Licensed soon... weighing options with agencies (question on carrying a book with me)

Mar 30, 2019

  1. MyGenericName123
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    MyGenericName123 Expert

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    I'll be starting part time with the intention to quit my full time job within 6-12 months of starting, dependent upon how quickly I grow.

    I see alot of agents talking about starting from scratch after their first agency. I have come into contact with a few agencies that said they would allow for me to take my book of business with me at the conclusion of our arrangement.

    What pre-cautionary measures can be taken to be sure that this ends up happening? Its not that I don't trust the individuals who are saying I could take it with me, its just that I hear so much discussion about start from scratch it makes me wonder why more agents didn't set up similar arrangements with their first agencies.

    I know that broker of record letters allow for the agent to move business from one agency to another, that is assuming that the new agency has a relationship with the same carrier. Is this correct?

    I also know that do not compete clauses often times prohibit the agent from soliciting commercial/personal lines that they personally signed up for a period of time.

    If an agency (mom and pop) is telling me that they believe I should be able to take my book with me if our arrangement doesn't work out, does it stand to reason that within the contract there be no do not compete clause (I thought this was pretty much industry standard so this is where the confusion comes up) and also indicate that they are okay with me actively soliciting my clients if and when I move on.

    My goal is to establish a long term relationship with the very first agency I sign on with because I believe in loyalty and building win win situations, not milking someone for training and moving on the first chance I get. From a business standpoint I believe this is poor practice, and it also does not align with my ethical code.

    Even still, I'd like to educate myself further on what it means to carry a book with you, how realistic it actually is, and what potential "trade offs" are worked into an arrangement with an agency that is willing to let you do this, as opposed to one that is not.

    Obviously an agency who gets to keep the book when you leave is in a much better position than one who lets the business go with them. But in my experience in life there's almost always a trade off.

    The thought of working my warm circle, and busting my ass for a few years, only to start from scratch all over again is a daunting thought as I am currently 37 years old. For this reason, I am very much so more drawn to agencies that are open to figuring out a way for me to bring it with me if I need to leave.

    FWIW I currently do not have aspirations of opening my own agency, though I am sure that could change.

    If you made it this far, thank you for reading this post. This community is great.
     
  2. MyGenericName123
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    MyGenericName123 Expert

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    I also know that some contracts include a buy out clause which from my standpoint seems fair. You give the agency a cut of what they would have made had you stayed.

    I am trying to decipher whether some of this is just talking points from an agency standpoint and that push comes to shove I end up having to leave the entire book of business with them.

     
  3. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    Your priorities are backwards.

    Your #1 priority is to survive and thrive in this business. You need skills.

    Your far lower priority should be about "book ownership". But if you can't generate a book of business... how would keeping what you COULD get help you long-term?

    Plenty of people get started in captive situations and leave them for "greener pastures" later on and leave it all behind. Why should you be any different?

    Once you have a track record, now you can be in a far better place to negotiate.

    Until you produce... you have nothing to negotiate with.
     
    DHK, Mar 30, 2019
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  4. BADTROUT
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    I see alot of agents talking about starting from scratch after their first agency. I have come into contact with a few agencies that said they would allow for me to take my book of business with me at the conclusion of our arrangement.

    What pre-cautionary measures can be taken to be sure that this ends up happening? Its not that I don't trust the individuals who are saying I could take it with me, its just that I hear so much discussion about start from scratch it makes me wonder why more agents didn't set up similar arrangements with their first agencies.

    I think much of it depends on what you see in writing, and having a clear dialogue as to the intent of the contract. I think the major difference you see is far more w2 employees will have a non compete of sorts, whereas 1099 relationships tend to be a little more flexible. Equity stake or a buyout or loosened restriction on customer contact is wide ranging and I wouldnt necessarily say there is an industry standard. Geography plays a role as well.

    I know that broker of record letters allow for the agent to move business from one agency to another, that is assuming that the new agency has a relationship with the same carrier. Is this correct? 100% Correct

    I also know that do not compete clauses often times prohibit the agent from soliciting commercial/personal lines that they personally signed up for a period of time.

    If an agency (mom and pop) is telling me that they believe I should be able to take my book with me if our arrangement doesn't work out, does it stand to reason that within the contract there be no do not compete clause (I thought this was pretty much industry standard so this is where the confusion comes up) and also indicate that they are okay with me actively soliciting my clients if and when I move on. Not to be cynical, but make sure any arrangement in writing because understandings change, contracts dont. Non competes and confidentiality is a fairly normal and understood inclusion, however not a black and white there will be one in every relationship. For my employees whom I provide 401k and pay for licensure etc etc absolutely... for contractor transitioning to potential agency owners we do not. Everyone does it differently though so read your contracts thoroughly.

    My goal is to establish a long term relationship with the very first agency I sign on with because I believe in loyalty and building win win situations, not milking someone for training and moving on the first chance I get. From a business standpoint I believe this is poor practice, and it also does not align with my ethical code. Most of the time this is not because of a bad case of ethics, it's because there wasn't a clear understanding, or the experienced agent takes advantage of a noob, rarely is it someone scheming to get smart then bolt... but it happens, and it's super frustrating.

    Even still, I'd like to educate myself further on what it means to carry a book with you, how realistic it actually is, and what potential "trade offs" are worked into an arrangement with an agency that is willing to let you do this, as opposed to one that is not. Good question! There is always an ulterior motive. There really isnt a way to just up and carry it off with you, but there is the having a restriction or not part at the end. Tradeoffs, usually one or the other is offset by compensation and benefits while working together. The more you are getting from an agency the more likely a restriction would be in a contract during and after. Again there isnt a one size fits all. First instance producers that produce for me, are employees and those are MY clients at the end if the day (and for two years after lol). The producer sells and has full back office support staff behind the scenes. Almost all overhead is covered. Ones who leave have that restriction, unless they decide they want at some point to start an agency. We help them acting almost like a trade school, they start their agency when they are ready to do so, their commission increases and we ween them off back office support. No restriction for them to move their clients as they still would fall under a sub code of ours. Win/win. I'm sure there are others out there doing a full 180 of this so it's good you are here asking these types of questions.

    Obviously an agency who gets to keep the book when you leave is in a much better position than one who lets the business go with them. But in my experience in life there's almost always a trade off.

    The thought of working my warm circle, and busting my ass for a few years, only to start from scratch all over again is a daunting unfortunately for most of us this happens several times before we get it, then do for ourselves. thought as I am currently 37 years old. 37 isnt considered old in this business... just saying... For this reason, I am very much so more drawn to agencies that are open to figuring out a way for me to bring it with me if I need to leave.

    FWIW I currently do not have aspirations of opening my own agency, though I am sure that could change. What you know and think how will almost always change... and if you dont change your mind, carriers and government regulation will step in and shake things up... there is no such thing as forever in this business so being adaptable is key.

    If you made it this far, thank you for reading this post. This community is great.

    Great questions, and as we've spoken about several times, if you are driven, you'll find success no matter where you go, or who you align with. The more education you get the better, but at the end of the day ANY program will work, if you are willing to work.
     
    BADTROUT, Mar 30, 2019
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  5. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    Typically, "do not solicit" is regarding existing clients to not be contacted for a specific period of time. "Non compete" is regarding doing ANY business with anyone in a geographic location for a given period of time.

    Generally speaking, non-compete agreements are illegal and unenforceable. However, this is not legal advice.
     
    DHK, Mar 30, 2019
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  6. InsCommentary
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  7. BADTROUT
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    BADTROUT Guru

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    Absolutely fact. I stand corrected in generalizing the fairly inaccurate term of "non-compete" in my response... You are right, generally, they are unenforceable unless you have an ownership stake. Non solicit/contact are what I was referring to, just lazily using the generalized term of non-compete.
     
    Last edited: Mar 30, 2019
    BADTROUT, Mar 30, 2019
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  8. InsuranceGuy29
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    Just an FYI, this is not an easy industry -- especially working just part-time. You're gonna need a GREAT mentor that can show you all the ropes, and how to attain and retain business. You need money to start off. Worrying about clients and books of business is good, and to be honest, I wouldn't trust any upline.

    Get EVERYTHING in writing, and have a lawyer look over all documents. I had a crooked upline try to take my entire book of business, before. But again, just understand that this business is kind of like learning how to be a lawyer, salesperson, and a counselor -- all in one. This takes TIME, and a lot of people simply just can't hack it -- which is why turnover is so incredibly high.

    You need tons of support and mentorship.
     
    Last edited: Apr 11, 2019
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