For New Final Expense Agents: 4 Final Expense Contract Scams To Avoid

[HoosierLife]

Yes, but in Scott's example the 1st IMO has to pay back $1000 that they never seen and in scenario #2 they only have to pay back $500 that they never seen. They got the other $700, so $700 is a wash.

But what about the lead cost exposure?

Hey I think the high comp/agent buys their own leads is the way to go.

I've toyed with the free lead/reduced comp idea. I know I don't want to take the risk.

 

[Thedude]

But what about the lead cost exposure?

Hey I think the high comp/agent buys their own leads is the way to go.

I've toyed with the free lead/reduced comp idea. I know I don't want to take the risk.

Yea they are forgetting the biggest "risk factor"


Your returns
Giving leads to someone who has not paid for them.

Give someone 25 leads who has not pre paid for them and hope they work if you wanna know true risk haha

 

[Newby]

The highest risk of debt, is not roll up, but agents at low contracts, who get "real" free leads, and dont produce. Couple that with roll up debt, and you can actually have higher losses than paying agents top comp and making them buy their own leads.

Some exposure there but if you gave the agent leads for free and did not work them efficiently wouldn't you just give those same leads to the next agent that you replace him with?

The leads are a bit older but still sellable.

 

[Newby]

But what about the lead cost exposure?

Hey I think the high comp/agent buys their own leads is the way to go.

I've toyed with the free lead/reduced comp idea. I know I don't want to take the risk.

I've done it. It never works unless you are going to run local agents out of a local office where you are right on top of them. Or a captive phone room or something.

I don't recommend it for an independent agency.

 

[Thedude]

I've done it. It never works unless you are going to run local agents out of a local office where you are right on top of them. Or a captive phone room or something.

I don't recommend it for an independent agency.

Never isn't a great word to use. Neither is always.

It typically ends with someone being surprisingly incorrect.

Also we are talking about risk!

 

[NSRH]

Some exposure there but if you gave the agent leads for free and did not work them efficiently wouldn't you just give those same leads to the next agent that you replace him with?

The leads are a bit older but still sellable.

I cant speak for other organizations, but for us, its live inbound traffic. I cant make someone call a TV commercial again to become a lead.

 

[NSRH]

I've done it. It never works unless you are going to run local agents out of a local office where you are right on top of them. Or a captive phone room or something.

I don't recommend it for an independent agency.

Horribly incorrect statement.

I know personally dozens of captive agents who are on a free lead model, make more than the average agent (50k) and never spend a dime on leads. Its obviously very profitable to the IMO as well, or it wouldn't be sustainable. These agents are scattered throughout the agent working for the same company.

 

[Thedude]

Horribly incorrect statement.

I know personally dozens of captive agents who are on a free lead model, make more than the average agent (50k) and never spend a dime on leads. Its obviously very profitable to the IMO as well, or it wouldn't be sustainable. These agents are scattered throughout the agent working for the same company.

Did you not see the post that Newby had about that never working? Are you joking around ramiz? You bearded Robin Williams

 

[donamese]

Never isn't a great word to use. Neither is always.

It typically ends with someone being surprisingly incorrect.

Also we are talking about risk!

Good Advice but you are saying inferring that leads ALWAYS is a greater risk than a debit balance.

25 Leads, they sell 0. Upline loses $625 on the lead cost. Can add a little for lost sales commission if you want. Say 10% on half the leads at $800 avg sale 50% closing. There is another $1,000 lost in commissions.

Now same 12.5 sales at $800 per policy at 110% commission and half are not taken or lapse very early and you are rolled up with a $5,500 debit balance.

The risk is situational, it depends on the producer themselves. I have seen producers come in and sell 15 policies immediately with 30K face amounts then lapse every single one in less than 3 months. Upline was hit with around 25K debit roll up. So if you gave a new agent 1,000 leads and they didn't sell a single one then those two agents are comparable.

There can be plenty of examples where there are minimal debit balance roll ups and doing significant leads drops for agents where no sales are produced and in that case, leads would be the larger risk factor.

 

[Thedude]

Good Advice but you are saying inferring that leads ALWAYS is a greater risk than a debit balance.

25 Leads, they sell 0. Upline loses $625 on the lead cost. Can add a little for lost sales commission if you want. Say 10% on half the leads at $800 avg sale 50% closing. There is another $1,000 lost in commissions.

Now same 12.5 sales at $800 per policy at 110% commission and half are not taken or lapse very early and you are rolled up with a $5,500 debit balance.

The risk is situational, it depends on the producer themselves. I have seen producers come in and sell 15 policies immediately with 30K face amounts then lapse every single one in less than 3 months. Upline was hit with around 25K debit roll up. So if you gave a new agent 1,000 leads and they didn't sell a single one then those two agents are comparable.

There can be plenty of examples where there are minimal debit balance roll ups and doing significant leads drops for agents where no sales are produced and in that case, leads would be the larger risk factor.

All things being equal. I'm not talking about an individual level. We are talking numbers. Not necessarily always real life. The math is going to say leads + chargeback is going to be riskier.

That's not even factoring in the time value of money. You get an agent a contract at 120 how much money are you down to get him started? He buys the leads. You start someone lower and provide leads what are you already down? With zero idea of when you will get that money back or if you even will.

And I'm not sure where I said always about anything. Sure you can create examples though.