Non-Compete Agreement | Non-Captive vs. Captive IMO

[AlexG]

Hello,

I'm looking for assistance.
I've had my life license for a few years now, have extensive product and industry knowledge, and was working with a non-captive IMO that only focused on buying more leads to generate more sales.
The commission payouts were high but running the leads purchase model (ONLY focusing on increasing my lead spend & failing to generate adequate referrals) caused me to run out of money!

Now I've partnered with a captive IMO that provides leads & has a robust referral generation system but (as expected) the commissions are significantly lower (about 1/2 of what the non-captive is paying out).

I understand there are different reasons why IMOs have higher or lower commission payouts as well as product options (to offer to clients) but what I'd like to do moving forward is close annuities and IULs with the non-captive IMO while simultaneously focusing on whole life with the captive IMO.
How can I successfully do this without breaching the non-compete captive IMO contract?



P.S. I could easily set up another corporation in order to ensure the commissions generated by the non-captive IMO are deposited into that corporate bank account but I want to ensure I'm not exposing myself to a large liability. The feedback is much appreciated!

 

[Tahoe Ray]

Hello,

I'm looking for assistance.
I've had my life license for a few years now, have extensive product and industry knowledge, and was working with a non-captive IMO that only focused on buying more leads to generate more sales.
The commission payouts were high but running the leads purchase model (ONLY focusing on increasing my lead spend & failing to generate adequate referrals) caused me to run out of money!

Now I've partnered with a captive IMO that provides leads & has a robust referral generation system but (as expected) the commissions are significantly lower (about 1/2 of what the non-captive is paying out).

I understand there are different reasons why IMOs have higher or lower commission payouts as well as product options (to offer to clients) but what I'd like to do moving forward is close annuities and IULs with the non-captive IMO while simultaneously focusing on whole life with the captive IMO.
How can I successfully do this without breaching the non-compete captive IMO contract?



P.S. I could easily set up another corporation in order to ensure the commissions generated by the non-captive IMO are deposited into that corporate bank account but I want to ensure I'm not exposing myself to a large liability. The feedback is much appreciated!

If the captive IMO doesn't allow that, then you're breaching the contract.

If they do, then you're good.

The corp has to have a sub-licensee which is public info in most states. It's pretty easy for a captive agency to task an employee once a month to run license checks to make sure you're not appointed anywhere else.

I wouldn't do this if I were you.

 

[Baseball7]

You’re just trying to do too much that’s a far bigger problem

 

[DHK]

Now I've partnered with a captive IMO that provides leads & has a robust referral generation system but (as expected) the commissions are significantly lower (about 1/2 of what the non-captive is paying out).

what I'd like to do moving forward is close annuities and IULs with the non-captive IMO while simultaneously focusing on whole life with the captive IMO.
How can I successfully do this without breaching the non-compete captive IMO contract?

First, I echo everything @Tahoe Ray said.

What I don't know is if you're trying to sell your non-captive products to the leads being generated in the captive situation? Not only could that be a contract breach, but I'd find that unethical in a business context. (It's different if the captive IMO doesn't have appropriate products you're trying to solve for.)

In my view, what you may really have... is a marketing problem. If you have a way to prospect outside of the captive lead system, then you have no problem and you can easily leave. It's when you're co-mingling your loyalties with the group providing you with leads that you may be having issues.

 

[walthamny]

Also if you are buying leads and not able to make sales of about 4 times the lead cost, you likely have a lot that needs to be improved in your sales skills. Stick to captive assuming mentoring and training is good and learn the business and then you can worry about commission levels and other products. If you cant sell one product line profitably, selling other products wont really work either.

 

[hemati]

Your captive IMO can use your outside appointments as a rationale to seize your entire book of business. I’ve been through it personally and so have multiple other agents I know.

That said - why not just writeup a side-agreement with an annuity producer to split commissions when you send them business? As a licensed agent, he’s breaking no laws shooting you a Venmo, your clients benefit from working with an annuity expert, you get to “stay in your lane” and non-partisan with your client, and since you’re not appointed with any outside carriers, you’re not breaching your captive agreement.

 

[PrivClientSG]

You want to sign a contract and then participate in an activity and behavior that would be in violation of that contract -- and you want advice on how to do that and not get caught. Here's my advice -- don't do it. Thanks.

 

[AlexG]

Your captive IMO can use your outside appointments as a rationale to seize your entire book of business. I’ve been through it personally and so have multiple other agents I know.

That said - why not just writeup a side-agreement with an annuity producer to split commissions when you send them business? As a licensed agent, he’s breaking no laws shooting you a Venmo, your clients benefit from working with an annuity expert, you get to “stay in your lane” and non-partisan with your client, and since you’re not appointed with any outside carriers, you’re not breaching your captive agreement.

 

[AlexG]

Your captive IMO can use your outside appointments as a rationale to seize your entire book of business. I’ve been through it personally and so have multiple other agents I know.

That said - why not just writeup a side-agreement with an annuity producer to split commissions when you send them business? As a licensed agent, he’s breaking no laws shooting you a Venmo, your clients benefit from working with an annuity expert, you get to “stay in your lane” and non-partisan with your client, and since you’re not appointed with any outside carriers, you’re not breaching your captive agreement.

Thank you for your input!
I know this forum can be great for anonymous users but your profile picture looks exactly like a person I knew of with a particular organization I've associated with.
I'm being ambiguous in order to preserve our (potential) identity.

My situation sounds more similar to what you're describing.
I understand that selling outside products to the leads a captive organization is providing can be a breach of contract but that's not my intention.

To your point, I would like to work with annuities (as I already have experience with selling them) - a product that the captive IMO does not offer.

I'm wondering if I can sell annuities (from my own marketing efforts/leads - NOT the captive IMOs leads or clients) without having to send referrals to someone else?


P.S. if I did send the referrals I'd still be ok with doing that but it wouldn't be my preference

 

[AlexG]

You want to sign a contract and then participate in an activity and behavior that would be in violation of that contract -- and you want advice on how to do that and not get caught. Here's my advice -- don't do it. Thanks.

My post wasn't clear enough which is why you're responding the way you are but thanks for your input.