Going through a rough patch

[moonlightandmargaritas]

When you sell properly chargebacks are never an issue.

This statement is too large. "Never" is way too big a word.

There are some circumstances (people get a job, go out of business and can't afford the premium), etc., etc., that are beyond your control and are inevitable.

Make sure you factor them in, and plan for them.

 

[Crabcake Johnny]

True - take 20% charged back which is horrendous:

10K per week advanced 20% commish

$2,000 X 80% = $1,600

That's $83K per year 1st year on advances with 20% blowing back on you. Where's the issue?

 

[djs]

True - take 20% charged back which is horrendous:

10K per week advanced 20% commish

$2,000 X 80% = $1,600

That's $83K per year 1st year on advances with 20% blowing back on you. Where's the issue?

I have no problem with people taking advances. You just have to plan for that time when you think you'll get a big check and you get a much smaller one.

My issue is with thinking the new guy is going to make 10K AV a week consistently. The new guy is also the one (usually) that is hungrier for deals, not screening as efficiently, and has a much higher cancellation rate.

Add into this, the new guy is the one buying a lot of leads, with no steady income to offset it, and that $83K diminishes pretty rapidly if your not careful.

I was talking with a friend today, 4 years into the field (P&C, not health), who didn't earn enough last month to cover expenses for the office. P&C is almost always advanced, which is the problem here, to many chargebacks from mortgage cancellations, renewals took a dive.

If you go advanced, and like I said, I don't have a problem with it, just make sure you have some savings to get you through the rough patches that will happen, especially early on.

Dan

 

[Crabcake Johnny]

Well play this out - if you're new and taking advances then a few months later you're hurting for cash, just imagine where you'd be taking as-earned.

And if you can't write a lot of business then as-earned will kill you. Now instead of some steady cash flow coming in a few months it's now 8 or 10 months.

As-earned is the way to go when you have at least 6 months of all household bills stashed plus marketing money.

Now, without a working spouse, you want to take a guess at how many people have six months of bills plus money to market liquid?

I'm thinking of a number between zero and 1%.

 

[bill3173]

Well play this out - if you're new and taking advances then a few months later you're hurting for cash, just imagine where you'd be taking as-earned.

And if you can't write a lot of business then as-earned will kill you. Now instead of some steady cash flow coming in a few months it's now 8 or 10 months.

As-earned is the way to go when you have at least 6 months of all household bills stashed plus marketing money.

Now, without a working spouse, you want to take a guess at how many people have six months of bills plus money to market liquid?

I'm thinking of a number between zero and 1%.

A lot of old timers would not agree with me, but I think that your advice is right on target. I've been paid as earned for a while now, but still day dream about the advances I would be getting on the biz that I'm currently placing. There are "french benefits" to not having to worry about any chargebacks more than the occasional 1 month, due to NT policies.

Once you go paid as earned, its hard to go back. However, another thing, which is purely psychological - If you are looking at a $200 monthly premium, that means that you are going to get $40-$50 added to your check at some point in the next 2 months, you don't push as hard. They come back to you, before someone that sounds like their going to die, if you don't buy from them. Most people are the same about things of that nature.

 

[Crabcake Johnny]

There is zero liability with taking advances. If chargebacks are an issue then you need to look at your overall business.

I'm also still lost. How does anyone actually get in the hole taking advances? Being in the hole is easy math; more is blowing back then you're writing.

If that's the case, as-earned is not the solution. This is:

Find Jobs. Build a Better Career. Find Your Calling. | Monster.com

If you listen to some of the world's worst advice ever given on this board, if you come in with lacking funds you should go as-earned and get a part-time job.

I do know agents who have gone in the hold taking advances. They typically write a bunch of bad business, grab thousands of in advances - spend every last dime, then have a few "bad weeks." Now the deals start peeling off the books and here come the chargebacks.

Again, as-earned doesn't solve that. Monster.com does.

 

[somarco]

If you listen to some of the world's worst advice ever given on this board, if you come in with lacking funds you should go as-earned and get a part-time job

I can probably cite quite a few examples worse than that, so don't tempt me.

 

[Crabcake Johnny]

Don't know...."go sell pizzas" while trying to get off the ground kinda takes the cake.

Of course, that's great advice when starting any career. All stock brokers and financial career agents should all be taking cheesy low-paying part-time jobs. That really gives your career a boost!

The good news is when you show up with a pizza you can also hand out health insurance flyers. Man...then you're really be cranking.

 

[somarco]

Go sell pizza's or go in debt.

Great choices.

 

[Crabcake Johnny]

You're right. I concede. Pizza delivery is the way to launch your career. I'll update my site later today.