Is this As Bad a Deal As I Think It Is?

[wealth2u]

Talked to a recruiter today.

They have all products available. Their main focus on getting you in the door is through medicare supplements and MA. They do direct mail. Then when they get those back their telemarketers set up appointments. All I would have to do is go to the appointments. They claim a 40% closing ratio on those appointments. Sounds great so far.

Have to assign commissions. Ugh, a big no-no from what I have read here.

They take a 50% split on commissions. In other words if I sell a med supp that they get 22% commissions on I would get 11%. Same with MA.

I asked about release policy and he kinda danced around it. Said if I did as-is it would not be a problem...

Asked about vesting. Have to have 500 medicare clients in order to be vested. So if I had 300 clients and things didn't work out I would lose all the renewals on them....

Tell me if my math is correct. If I sold 500 clients (assuming they are all med supp). Average monthly premium of $120. IF they all stayed on the books for 6 years I would be giving up about $460,000 in commissions if I figure it correctly. Would it really cost $460,000 to obtain 500 medicare clients???

Oh, if I sold something else like FE or other products on the appointment (or if I sold a med supp on my own through a referral they would give me 70% of the commission and they would take 30%. After I sold 60,000 ap from cross selling or on my own I would then get to keep the entire 100% of commissions.

 

[sman]

At least you're looking at the big picture. And yes, it's as bad a deal as you think. The assignment of commissions is bad. Giving up half of the commission is bad. Losing renewals is bad. All great for the FMO though.

The biggest challenge in this business is getting in front of enough people to earn a living. They claim to take this out of the equation, which on the surface sounds great. But once you do the math, which you did, it seems foolish to give up that much.

If you have the money to do the marketing yourself (direct mail, telemarketing, etc), you can keep all of the commission and don't have to rely on the FMO to pay you. And no, it wouldn't take nearly a half a million dollars to gain 500 clients. You could probably spend $20k-$30k per year for a few years and get to 500 clients. Problem is, most agents don't have the money and/or the discipline to do that.

Additionally, you aren't giving up any commission on other products you sell.

Why don't you share who this FMO is? It can keep others from getting taken. This sounds a lot like a particular FMO in south Georgia, but I don't want to make an assumption.

 

[G.Gordon]

Decline.................................

 

[axeman462]

This is one of the wost deals ive seen.

So many good FMOs on this forum you can talk to...

 

[smokin goose]

If you take this deal, change your screen name to "wealth2them".

 

[vic120]

In addition to everything else already said and true.

Take this comment "They claim a 40% closing ratio on those appointments"

It does not take much for them to claim this be true if it were not how would you know until it was too late. Even if you started and were not doing well 1st it would be are you doing it this way ohh you didnt try that as if it were your fault

And worse lets say they do close at that rate when you start But what is stopping them from using their best leads to hook new recruits and once you invested enough time then give you the crap and make you get your own leads (because of declining quality) a little here and a little there

If you give them that much power you will be at their mercy and you will always pray they don't change the deal any further

 

[goillini52]

Terrible deal all around. Don't do it, they'll own you.

 

[YouGotMyMoney]

Is this the deal you want for entire career in the insurance business, no - but that doesn't mean you shouldn't take the deal for now.

Do you have the marketing money and cash flow currently to be able to consistently write 1 case a day?

They are providing the leads and all you have to do is sell, and in return they take 50%? That's not a bad deal whatsoever.

I'll assume a 50/50 split between MA and Medigap sales, that's an average of $200 for MA ($400 * 50%) and $165 for Medigap ($1500 AP * 22% * 50%) . Average of $182 FYC. That still works out to $66k the first year.

If you bought your own leads then it would cost you on average $100 to gain a client, you would need about $35k to acquire those clients. Average FYC would be $365 per deal, - $100 to acquire the deal, that leaves you with $265 profit per deal FYC. That would give you $96k FYC profit, excluding new year cancellations/referrals/cross sales.

Theres no denying your best best is to generate your own leads, and keep FMO's fingers out of your wallet. But there's reality, if your not gonna hustle to generate the leads, to get 1 deal a day every single day, then it aint a bad way to make $60-100k the first year.