Look for Advice on a Fair Deal with a Potential Mentor

[jbm386]

Hello ladies and gents,

I am seriously considering getting into the insurance industry. I have been reading on this forum over the past few weeks and it seems that most people think that when starting out one should try to find an independent agent to use as mentor and setting up a deal with them mentor/partner. I have two contacts from my home town that I have spoken to about potentially joining or partnering with them. I have set up meetings next week with both to discuss my options with them and I was wondering what I should be looking for in a fair deal. Fwiw one of these contacts only does P&C (its just him and his wife I believe) and the other is the owner of independent agency that does both L&H and P&C with a focus on commercial P&C (it looks like his business has 10ish agents working there including 3 personal insurance reps and rest are involved in the commercial side).

I would think that being the agent of record for my book of business is something I cannot be willing to give up in terms of setting up a deal but Im not sure. I also am leaning towards starting with the P&C side of the industry just because I am slightly more familiar with the concepts but I open to either if it makes for a better deal. I have a feeling the contact from the bigger company is going to want me to work for him but wouldn't that make me a captive for him? Do you think it would be wise to offer some sort of buyout clause after a set time period for my book of business if the large agency contact does not want me to be my own agent of record? Also, I am currently two hours south of both of these individuals and am not extremely interested in moving back into my hometown. However, when I mentioned this to the smaller P&C shop he sounded somewhat receptive to the idea of me working where I am as a partner because he does not have any business in my area.

Lastly, I know basic street level commissions for FE is around 100-110%, medicare supplemental is around 20% and 10-15% for auto, but what other street level commissions should I know going into these meetings so I what percentage of each I would be receiving?

Sorry if this is too vague I can give more details if need be but I want to be prepared to negotiate a fair deal for myself. What other topics should be part of the negotiations? How much they will cover expenses (e&o is a big one, but gas, phone, office, leads, what else?) and if I decide to allow one of them to be the agent of record should I demand a solid base salary in addition to my commission % in order to make up for not being able to be the agent of record?

Any advice is sincerely appreciated, thanks.

 

[xrac]

Hello ladies and gents,

I am seriously considering getting into the insurance industry. I have been reading on this forum over the past few weeks and it seems that most people think that when starting out one should try to find an independent agent to use as mentor and setting up a deal with them mentor/partner. I have two contacts from my home town that I have spoken to about potentially joining or partnering with them. I have set up meetings next week with both to discuss my options with them and I was wondering what I should be looking for in a fair deal. Fwiw one of these contacts only does P&C (its just him and his wife I believe) and the other is the owner of independent agency that does both L&H and P&C with a focus on commercial P&C (it looks like his business has 10ish agents working there including 3 personal insurance reps and rest are involved in the commercial side).

I would think that being the agent of record for my book of business is something I cannot be willing to give up in terms of setting up a deal but Im not sure. I also am leaning towards starting with the P&C side of the industry just because I am slightly more familiar with the concepts but I open to either if it makes for a better deal. I have a feeling the contact from the bigger company is going to want me to work for him but wouldn't that make me a captive for him? Do you think it would be wise to offer some sort of buyout clause after a set time period for my book of business if the large agency contact does not want me to be my own agent of record? Also, I am currently two hours south of both of these individuals and am not extremely interested in moving back into my hometown. However, when I mentioned this to the smaller P&C shop he sounded somewhat receptive to the idea of me working where I am as a partner because he does not have any business in my area.

Lastly, I know basic street level commissions for FE is around 100-110%, medicare supplemental is around 20% and 10-15% for auto, but what other street level commissions should I know going into these meetings so I what percentage of each I would be receiving?

Sorry if this is too vague I can give more details if need be but I want to be prepared to negotiate a fair deal for myself. What other topics should be part of the negotiations? How much they will cover expenses (e&o is a big one, but gas, phone, office, leads, what else?) and if I decide to allow one of them to be the agent of record should I demand a solid base salary in addition to my commission % in order to make up for not being able to be the agent of record?

Any advice is sincerely appreciated, thanks.

You may be jumping the gun on your questions until you get some idea of what type of compensation and deal each one is willing to offer. This would be a situation where I would listen and ask as many questions as possible. Ask questions about any benefits, commission splits, ownership of book of business, leads, service work, etc. Then come back to the forum and fire off all of your questions and concerns.

 

[Bob Klee]

I agree with Xrac.

Personally, I've mentored dozens of agents 1-1 over the years. Never took anything from them. Made some good friends that still stay in touch today.

So not all "mentors" want money. If the personality fits, you find someone with the heart of a teacher....I learned as much as I gave.

Like Xrac said: Listen & ask questions. Ask "why." there are NO dumb questions. You are looking for information to make an informed decision.

From what I hear on this Forum & I've talked to him personally too, Frank Stastny:
Professional Medicare Supplement Sales Training, Coaching, Support & Contracts.

"The Perfect Contact Management Program (CMP) for the Insurance Professional"
Insurance Sales Management - Insurance Sales Contact Management Software
877.633.0808

is one heck of a Med-Supp/FE mentor. IMO, his techniques work with any type of insurance but are tailored to what he does. The cost is the price of his software which is a Steal IMO. $299. Plus he can appoint you with excellent commissions, you own your own book, etc.

IMO, I'd give him a call as it would be well worth your time if you have Any interest at all.

Do report back & let us know what you find. Best of luck in your new chosen profession.

 

[b61mack]

i second and third, bob and xrac. i would do more listen than talking, the first meeting. i would meet with the big company first, so you will have more of a plan when you meet with the small company.. the small company will probably be more receptive, to you owning the book of business.

 

[jbm386]

Hey guys, thanks for the advice so far, I'm generating a list of questions to ask as we speak. I agree with listening more than talking but like I said I have spoken with both of these individuals over the phone already for over 30 minutes a piece asking a lot of preliminary type questions.

Thanks for the referral towards Frank, I actually spoke with him for about an hour before I even posted this thread. He was extremely helpful and gave a me a lot of great information but said he was not an expert with the P&C side of the industry so he couldn't help me with a ton of specific issues I had that I stated in my original post.

Anyways, I will take your advice and ask a lot of questions and try to find out what each potential partner is looking to try to set up in terms of a deal and will let you guys know so I can get further advice.

Thanks

 

[Bertolinoins]

I am not trying to be a wet blanket here but it is very, very difficult to mentor a green agent from a distance. Insurance is not easy if you are doing it right. I have tried to deal with agents from a distance and it is very, very tough unless they are very exerperienced and can basically work on their own. If there is little to nothing in it for the agency (you retain ownership and want a good split) then it makes you wonder why an owner would agree to it. The small agency owner may want to do it to groom somebody to buy his agency in the somewhat near future... but the larger agency owner won't have must interest in giving that level of control with a fair split. When a new guy wants to start in the industry and they are talking to me about book ownership and splits... all I hear is "please train me, let me use your resources, make my mistakes on your dime and pay me well to learn this fantastic industry... so that I can go out on my own ASAP". My reaction 9/10 times is "thanks but no thanks". A college education isn't free and what I am about to teach you is worth a whole lot more than a bachelors degree.

 

[xrac]

I am not trying to be a wet blanket here but it is very, very difficult to mentor a green agent from a distance. Insurance is not easy if you are doing it right. I have tried to deal with agents from a distance and it is very, very tough unless they are very exerperienced and can basically work on their own. If there is little to nothing in it for the agency (you retain ownership and want a good split) then it makes you wonder why an owner would agree to it. The small agency owner may want to do it to groom somebody to buy his agency in the somewhat near future... but the larger agency owner won't have must interest in giving that level of control with a fair split. When a new guy wants to start in the industry and they are talking to me about book ownership and splits... all I hear is "please train me, let me use your resources, make my mistakes on your dime and pay me well to learn this fantastic industry... so that I can go out on my own ASAP". My reaction 9/10 times is "thanks but no thanks". A college education isn't free and what I am about to teach you is worth a whole lot more than a bachelors degree.

That is another valid view point and a point worth considering. Time spent with a good mentor is invaluable.

 

[jbm386]

Hey guys I appreciate the advice so far, so here are specifics from the deal that the smaller p&c shop is offering.

• Commission = 50% on new business and 25-30% on renewals (earned commission on auto policy = 15% (7.5% for me), Homeowners/Renters = 20% (10% for me), workers comp = 7% (more likely) - 10% (3.5-5% to me), Business Owners Policy = 20% (10% for me) Other commercial policy = 15% - 20% (7.5-10% to me)

• Base = none

• would let me stay in my current area as he wants to expand down to my area and would consider setting up an office down here eventually
  

• no pay until received license and I must pay for testing and prep

• possible buyout when he retires in 5-15 years

• The agency would be the agency of record and I would be the producer

• vast majority of service would be at his office 2 hours away

• no benefits (health, dental, vision)

• errors and omissions insurance would be full covered

I just sent him an email letting him know I wanted a partnership contract in writing before I committed to getting my license. The main term I want included is that I want 1st option to buy the company when he decides to retire and if I chose not to buy the company for whatever reason I get to take my book of business and either become independent or sell it myself. I can only lose my book of business if I decide to leave the company, if he decides to let me go I keep my book of business (this prevents him from firing me right before he sells the company to someone else to keep my book in his business). This is sort of a deal breaker in my opinion and if he says no then I am not willing to even consider the deal unless you guys really think I should still. Also, are their any other terms I should try to negotiate for? The no benefits issue and getting my e and o covered seem to offset one another, maybe ask for higher % of commission on renewals? Ide like to hear people opinions on what I should ask for on the deal or if i should run with it.

Lastly, while earning 1/2 of 15% commission (7.5% for me) for auto policies (we will say average policy =1,000) and 1/2 of 20% commission (10% for me) on home and renters (avg policy = 600). If I get 5 policies written a week over 50 weeks in my first year (which seems like it may be high for a new agent) I'de receive around 18,750 in commissions (250 policies x 75 dollars commission per policy) for my 1st year salary. This is not going to make me nearly enough to cover my basic living expenses. Did I miss a calculation somewhere or is this realistically what I am looking at in my first year?

 

[PDX_Agent]

Are the auto policies 12 months or 6 months?

The big thing your math really, really relies on is that you have 100% retention. Each time a policy cancels, you are going to have to pay back the non-earned commission.

 

[jbm386]

Are the auto policies 12 months or 6 months?

The big thing your math really, really relies on is that you have 100% retention. Each time a policy cancels, you are going to have to pay back the non-earned commission.

I did not think of that, I remember him saying retention rate has been 94% with his agency after 1 year and 97% retention rate for 2+ years. I do not know if those are realistic numbers or not, they seem very high especially when the bulk of his policies seem to be personal auto policies. So it would be 18,750 * 0.94 =17,625. Is that correct for my expected fist year income? It cannot possibly be that low?