Posting Commission Schedules On Website?

[Newby]

I had the idea of posting the commission schedules of the carriers that I'm appointed with on my website for transparency ... does anyone know if this is compliant. Intuitively, I would feel like carriers would frown upon this. What if is wasn't actually the official commission schedule but rather a summary of some kind?

If you are talking about for consumers then I think it's a bad idea unless they feel the need to disclose to you how much they earn per hour.

If it's a website for agents to consider contracting with you, then yes. I don't understand why agents put up with the Easter Egg hunt many IMOs make them go through to find out the commission levels they are being offered.

I've posted ours for the last couple of years and get great compliments from agents and sometimes the opposite from recruiters. But I think it should be a requirement just like the required General Price List that funeral homes are required to give to consumers. Why hide one of the most important things that your customer (the agents) needs to know. Here is an example of ours: Final Expense Commission Levels

 

[goillini52]

If you are talking about for consumers then I think it's a bad idea unless they feel the need to disclose to you how much they earn per hour.

If it's a website for agents to consider contracting with you, then yes. I don't understand why agents put up with the Easter Egg hunt many IMOs make them go through to find out the commission levels they are being offered.

I've posted ours for the last couple of years and get great compliments from agents and sometimes the opposite from recruiters. But I think it should be a requirement just like the required General Price List that funeral homes are required to give to consumers. Why hide one of the most important things that you customer (the agents) needs to know. Here is an example of ours: Final Expense Commission Levels

I'm pretty sure that you knew he was talking about consumers and you just used this as an opportunity for another "cheap plug".

 

[zwcoop]

By posting them in public you risk an issue with your carrier partners.

This is what I was curious about whether or not this would be compliant/ok from the carriers stand point.

Personally, I think you are inviting unnecessary questions and conversation surrounding something that isn't relevant to the product or service provided.

I don't know if I would agree it's irrelevant. It certainly SHOULD BE irrelevant but, the truth is there is - in my experience - no shortage of individuals pushing whichever product has the biggest commission tag attached to it.

Not really another layer... just more confusion.

I haven;t even figured out how I get paid yet so I do agree with the adding confusion sentiment.

It was just a thought that I wanted to hear some feedback on. It was spurred by the first decently sized life quote I've worked up since opening the doors. I got 4 quotes worked up - 2 from two carriers I established independent channels with and 2 that my FMO recommended.

All or the quotes did turn out to be fairly competitive ... but, to my surprise, when I inquired into the details of the commission structure I found that there was a HUGE range. I'm talking $4,200 vs. $9,000!!! That sort of a range would make a nun second guess her recommendation.

I am no nun but I do try very hard to put my clients needs first. Part of me feels like setting up commission structures in such a way selects for a certain personality type/behavior pattern that leads to a lot of distrust in our industry. The other part of me realizes that carriers need to promote their products and is give incentives to agents any different that a retail store running sales?

 

[DHK]

I'm talking $4,200 vs. $9,000!!! That sort of a range would make a nun second guess her recommendation.

Compared to what premiums? Underwriting? Contract provisions and definitions?

Rarely is there that big of a discrepancy of commissions... unless you're comparing a MassMutual or Guardian brokered product through a local GA to a product you're selling with a true PPGA independent contract?

OR... you're comparing a fully target premium UL/IUL to a base whole life/blended term policy? (Or is it Ohio National's PrestigeMax whole life policy paid to age 65? There are various contracts that work out for a higher commission because of how they are structured.)

There are a lot of factors that can be considered.

"Best policy" is NOT necessarily the one with the lowest commission. The problem is... you can justify just about ANY policy as being "the best" for the client. Here's what I look for:
1) ease of underwriting (a policy isn't much good if it can't be issued)
2) how understandable is the policy for the client?
3) how long is the coverage guaranteed for? In the same vein: "how long would a similar policy with a term rider be good for?"
4) How soon does the insured plan to need access to the cash values of the policy?
5) Company ratings, customer service, etc.

The CFP Board, NAPFA, and other critics of our industry have conditioned the public and many agents that "commissions are evil" and that "fee-only" people are the only ones doing planning "right". (They also don't understand ANYTHING regarding life insurance and annuity contracts.)

Now, there are plenty of people that would sell an INFERIOR product purely for the commission... but if you have quality products and you're looking out for your client... and you can SELL them on why the higher commission product (or contract structure) helps them to accomplish their short-term and long-term goals... then go for the higher commission product! Just make sure it's a real fit. If it doesn't fit, you can't be ethically justified in selling it.

 

[MIBizInsurance]

Give FEX credit for posting theirs as with some IMO's have noticed a challenge to get clear commission levels. They send 3-4 for companies and you have to keep asking for rest.

Have no horse in race as to FEX but was glad to find their levels as provided a good starting point to gauge others by. Understand if considerable amount of training is involved or subsidized leads the levels will be different but again the only IMO that I know that clearly post them.

 

[zwcoop]

Rarely is there that big of a discrepancy of commissions... unless you're comparing a MassMutual or Guardian brokered product through a local GA to a product you're selling with a true PPGA independent contract?

I'm still trying to figure this out but I think this is the reason. I have a contract through Mass and Penn's broker channel as well as a contract with Impact Partnership (FMO). You're basically saying that the higher comp level through the FMO vs. Mass/Penn direct contract is structurally different. PPGA vs. GA is still gibberish to me at this point.

Give FEX credit for posting theirs as with some IMO's have noticed a challenge to get clear commission levels. They send 3-4 for companies and you have to keep asking for rest.

FEX ... please elaborate

 

[zwcoop]

As far as contract details they were 'the same' as far as I can tell. The quote was for a GUL on a 73 yo male for 9000 annual premium. The guy wanted to see how much DB could be guaranteed through 100. The range came back 205,000 - 216,000

 

[DHK]

I'm still trying to figure this out but I think this is the reason. I have a contract through Mass and Penn's broker channel as well as a contract with Impact Partnership (FMO). You're basically saying that the higher comp level through the FMO vs. Mass/Penn direct contract is structurally different. PPGA vs. GA is still gibberish to me at this point.

Well, in that event, the compensation contract is vastly different. You're essentially a non-contracted captive agent when you write for Mass or Guardian as a broker. You get the 55% instead of the 80%+ that you could get with independent companies. Why? Because you're (generally) contracted through the local GA office and that's how they pay their agents that sell for them. (They have levels of managers and office overhead expenses, so they take a greater share of the overrides.)

By contrast - a PPGA (Personal Producing General Agent/independent) earns far more for selling a particular company's insurance products because the compensation arrangement is different. Instead of paying levels of managers, YOU keep that difference as an independent.

Or, another way to think about it: the standard compensation on an agent contract is 55%. If you're with a captive agency, there is staffing, management, and office rent that need to be paid. They get those overrides for those expenses.

If you're independent, you get that same 55%... but YOU get the overrides that would've gone to the traditional general agency and you can control your own expenses as you see fit. Your total compensation can be 80%+ (depending on company, contract, and production experience). Of course, you're responsible for your own training, staffing, and everything else.

 

[zwcoop]

Well, in that event, the compensation contract is vastly different. You're essentially a non-contracted captive agent when you write for Mass or Guardian as a broker. You get the 55% instead of the 80%+ that you could get with independent companies. Why? Because you're (generally) contracted through the local GA office and that's how they pay their agents that sell for them. (They have levels of managers and office overhead expenses, so they take a greater share of the overrides.)

By contrast - a PPGA (Personal Producing General Agent/independent) earns far more for selling a particular company's insurance products because the compensation arrangement is different. Instead of paying levels of managers, YOU keep that difference as an independent.

Or, another way to think about it: the standard compensation on an agent contract is 55%. If you're with a captive agency, there is staffing, management, and office rent that need to be paid. They get those overrides for those expenses.

If you're independent, you get that same 55%... but YOU get the overrides that would've gone to the traditional general agency and you can control your own expenses as you see fit. Your total compensation can be 80%+ (depending on company, contract, and production experience). Of course, you're responsible for your own training, staffing, and everything else.

I understand that conceptually the difference between comp rates between captive vs. independent but I guess I don't understand why I am being paid as a 'captive' through Mass since I'm going through their broker channel and not using their resources. Is there a way to get another contract type through Mass, Penn, and Guardian?

The reason I decided to one off through those 3 is because I value having good mutual companies to offer my clients.

 

[Newby]

This is what I was curious about whether or not this would be compliant/ok from the carriers stand point.



I don't know if I would agree it's irrelevant. It certainly SHOULD BE irrelevant but, the truth is there is - in my experience - no shortage of individuals pushing whichever product has the biggest commission tag attached to it.



I haven;t even figured out how I get paid yet so I do agree with the adding confusion sentiment.

It was just a thought that I wanted to hear some feedback on. It was spurred by the first decently sized life quote I've worked up since opening the doors. I got 4 quotes worked up - 2 from two carriers I established independent channels with and 2 that my FMO recommended.

All or the quotes did turn out to be fairly competitive ... but, to my surprise, when I inquired into the details of the commission structure I found that there was a HUGE range. I'm talking $4,200 vs. $9,000!!! That sort of a range would make a nun second guess her recommendation.

I am no nun but I do try very hard to put my clients needs first. Part of me feels like setting up commission structures in such a way selects for a certain personality type/behavior pattern that leads to a lot of distrust in our industry. The other part of me realizes that carriers need to promote their products and is give incentives to agents any different that a retail store running sales?

I'm FEX. Here is the problem. Some agents are paid 50% and others 100% on the same product. To the consumer the 50% agent would appear less biased. But it's probably the opposite. The agent on 100% is likely more established and experienced. To me it's not the commission amounts that sway an established agent. But to a more desperate agent it would be more likely to.

Also do you only disclose 1st year? Or renewals too? Because some products like annuities you have the option to make your 1st year lower and the renewals higher.

DO you disclose what your up lines all make? Because YOUR commission level might appear small but your up line might be heavy handed in what you sell and he might be making twice what you make. Especially for captive agents.

I think the disclosure that you work on commission is all anyone needs to know. People who work on salary are just as likely to be making bad recommendations as a commissioned person. People with no commission are going to be less driven to really keep up on their industry and be a true expert. They would be more likely to get into a routine and recommend the same thing that worked last time and not have to learn new products. Also they are more likely to be recommending what the boss told them to recommend and HE could be financially biased in his choices.

Consumers just need to be aware that any business they deal with is profit driven. Their lawyer is. Their doctor is. Their insurance agent is. Their grocer is. Any business has to have profits to survive and get paid. The profits could come from commissions. Could come from fees. Could come from the price of goods or services.

But regardless of any disclosures all consumers need to educate themselves and stay aware.