I need to call something mine, say I am "the boss", they are not my "partner" ..Which by the way if you 1099 someone you are in fact partnering with them. They are not your employee. You do not pay their taxes and they do part of the work you contracted out to get done. So if you provide them with an office overhead, leads , CSR etc then that's the extent of your partnership in which allows you to take the larger split. If they are an employee and you pay workers comp, half their taxes , overhead etc then then of course they should make less splits because you are actually taking on a risk here. You can say it all you want but an experienced 1099 agent at 100% commission has a substantially lower risk than a w-2. And if you find the right 1099 agent you would be a fool not the listen to their offers when they bring it up. Just as a reminder, there is a reason I was able to negotiate 70/70 before. The only reason it dropped is I took one for the team because the agency comes first to me. As long as its strong we have the foundation to keep building.

So if any of you could open your mind for moment here and try to imagine some things you as an agency owner would entertain please do...For example, what if I said I will give you an up front lump sum payment of $20-30K..or a monthly sum to a total amount...or paid you a flat fee of $500 a month etc.. Get creative.

Be serious, don't be so quick to say ..oh just go out on your own..try it there and see how hard it is!! You can pull that BS on a new producer whom has no leverage in an established agency that has nothing to back up challenging the status quo yet. Don't put me in this category, I have been here from the start helped put this agency where it is, and I want to make it better. The only way to do that is for me hire my own service/sales rep. I know this for a fact, let me put it this way. If you are 8 years into the ownership of your agency and you are still writing your own policies then you are either really happy selling or you simply haven't utilized or nurtured the producers you have the the fullest potential. Or lack their of "producers".

Why would I start my own agency if I can do the same thing from within, we both win. So I came here to see if anyone can help me brainstorm so I can create a roadmap.

So if any of you could open your mind for moment here and try to imagine some things you as an agency owner would entertain please do...For example, what if I said I will give you an up front lump sum payment of $20-30K..or a monthly sum to a total amount...or paid you a flat fee of $500 a month etc.. Get creative.


Champion, that statement changes the game. Now you are offering to put skin in the game and become an equal partner. That's a completely different conversation. I apologize if I missed it earlier, that I'm not sure I saw you mention that approach. Otherwise, your still just offering an owner something he already has or can get cheaper elsewhere. But, I'll admit thinking about it, that your guy can't be all that bright if he is keeping you where you are if you are as good as you say. And the reason I think the rest suggest going on your own, is that this forum trends heavily to individualistic, libertarians, who don't like being told what to do. No offense, guys, I'm one also....

 

[Championpatriot]

Jbbarea, you did not miss that statement earlier I did not mention it yet..This is such a loaded conversation..as you can tell I cannot even keep my posts short since there is so much to put into analysis..

I am certainly and willfully looking to put skin in the game, although at the same time when doing so I would like to also make sure the skin and hours I have already put in the game has some value to it. Like I said when you pay someone 100% commission 1099 you took a small risk, but I myself took a reasonably large risk myself and I am still here. We both know it is not easy and I am certainly not saying I am worth a million bucks tomorrow...However I am saying I can help you be worth a million if you also at least consider how you can help me to.

The one large downside to this whole situation for me is any owner that had the visionary attributes that a heavy hitter has this discussion would not be happening as all of this would be hashed out and I would be selling another policy(s) instead of typing on this forum. So my attempt here is to brainstorm and put together someone any agency owner would take a second look at

The reality is this. The agency was started on 100% FORGIVABLE LOAN (a rather large one at that), who on earth with any experience would not take this deal if the Insurer offering this was even remotely reputable. In addition to this you got 15K in free marketing dollars as well each of those years. After 6-8 months of starting your agency which is an infant at this stage a guy walks in that was in business for himself but wanted to move on from it said give me 100% 1099. Wheres the phone, show me tech. systems, throw me a few bones and I will be good to go in short order. I have never thought about leaving because it makes no sense. Survival of the fittist is about adaptability. I in the process of adapting.

Also Jbbarea, I know what you mean about being told what to do. Thats also kind of the problem. I am already at that point, I essentially own my own agency except with out the book value but I also do not get any access to the calls coming in from the Insures marketing etc..The owner and I do not even talk, once every 6 months or so. To your point about him not being to bright..I have a hard time saying that so I just stick in my head it is he simply cannot see through the trees. The reality is I am holding back on doing most of my sales activity because to sell 40K in personal lines policies per month requires smart effective work and a lot of work on the backend. When you throw your current client emails and phone calls into that it makes it a daunting task. Why am I going to bat for fences when 50% of my renewals are taken and I am also shagging the balls?

But again..until something hits me int he head and knocks a different sense into my head I find it would be cowardly on my part not to hit this head on with a professional approach. Dont get me wrong, I know this a tough sale but I have not made enough calls on this prospect to give up yet. I succeed in something either way it turns out. My options are plentiful. I am not afraid of change.

Any thoughts on how you would like to be approached by an eager experienced agent that puts your agency first , wants you to be successful and is willing to put skin int he game??

 

[AZDave]

You need CSR support. period. That will free you up to sell even more.

Your split is great for you. Not very common in P&C.

Not sure about 'semi captive' meaning. Sounds like your captive. I can guess. but decide not too.

You have heard other advice regarding going indy, and want to stay at where you are at.

GET A CSR.


Dave

 

[scooter33]

You need CSR support. period. That will free you up to sell even more. Your split is great for you. Not very common in P&C. Not sure about 'semi captive' meaning. Sounds like your captive. I can guess. but decide not too. You have heard other advice regarding going indy, and want to stay at where you are at. GET A CSR. Dave

Again... Why not open up your own office? It's cause you know how difficult, expensive and risky it is. If your agency owner gives you any where near an 80/80 split, either you have some dirt on him or he is a complete ***, maybe both.

Since you are already are squeezing him already like a snake with your 70/50 split. A fair next step is to ask him to hire you an Assistant/CSR. That way you can focus on marketing and new business.

 

[Championpatriot]

CSR needed..agreed! However that has been my issue, I have raised this need several times and the only response is I (he) can handle the calls. Completely missing the point. This would allow us to focus on a plan of attack to write new Biz..."Semi-captive" yes..not sure why that means either! I just put that when staring the post, I guess what I meant there was for any biz our primary insurer declines or does not write we can have appointments with GA's and other insurers and are ok to write that biz with them.

Scooter! If a snake is to survive, squeezing is required and generally dirt is a very good friend.

On the starting my own agency, of course I know the challenges, costs etc. This is just part of the reason I am trying to develop a proposal that works. Why start your own if you can just make the current situation is better. Which again gos back to my original question for owners about what types of ideas you would entertain with someone willing to not only continue investing in growing your book but also putting skin in the game. So I would like to here any constructive ideas here. By the way I am not trying to man handle this and try to get a controlling stake.

With some type of ownership and knowing I have the ability to make the agency grow and therefore achieve higher bonuses this changes how I work. There are part time agents we still have that are semi-retired that I could feed some of my marketing leads when I am out in the field. Hence policies being written for the agency, since I would have a stake in that it helps drive me to do just that. In other words, if I write 30K in biz, then along the way I sent leads I generated because I could not handle efficiently I send to the other agents or the owner himself and they all write another 10K from this. So lets say my 30K, and three others at 10k not we are at 60K for the month. 180K for the quarter. This would easily make us a bonus of a reasonable amount.

Regarding those agency owners that think my splits are either fair as they are or higher than you think it should be are you telling me you have your original agents you started with or new ones that are on lower splits that are still with your agency, happy and all is go lucky?

You could put an add out there for an agent right now tell them they are lets say 50/50 at 1099 provide no leads, no systematic csr support, no office etc and you would expect them to achieve what?

 

[Josh]

This looks like one of those threads where the OP asks a question, doesn't like the answer, then spends the rest of the thread explaining to the people that disagree with him why they're wrong.

It's abundantly clear that you think 80/80 is fair. It sounds like a loser bet to me and at least one agency owner agrees.

Ultimately your boss is going to be the one making the decision, but it sounds like you're going to have a chip on your shoulder if he doesn't give you what would probably be a losing bet on his end. Now you're going to want to come back and explain to me why I'm wrong, which is great, but I'm not the one making the decision.

When do you plan on talking to the boss? I for one will be very interested in hearing the end result.

 

[Championpatriot]

Yes Josh, one could see this thread that way. In this case however I am not signing up for that class. Especially will not disagree with those on why they are wrong. There is not Wrong or right here. The same go's the other way around, you as an owner could be "greedy" so to speak and tell a new producer 15% at 100% is common. Is that a fair deal?? Well it depends, did the producer accept it? Or did he negotiate? He may have thought it was fair then but may want to negotiate a change later. I have been around 8 years. I know how our agency runs, I know our processes and areas lacking processes and I know what I can do to bring more business. What is fair to one is not fair to the other.

That being said I was pretty specific in my question and added more along the way. So up until this point there is no one to disagree with as my question has not been addressed. The best so far to actually come up with some ideas was TheInsuranceGuys. He at least mentioned production bonuses. However vague, it is part of what I want to put in this proposal once I have further ideas. I was hoping for further clarification on the production bonus, for example what percentages etc.

So again I am not asking in this thread what cannot be done. I would have done well in sales for the vast majority of my life if I were. I am simply asking if you whether you know it or not were possibly on the verge of losing one of your primary/ most productive associates and he came to you with some ideas. What are some you would entertain. Keeping in mind all the facts I have provided here, no CSR's, no leads, no marketing, no office provided etc.

Josh I plan on having this meeting once I feel I have come up with something that at least has a reasonable tone to it. I think this is very important to mention again. I have a very decent sized book that I do not plan on asking for any higher percentage on. Keep in mind our last conversation he did offer a counter to my request for matching my marketing dollars, it jut did not make the most sense to do it that way. So there is room for me to get somewhere here, but again what types of approaches or ideas need to be developed before readdressing.

I can say this confidently, the agency owner is not coming to me with ideas because he is sitting fat and pretty and has all the leverage. The agency is not to that point yet (think about it, he writes his own policies and takes all the service calls that come into his office) . He simply does not come to me with a comprehensive long term plan because he either has to much to do himself or just simply does not have an idea of what may work. So I am taking the initiative here. Again. Please open your minds and give me some create thought on ideas you would consider.

By the way the 80/80 was just my initial thought to start with. Considering I do 90% of my own work and I pay 98% of my own costs. Again, was looking for thoughts that went beyond " no owner will pay you that" . I will call my mother if I want to be told something cannot be done.

Its funny though, every time I bring up a response to your guys "losing bet" for the owner, "he would make much money if at all" at 80/80 you say it but have no logical response. Someone please tell me how you figure you would not make money off a 100% commission indi contractor in which you pay no taxes for, no workers comp, no unemployment, no benefits, do not provide leads or marking for, do not need to train ONE ioata. And that producer sells 30K in dwp the next month after hired..how did you not make approx. $900??

 

[Josh]

These are some very long responses to a very simple point.

You think the guy owes you a more generous cut because you believe he's just making piles of money off of you. The other side of the camp thinks 80/80 doesn't leave enough of a margin for it to be worth accepting the liability/risk/expense/resources/time of having a producer. Using what looks like your numbers, $900? Forget about it. What if there are cancellations and chargebacks, nevermind an e&o claim. Again, that's just my take on it, if the guy you're working for is interested in it and signs on, then great.

I'm not going to debate this with you much more. Seriously though, if you want the extra money this badly, you should really look at going independent. If you want the higher cut, that's the price of admission.

 

[kgmom219]

You need a long term plan. One year, 5 year, 10 year. Where do you want to be and how do you plan to get there? Save some money, stop being jealous of the start-up loan (its pretty obvious), jump off the cliff and start your own agency. If you signed a non-compete, then lesson learned. You can obviously sell, so stop giving away the cash and clients.