Is This a Good Agency Agreement

[NCAgent]

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?

I'm agreeing with Norway here. You are basically being charged the ability for you to have your own business. Do you get great walk-ins? Are you in an excellent place to do insurance like in a busy area where business owners and high income people frequent a lot?

As for P&C, that setup is totally different. I'm a P&C guy as well but I've been a part of a life and health agency as well. This guy is getting nothing but getting a cut in commissions. Even with P&C you get 10-15% for your own traffic and production, then you pay bills outside of this. This guy is basically getting 7.5-9% and THEN having to pay all the expenses of an agency.

IMO, if you aren't getting any training here, then you need to go somewhere else. Are you considered *captive* or independent? By that, I mean can you write multiple companies besides Metlife, Pru, and things?

Look and see how much your E&O is a month and a phone line,CRM (Frank has an inexpensive one, BTW),and a website.From there, compare to what your production is and the lost commissions. Take out any walk-ins that you get from where you work from that math. Honestly you don't need an office for solely L&H unless people just demand that you see them in an office, which is like, never.

 

[Chazm]

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.

Sorry, I meant for Sh*t's and Giggles, find out what 50% commissions mean. If you write a life product, what is the total percentage that the company gets.
Say for instance, you write a $100/month life policy. The company may get 110% ($1320) of First year commission. Do you get 50% of that which is $660 or do they say they only make 90%($1080) so you get 50% of that which is $540.
Or is it just cut and dry 50% commissions. $100/month premium you get $600 FYC?
My math may be off, typed it in quick

Either way it's a rip if they provide no training, no office, no leads...nothing. Run like the wind

 

[tlmarketing]

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

Terrible deal...

Usually when you give agents 50/50 splits, it's because you are providing them with leads, referrals, marketing support, etc..

I would give agents 50/50 split, but provide them with 100 life leads per month.

 

[Cypher1]

Thanks so much for your insight, I really appreciate it. I am in a smallish town and I can't exactly call around and find out what other folks are offering without it getting back to the agency. Just to clarify a few things:

We do not do any P and C. We are a health/life/LTC/etc insurance agency with a few investment reps. My business is mostly Med Sups, Indiv Health, Life, Dental and a few accident policies.

Agency leads are minimal. I would say I get maybe 1 a month if that. We are in a bad location. Lower income side of town across from a laundry mat. No foot traffic.

The commission structure is a scale based on commissions in your pocket. meaning if you make less than $7k per quarter in your pocket you are at a 50% level. In order to make the 70% commish you need to bring in $10k in commission in your pocket per quarter ($20k to the agency).

What is the pitch as to why you would want to work there? They are established and known in our area. The office is very nice. Very classy lobby, nice conference room you can meet clients in, receptionist to greet clients and screen calls. Coffee and tea offer to clients with they come in. Local papers for them to read. The staff processes your apps for you (does submissions). The chance to make big commissions by referring to financial reps.

Thanks again and I hope this lets those of you who are kind enough to respond get a better picture of what is offered.

 

[Norwayguy]

Thanks so much for your insight, I really appreciate it. I am in a smallish town and I can't exactly call around and find out what other folks are offering without it getting back to the agency. Just to clarify a few things:

We do not do any P and C. We are a health/life/LTC/etc insurance agency with a few investment reps. My business is mostly Med Sups, Indiv Health, Life, Dental and a few accident policies.

Agency leads are minimal. I would say I get maybe 1 a month if that. We are in a bad location. Lower income side of town across from a laundry mat. No foot traffic.

The commission structure is a scale based on commissions in your pocket. meaning if you make less than $7k per quarter in your pocket you are at a 50% level. In order to make the 70% commish you need to bring in $10k in commission in your pocket per quarter ($20k to the agency).

What is the pitch as to why you would want to work there? They are established and known in our area. The office is very nice. Very classy lobby, nice conference room you can meet clients in, receptionist to greet clients and screen calls. Coffee and tea offer to clients with they come in. Local papers for them to read. The staff processes your apps for you (does submissions). The chance to make big commissions by referring to financial reps.

Thanks again and I hope this lets those of you who are kind enough to respond get a better picture of what is offered.

So just how many of your clients come to the office compared to you going to meet them? I don't understand how you have the possibility of big commissions by referring to Financial Reps...If they sell a security for commission they are not allowed to split commissions with you unless you are a registered rep.

 

[Cypher1]

So just how many of your clients come to the office compared to you going to meet them? I don't understand how you have the possibility of big commissions by referring to Financial Reps...If they sell a security for commission they are not allowed to split commissions with you unless you are a registered rep.

Almost all my clients come to me at the office. I prefer it that way. The office does make a nice impression and lends credibility. We only get splits on annuity products, not securities. I know I can see annuities on my own, but the financial reps have a lot more success selling as they can offer full financial management services.

 

[Chazm]

You say you've been an agent for about a year but new to this company? I still don't understand why you would want to be there. It sounds like you work mostly seniors and from what I've gathered over a short time, is that most seniors would rather you come to them. Believe me, you would make a TON of more money working from your home office, running appointments for Medicare.

It'll be pretty hard to hit 70% commission there. You said that you mostly do Medicare. So lets say you do a Med Supp. Assuming Commission is 20% there and the average Med Supp commission is $300 you only get $150. If you do 3-4 of those a week that's only $450-600.
No leads are given to you, so you must pay out at least $400/month in leads and pay $400 for office space.
How are you supposed to survive there again?

 

[tlmarketing]

Thanks so much for your insight, I really appreciate it. I am in a smallish town and I can't exactly call around and find out what other folks are offering without it getting back to the agency. Just to clarify a few things:

We do not do any P and C. We are a health/life/LTC/etc insurance agency with a few investment reps. My business is mostly Med Sups, Indiv Health, Life, Dental and a few accident policies.

Agency leads are minimal. I would say I get maybe 1 a month if that. We are in a bad location. Lower income side of town across from a laundry mat. No foot traffic.

The commission structure is a scale based on commissions in your pocket. meaning if you make less than $7k per quarter in your pocket you are at a 50% level. In order to make the 70% commish you need to bring in $10k in commission in your pocket per quarter ($20k to the agency).

What is the pitch as to why you would want to work there? They are established and known in our area. The office is very nice. Very classy lobby, nice conference room you can meet clients in, receptionist to greet clients and screen calls. Coffee and tea offer to clients with they come in. Local papers for them to read. The staff processes your apps for you (does submissions). The chance to make big commissions by referring to financial reps.

Thanks again and I hope this lets those of you who are kind enough to respond get a better picture of what is offered.

So if you bring in $20k per quarter, your agency gets $10k, which amounts to $3,333 per month + $400 = $3,733 per month is what you pay for rent, reception, etc...you can get an office at an executive suite for less than 1/3 of this and it would come with answering service, donuts, etc..

The deal you have is terrible...it's a deal that would typically be used if the agency was giving you 100 leads per month..except you get 1 lead per month.

 

[Guest]

Almost all my clients come to me at the office. I prefer it that way. The office does make a nice impression and lends credibility. We only get splits on annuity products, not securities. I know I can see annuities on my own, but the financial reps have a lot more success selling as they can offer full financial management services.

YOU Prefer it that way??

Well, I work from home and prefer to go to the clients house.

More money in my pocket, and its less of a hassle for the clients. If you were a mom with 2 or 3 small babies to lug around, your more inclined to cancel the appt....

make it convient for the clients, go to their house, where they are comfortable....

People dont need to be "impressed" with your office.

 

[Insurance-Guy]

People dont need to be "impressed" with your office.

RBA...I have just put over $60,000 into one of my offices last year! My other office is a lease...with option to buy. Do you know how many people...business people, reps, clients, walk in business, know exactly where my offices are? Thousands of them drive by them every single day...even if they don't come in to the office which many of them don't to take out the policy...but they all see it and know where we are. Just the electronic message center for the sign at my main office was over $40,000...and that is part of the sign. I have 3 signs at that location. My other office I have two signs that cost me around $15,000...trust me you may not think that you need a office and maybe you don't. But don't think that a office in the right location has no value.

Having said all this I think the OP is getting a horrible deal. I pay all expenses provide small advertising budget, phone, CPU, office, conference room, E and O, and give my commission only producers a better split than that...and they don't pay for their office space either.