Management Commission Split?

indaville

Super Genius
100+ Post Club
125
I would like some help by learning what the reps that have established themselves as a firm do to pay your expenses and management. I started my firm in 2002, I am the sole owner. What I have been doing is having the firm paid 100% of my commissions. If a commission has to be paid to me directly (securities) then I assign the money to my firm and write it a check. The firm pays 100% of my expenses. I pay myself and another rep. two times a month. The firm keeps 25% of all commissions, the remaining 75% is paid 75% to me, 25% to the other rep a "business manager." So if the firm generates $1,000 in commission $250 stays with the firm $562.50 comes to me and $187.50 goes to the business manager.

What the business manager does is take care of all things that come with running a business. He has negotiated contracts with carriers, utilities, the bank on our mortgage, etc. He is also supposed to be a rain maker, he is very well known and respected in the community. But recently he has not been doing much of anything, other than giving me some advice when I ask for it. Such as from a business stand point what is the best thing to do for marketing, etc.

Does this seem like a fair split? I find myself feeling like I am doing all of the work for a little better than 1/2 the commission. I know this is not the case b/c the firm pays all of my expenses. I used the example of $1,000 but in reality he is getting a significant amount of money.
 
I should have mentioned when he does find a new client, he makes the introduction, I do the work and then we split the remaining 75% after the company keeps its' take 50/50. But this is becoming a rare event.
 
How much are your expenses? What % of the total earnings are they, after fixed costs? If they are a decent amount, then you are paying out 10% or less. Nothing to sneeze at, but not criminal either.
Did he help you start out? How often does he introduce you to people? Sometimes, it is important to keep paying someone who helped you get your start. Also, if you piss off someone who knows that much about your business, you may end up losing much more than you pay him.

A better way to handle it would be to ask him to try and generate more business. Explain that he is so good at meeting people and making relationships, perhaps he can step it up.
 
Melmunch3 said:
How much are your expenses? What % of the total earnings are they, after fixed costs? If they are a decent amount, then you are paying out 10% or less. Nothing to sneeze at, but not criminal either.
Did he help you start out? How often does he introduce you to people? Sometimes, it is important to keep paying someone who helped you get your start. Also, if you piss off someone who knows that much about your business, you may end up losing much more than you pay him.


Expenses only run about $5k per month but that is going to go to about $10k with some of the new marketing efforts I am about to kick off. Each quarter as the companies account builds up I take a distribution. I am paying myself back the money I put into the company to get it started.

He did start with the formation of the company. Not financially but he acts as a consultant with start up companies. He has personally started 6 successful companies. His business experience is unmatched. He usually works on retainer but in 2002 I could not afford that cash flow wise, which is why we used the splits. He went out and picked up his insurance & securities licenses so everything is above board. In the beginning he introduced us to lots of great clients, but we split that business 50/50 so I feel like he has already been paid for thoses efforts. The company is now doing great, his involvement is limited, he has potential to get HNW clients, but he is involved in so many other ventures I feel he does not have the time to find us prospects. I have approached him 3 times this year about this issue and for a week or two he does a great job of getting me very nice prospects. But then it falls off again.
 
I have a similar situation. Someone helped me get started and now I give him a small piece of my pie. Every once in a while, I get resentful that he is still making money off of me and not really doing anything for it. However, he did help me get started, and that is worth something.

I think that splitting some high net worth cases 50/50 after expenses, is also a very good deal for you. Any agent in their right mind would give a limb to have an arrangement where someone throws them big dollar cases. Look at the situation in its totality. How much money have you made because of him, and how much has he made from you.

I still recommend spending some time trying to figure out a nice way to get him to throw you more business. If he has the contacts, just remind him of the cases that he netted the most, and tell him that you are ready for some more of those.
 

Latest posts

Back
Top