Is this Fair? Just Got Offered a Position.

Jul 29, 2015

  1. antek227
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    antek227 Expert

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    Hey guys, I know this has been talked about at length.

    However, I figured i'd run this by and see if the consensus was that it is fair or not. It's an independent agency in NJ and I will be writing commercial & Personal lines.

    I was just offered the following structure.

    Producer split on new business will be 40% base that increases by 5% points every time a new tier bracket has been reached A bracket consists of $40,000 of written premium capping out at 55%. Will reset monthly.

    I would receive access to the entire Vertafore Agency Platform, Broker Briefcase, ModMaster and Velocify. I would also receive email marketing automation, business cards, stationary, etc, as well as a desk and a phone and be covered by their E&O. I would have to provide my own laptop through. They said that they would provide up to 5 real time leads if i wanted. (Why wouldn't I?)

    Renewals would be at a split that is tiered based on the trailing 12 month retention. Anything less than a 80% retention rate would get 15% split. 80% retention will yield a 20% split increasing by 1 point for every point of increased retention. Capping out at a 40% renewal split for 100% retention.

    I'd have to service my own book until i produce $250,000 in revenue and then if i wanted i could have the agency do the servicing and only receive a flat 20% on renewals.

    Contract will have a 2 year non-compete and non-piracy clause. If the agency terminated the contract, the agency will pay me 20% of what ever commissions i received over the previous 12 months.

    Vesting would begin at $500,000 in revenue and Will be fully vested after 5 years. Vested position will be equal to 50% of book of business. Non-Compete must be in force in order to qualify.

    Please let me know what you think. I cant tell if this is a really great or a really bad deal. lol

    Thanks in advance.
     
    antek227, Jul 29, 2015
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  2. Arnage150
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    Arnage150 Guru

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    That is a pretty complex contract. I also feel bad for whomever does the commissions in their office.

    40% on new is low. I would just ask for a flat 50/40.
    I'm also a little confused with your usage of revenue and written premium.
    40k in written premium is nothing. 250k in revenue (commissions) is a lot.
    You would be drowning in service with a 250k commission book. Conversely it is very difficult for one producer to get to $500,000 in revenue/commissions unless you are working in a large agency specializing in large accounts.

    I would also be more concerned with how they are going to help you prospect for leads.

    20% on renewals sucks.

    Is the vesting 5 years or 500k? or at 5 years no matter your production? getting to 500k will be difficult.

    pm me the name of the agency. i know a few crooks in NJ.
     
  3. MedMalAgent
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    What is the current revenue of the agency? 500k is a lot of revenue. The renewal splits are low and no one has a 100% retention unless it is a super small book. What are would you focus on? Is there a base salary?
     
  4. ncagent83
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    ncagent83 Expert

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    I do not see this as fair. All the agents that I know offer an agent a base salary until they exceed the salary with commissions...Sounds like a bad deal to me, just my opinion.
     
  5. Verbgravy
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    Verbgravy Expert

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    There are a TON of producers out there that are 1099 straight commission with decent splits.

    A great producer with a base salary will never make as much money as a decent producer straight commission producer with a good contract.

    OP's contract is not great, but it has nothing to do with a base salary.
     
  6. kgamarketing
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    kgamarketing Expert

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    Where in NJ - I am in NJ and get a good base salary but make more in commission than my salary. No renewals or servicing.
     
  7. antek227
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    antek227 Expert

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    Central Jersey, Manalapan area

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    they wont disclose current revenue. no base salary. would focus 60% Personal 40% Commercial

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    Vesting would begin at 500k. would be fully vested 5 years from hitting 500k
     
    antek227, Jul 31, 2015
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  8. kgamarketing
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    kgamarketing Expert

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    Umm I live in Manalapan lol...
     
  9. antek227
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    antek227 Expert

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    HA. Thats funny lol
     
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