Getting Paid After the Advanced Months Have Passed...

[2112Greg]

This is something I wanted to run by you guys. It's the explanation for what happens to my business after the months that I have been paid for on advances have passed. This is from a GA I get a couple carriers...what do you guys think?

Per your contract, you are vested on your block of business for life. There are some administrative charges such as interest and minimum payments that are all spelled out in the contract. All your as earned credits go against your Debit Balance. Once your Debit Balance is paid off, you will receive payments from me as long as the business stays on the books. Simple as that.

 

[joshril]

This is something I wanted to run by you guys. It's the explanation for what happens to my business after the months that I have been paid for on advances have passed. This is from a GA I get a couple carriers...what do you guys think?

That's pretty standard. This is almost always the case when your commissions are assigned (i.e. not paid directly from the insurance carrier).

From the GA's point of view... can you blame him/her?

 

[2112Greg]

I suppose. It just seemed weird to me that once the period of being advanced ends, I should be paid as earned and let the business that I've written pay down the current debt from advances within the 8 months. Can't really blame him, I guess, he's just covering his ass. When he explained it to me over the phone, he was so unconvincing that I don't think he himself believed what he was saying, which got me to thinking. A friend uses this same GA and she had the same weird phone call (a lot of stammering and nonsensical crap). So I thought I'd ask what y'all thought...

 

[Guest]

Hey man,
you have to look at it this way. Many GA's get burned by people taking advances and walking, owing them money, or trying to get the best of the agency. I know there's no way you'd do that (from our conversations) but they have to have the upper hand. Also, many GA's don't really make serious money until the book of business grows over time. They assume the risk much more than we do as agents under them.

Do you know how many agents submit bad business?
Don't know their craft?
Can't close a spring loaded door?

All this after receiving leads, tools, software, etc?!?!

You get the point, hang in there and call me if you have any specific questions about problems you might be facing in sales.

I suppose. It just seemed weird to me that once the period of being advanced ends, I should be paid as earned and let the business that I've written pay down the current debt from advances within the 8 months. Can't really blame him, I guess, he's just covering his ass. When he explained it to me over the phone, he was so unconvincing that I don't think he himself believed what he was saying, which got me to thinking. A friend uses this same GA and she had the same weird phone call (a lot of stammering and nonsensical crap). So I thought I'd ask what y'all thought...

 

[2112Greg]

Thanks guys...I was really just checking. He's been good to me, I just wanted to make sure I was getting doinked.

Rob, I'll give you a call on Monday or if you're around over the weekend, give me a call at 512.514.0117.

 

[Mark]

I want to add that it's not up to your upline or MGA. It up to the insurance company.

They do the MGA and upline the same way on their business. But you will end up getting the money.

 

[Crabcake Johnny]

GA's/MGA's take on a huge liability when issuing advanced commission - all GA's/MGA's must sign behind the advance.

In the case of GR that's really not even necessary since the Key Broker receives the advance and immediately incurs the debt.

Imagine a Key Broker receiving $10,000 in advances, passing on all 10K to the agent, the agent blows out and 4K charges back. The Key Broker is personally in the hole 4K - quite the liability and the one of the reasons I no longer hire.

Although most (95%) of all agents coming into the field need advances you also need to consider going as-earned as soon as you're financially able.

 

[G.Gordon]

Although most (95%) of all agents coming into the field need advances you also need to consider going as-earned as soon as you're financially able.

Exactly!! Being an agent sucks when you're living sale to sale for the advanced buck. The best method I adopted when I changed course and needed advance money to keep it going was to get two contracts with the companies that would allow it and split your sales between the advance and as earned contracts. If they won't then get contracted with several carriers and send a sale to the as earned every once in a while to build up that steady money faster.

 

[Crabcake Johnny]

Best way is to start with a mixture of advances and as-earned. Good agents should always be selling a mixture of carriers so choose 1 carrier for advances - maybe 50% of your sales are through that carrier and go as-earned with the others.

The problems I see with agents taking advances is they simply don't save. They might make $2K a week in advances and simply blow all of it - or even worse, raise their standard of living. Maybe buy a luxury car, bigger house, etc...

This is a trap. If you're making 2K a week in advances you should be saving every cent of it after marketing and regular bills. This not only makes it easy to transition to as-earned but provides a cushion against a chargeback.

 

[somarco]

all GA's/MGA's must sign behind the advance.

So when you stiff the carrier and they can't collect your outstanding balance rolls back to the GA. In some cases the GA will try to collect not only the commission advanced but his override as well.