Is This a Good Agency Agreement

[Cypher1]

Hello All,

New to Forum and a newer agent (just about a year). Just got a new agency contract and wanted the opinion of others. Here is what my fixed costs are

$250 office rent for cubicle
$50 CRM software fee
$15 per hour for any office staff time I use
$0.33 per color copy

This mean my base cost to go to work is around $400 a month.

Commission is 50% - 70% depending on previous quarter new business production. $6k and under is 50% (That is paid to the agent so $12k total). If you want the 70% you need 10k in new business each quarter.

We do life and health products as insurance agents. We are also an RIA with referral opportunities that offers a 50/50 commission split.

We do almost all our own marketing. It just seems like as agents we are giving a whole lot more then we are getting. Is this normal??

Thanks in advance

 

[NCAgent]

Hello All,

New to Forum and a newer agent (just about a year). Just got a new agency contract and wanted the opinion of others. Here is what my fixed costs are

$250 office rent for cubicle
$50 CRM software fee
$15 per hour for any office staff time I use
$0.33 per color copy

This mean my base cost to go to work is around $400 a month.

Commission is 50% - 70% depending on previous quarter new business production. $6k and under is 50% (That is paid to the agent so $12k total). If you want the 70% you need 10k in new business each quarter.

We do life and health products as insurance agents. We are also an RIA with referral opportunities that offers a 50/50 commission split.

We do almost all our own marketing. It just seems like as agents we are giving a whole lot more then we are getting. Is this normal??

Thanks in advance

Dude, 50% commissions on life and you pay your costs AND you do your own marketing? That seems low. 70% may or may not be horrible, but you need to bust your ass.

You better make sure that the training you get is SPECTACULAR. There is nothing that a reduction in commission is handling otherwise if you are producing yourself and paying all the other costs each month...unless it is ridiculously subsidized.

 

[Cypher1]

Training is all but non-existent. This is the same agreement for new agents and 10 year agents. It is all about new business. Not sure what you mean by subsidized??

 

[Chazm]

This has to be one of the worst deals I've ever seen. Not only do you have to pay for office rent and supplies and get zero training, but you have to give up half your commissions?

If you don't want training, why don't you just do this on your own.

Also, for S&G I would find out what they mean by 50% commission. 50% of what? 90%? 105%?

 

[Cypher1]

This has to be one of the worst deals I've ever seen. Not only do you have to pay for office rent and supplies and get zero training, but you have to give up half your commissions?

If you don't want training, why don't you just do this on your own.

Also, for S&G I would find out what they mean by 50% commission. 50% of what? 90%? 105%?

By S&G I take it you mean the financial products. If we refer something to one of the financial reps and they write an annuity we get a 50% comm split with the financial rep. If you are at a 50% comm rate that would equal only 25% of the comm paid to the referring agent. If they take funds under management we get nothing.

Appreciate the responses. Prior to the change we all got 70% and the fixed costs were the same.

Something I forgot to mention is that after 2 years you are 100% vested in your book. The agency owns the client, but you will continue to receive comm payments as long as the polices are paying.

 

[gebins]

That is not a value..... look elsewhere

 

[Denise509]

I don't think that's such a great agreement....look for other options

 

[Norwayguy]

By S&G I take it you mean the financial products. If we refer something to one of the financial reps and they write an annuity we get a 50% comm split with the financial rep. If you are at a 50% comm rate that would equal only 25% of the comm paid to the referring agent. If they take funds under management we get nothing.

Appreciate the responses. Prior to the change we all got 70% and the fixed costs were the same.

Something I forgot to mention is that after 2 years you are 100% vested in your book. The agency owns the client, but you will continue to receive comm payments as long as the polices are paying.

Please write in simple english what this agency does for you that entitles them to own the client, keep half of the commission and charge you rent for a cubicle and office staff time...

I agree that the agency has an expense providing a cubicle and office staff but they are taking 50 percent of the commission shouldn't that cover the cost? Also if your bringing the client in the door solely on your own marketing just what does this agency provide?

 

[Norwayguy]

Am I missing something? You have to sell $10K in premium in a quarter to make $7K? Or is it 20K to make the 70%?

That is a low production requirement compared to when I was a captive. We had to sell 50 life a year -- averaging 12 a quarter and made a $40/ a policy -- I am not kidding. That same production number for you would equal $35K a year assuming a policy is 1K

Where are you going to get office space for $250/month? If you are on your own you will have a lot of other fixed costs. I am a P&C agent, but that seems like a decent deal. I do sell life as a complimentary line -- 10K in premium seems low - but maybe I misunderstand your arrangement.

He is selling Life insurance, why does he NEED office space. This is totally different line of business and the fact your agent paid you $40 on the sale of a life policy while paying your salary and benefits really has no bearing on this conversation.

 

[Todd King]

Looks like a terrible deal to me.