How the hell do these people make money?

Discussion in 'General Insurance Agent Discussions' started by NHB_MMA, Nov 9, 2006.

  1. NHB_MMA
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    NHB_MMA Guru

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    Okay, so I represent a WL company. Many of you are essentially of the "buy term and invest the difference" thinking, so the alternative is to offer mutual funds or similar variable products. Unfortunately, it seems mutual funds don't pay all that much money. I would have never guessed that before jumping into the business, and would have assumed it was the opposite. Yet, some guys do pretty much exclusively investments and do almost nothing with insurance products. How the hell do these people make money?
     
  2. Sam
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    Sam Founder Administrator

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    You can make money selling anything, if you do enough of it. Hell, the guy who sells you the magnets and mugs make pennies a piece, but it doesn't matter when you hit your numbers.
     
  3. MIBizInsurance
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    MIBizInsurance Guru

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    For most part Financial Advisors who earn a decent living have at least
    $30 million of AUM= assests under mang. Or do high # of transactions per year.

    They survive in the first years by salary.

    Plus factor in bonus plans and such.

    Mutual funds are not what they striving for its the IRA, pensions and so forth. Thats where you build your book for the most part.
     
  4. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    It's not really a "buy term & invest the difference" type of a problem.

    Whole life is a great product for the right prospect. However this type of prospect is not found by going door to door with free coffeemugs.

    As I believe I've written in previous posts, this product requires a long time to develop through referrral relationships with accountants, etc. Unless you've got 2 or 3 years to work on this stuff, you better start thinking about a new direction.

    As far as mutual funds are concerned, you are right. You can't make money with someone putting $166/month into an IRA. You need lump sums of $100,000 plus ($2,500-$3,000 in commission) to make it work.
     
  5. sman
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    sman Guru

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    You have to get lots of assets. The big boys have a system set up. All my investment business is word of mouth and cross selling. I tried the seminars, but there were two other reps in my area doing them and we all stopped because we were spending the money and getting fewer and fewer attendees. I was tlaking with my American Funds wholesaler a couple of months ago and asked him what his top rep did with American Funds. He said he has a lady in the metro Atlanta area that averages $20-$30 mil in investment dollars per year. Let's just say her average rollover is $250k, that's 2% GDC or $400k-$600k per year. Once you add in the 25bp trail, it really starts to add up.

    I am by no means a superstar. I've been concentrating more and more on "annuitizing" my business the last 2 years. Moving more and more towards wrap accounts and if it's a VA, choosing to get less up front so I can get a higher trail. If I didn't have the other lines (health and life) I'd be starving. But it's really starting to pay off. It's nice when your trails and renewals are enough to cover all your expenses. Not quite there, but close.

    It's funny to hear you say before you started you thought investment advisors got paid well for putting money in mutual funds. I guess that's probably the normal thought process out there. If it were only true.
     
  6. NHB_MMA
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    NHB_MMA Guru

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    Short story: sell a sh*tload! :)
     
  7. Guest
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    Guest Guest

    MIBiz is correct however when I was a stockbroker and the director of insurance for the B/D there some other ways since you have access to REIT, 401 k roll over and extremely rare situations with variable annuities.
     
  8. axeman462
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    axeman462 Guru

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    You hit the nail right on the head. Best example of that would be oil companies. They only make a profit of an average 2-3 cents per gallon of gasoline sold, yet they a billions every year. How do they do that? They sell billions of gallons of gasoline every year. I could never imagine operating a business on paper thin margins like that; its pure insanity, but they pull it off.
     
  9. Guest
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    Guest Guest

    If your looking at the annuity business, I would steer clear of them as director of insurance I only approved two, but if you want to give them piece of mind and way to control their income and potential earnings, go with FIA . They will get you more referrals and more satisfied clients, just be sure to use that yellow pad to state their name and date and what they understand, this will save you e/o , you assets and less likely have their kids trashing your reputation. For every one dollar you lose on a dissatisfied client it will take $100 in sales to break even.
     
  10. Norwayguy
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    Norwayguy Guru

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    You were the director of insurance for a B/D and only approved 2 annuity transactions.....That explains a lot either it was a tiny B/D or more likely encouraging the business to go elsewhere.
     
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