Does Transparency Really Pay Off?

[Josh]

That's a very good point about trust. I might not have done a very good job at building rapport/trust with the client. I can see where that could be the problem.

That's everything man. A lot of analytical types get hung up on the details and focus way more on product/etc vs really connecting with them. People by on emotion, shored up by logic. If you're leading with logic, it's tough. It's impressive that you're humble enough to acknowledge that as a potential weakness. It's a really big deal though.

As a company rep it was the three sales, first you sell yourself, then the company, then the product. To use FE as an example:

Make your first sale by talking to folks and spending 10 - 15 minutes making nice and building a comfort level. The next sale you make is the company, while going through the presentation you talk about the carriers you represent and ask things like "isn't this the type of company you'd want to do business with?" It's also a trial close and gives you an idea of if they're along with you or not. The next sale is the product. Things like "we have these three options, which one do you think would work for you?" If they like you, they trust the company, and they see the product that fits their needs, what you get paid is almost completely irrelevant. Each company pays you differently and you won't know the exact number until everything gets approved. On life products you have no idea what will get approved or not vs rated up or anything like that. It's a dodge, but if they trust you that will solve their curiosity.

Anytime I've ever talked to a sales rep about a product I like, I can't think of ever asking the salesman/saleswoman what they got paid if I bought.

 

[cnguyen84]

That's everything man. A lot of analytical types get hung up on the details and focus way more on product/etc vs really connecting with them. People by on emotion, shored up by logic. If you're leading with logic, it's tough. It's impressive that you're humble enough to acknowledge that as a potential weakness. It's a really big deal though.

As a company rep it was the three sales, first you sell yourself, then the company, then the product. To use FE as an example:

Make your first sale by talking to folks and spending 10 - 15 minutes making nice and building a comfort level. The next sale you make is the company, while going through the presentation you talk about the carriers you represent and ask things like "isn't this the type of company you'd want to do business with?" It's also a trial close and gives you an idea of if they're along with you or not. The next sale is the product. Things like "we have these three options, which one do you think would work for you?" If they like you, they trust the company, and they see the product that fits their needs, what you get paid is almost completely irrelevant. Each company pays you differently and you won't know the exact number until everything gets approved. On life products you have no idea what will get approved or not vs rated up or anything like that. It's a dodge, but if they trust you that will solve their curiosity.

Anytime I've ever talked to a sales rep about a product I like, I can't think of ever asking the salesman/saleswoman what they got paid if I bought.

Very good feedback. Thanks! And I like how you summarized it up with the "three sales." I gotta borrow that one in future discussions

 

[Josh]

Very good feedback. Thanks! And I like how you summarized it up with the "three sales." I gotta borrow that one in future discussions

Do it.

I've learned a lot from a lot of people and it all gets mashed in. There are some things I say almost every day I've picked up from different managers and peers. It's amazing how much of a difference some of these little things can be.

 

[rousemark]

I'm curious then... If a client wants to know how much commission are you getting paid for the plans you recommend, would you tell him the truth. What if you recommend 3 plans and the one that is best for him happens to be the highest commission. Would you lie? This is where the stickiness comes in, I think. In this case, the customer wants you to be transparent with your commissions but would you really be in all situation?

In 41 years, I have never been asked about my commission rate.. If asked, depending on the situation I would either tell what it was or reply, "I am paid very well for what I do because the service I provide is worth it. When you go to the doctor, do you choose the cheapest or the best? They are rarely one and the same." The reply can be effective when justifying a higher premium plan don't see why it would work justifying what I make.

 

[xrac]

I too have never been asked about how I am paid. If someone asked me that I would believe that I am dealing with a tightwad analytical who is not a very good prospect. They are usually the ones who will by pass the agent because they think they are so smart and they usually wind up screwing themselves in the ned. On insurance products the premium is what is important. If you buy $100K term life from a company the premium doesn't change whether the agent is being paid 55% or 110%. The range can be that broad or broader. If on a $100K policy company A pays me 50% but the premium is $800 per year and company B pays me 110% but the premium is also $800 per year and the policy are equal it doesn't matter to the consumer if I go for the higher payout.

 

[donamese]

Transparency can get complex when disclosing commissions. You could make 60% commission where I make 120% with the same product depending on the upline. You may get leads and training where I don't which is the difference in commissions. If you get free leads with one company at 70% but 100% commission with another company, are you really earning more by selling the 100%? Most agents won't know the gross commission on a product so you can truly show an equal comparison, and even if they could, they aren't earning the whole thing so it is irrelevant.

Do you want to disclose trips and other promos that could be included in the product you are selling? Do you have a debit balance with one company so you are either pushing to pay it off or pushing another company so you can earn money rather than have it directly applied to pay off that balance? Those may or may not be an influence in your decision as well but you are being completely transparent.

There is a distinct difference between being honest and boring the hell out of your client with information that is primarily irrelevant. Be ethical and do right by the client and you have nothing to worry about. If you are pushing a much higher priced product simply for their higher commissions you will likely end up with a chargeback because someone else will come in and replace that policy anyhow.

 

[Tahoe Ray]

I'm curious then... If a client wants to know how much commission are you getting paid for the plans you recommend, would you tell him the truth. What if you recommend 3 plans and the one that is best for him happens to be the highest commission. Would you lie? This is where the stickiness comes in, I think. In this case, the customer wants you to be transparent with your commissions but would you really be in all situation?

Some states already require this transparency...

Ameritas Group of New York - our latest

 

[VolAgent]

Some states already require this transparency...

Ameritas Group of New York - our latest

Perhaps the NY State Legislature and DOI should stop punishing consumers in the guise of regulating insurance.

I'm not aware of a single L&H product area where NY consumers even have the same options as the other 49 states, much less more options.

 

[xrac]

Transparency can get complex when disclosing commissions. You could make 60% commission where I make 120% with the same product depending on the upline. You may get leads and training where I don't which is the difference in commissions. If you get free leads with one company at 70% but 100% commission with another company, are you really earning more by selling the 100%? Most agents won't know the gross commission on a product so you can truly show an equal comparison, and even if they could, they aren't earning the whole thing so it is irrelevant.

Do you want to disclose trips and other promos that could be included in the product you are selling? Do you have a debit balance with one company so you are either pushing to pay it off or pushing another company so you can earn money rather than have it directly applied to pay off that balance? Those may or may not be an influence in your decision as well but you are being completely transparent.

There is a distinct difference between being honest and boring the hell out of your client with information that is primarily irrelevant. Be ethical and do right by the client and you have nothing to worry about. If you are pushing a much higher priced product simply for their higher commissions you will likely end up with a chargeback because someone else will come in and replace that policy anyhow.

Donamese hits it on the head. One agent may get 55% up front and another 55% on the rear end in office expense and bonuses. Does commission disclosure include the renewal stream?

The title of this thread is "Does Transparency Pay Off"? In regards to the comission if anything is said I think Louis's statement is enough. The less that is said about commission the better off everyone is including the client. What the agent is paid should be the consumers last concern. If he is getting a product that meets his need at a fair price should be the primary concern. There are two many products and too many variances out there for anyone to know what is absolutely best and absolutely cheapest.

Do you ask the State Farm Agent how much commission he gets when he sells you car insurance or the car salesman how much he makes when he sells you a car or how much the radio advertising sales person makes when they sell you an ad. The disclosure thing about commission is absolutely stupid. If the SF agents makes 10% commmission but the Allstate guy only makes 8% do I buy the Allstate policy that is $200 a year more than the SF? I don't think so.

 

[cnguyen84]

Donamese hits it on the head. One agent may get 55% up front and another 55% on the rear end in office expense and bonuses. Does commission disclosure include the renewal stream?

The title of this thread is "Does Transparency Pay Off"? In regards to the comission if anything is said I think Louis's statement is enough. The less that is said about commission the better off everyone is including the client. What the agent is paid should be the consumers last concern. If he is getting a product that meets his need at a fair price should be the primary concern. There are two many products and too many variances out there for anyone to know what is absolutely best and absolutely cheapest.

Do you ask the State Farm Agent how much commission he gets when he sells you car insurance or the car salesman how much he makes when he sells you a car or how much the radio advertising sales person makes when they sell you an ad. The disclosure thing about commission is absolutely stupid. If the SF agents makes 10% commmission but the Allstate guy only makes 8% do I buy the Allstate policy that is $200 a year more than the SF? I don't think so.

This has been an interesting discussion.

Regarding the commission, I guess it makes sense in our industry that most (99%) of people don't ask for our commissions. In the case where I was asked, it could have been due to lack of rapport as previously pointed out by another member.

When I spoke with people in other industries, the buyer wanted to know the rep's margins and costs (in some cases commission percentage). The only reason I can see why this type of "sensitive" or private information is requested is because the price of the product can be negotiated. We cannot change the prices.

Interestingly, however, in the real estate industry, where most people know that realtors make 3% (most of the time when you are the buyer's agent), some clients would not hesitate to ask for some of that money, which can legally be given by the agent in the closing documents (my friend who is a realtor does this for the clients that ask for some rebate/kickback).