To Push On...Or Not

[jnetiam]

Firstly... a bit of back ground. I am 41 and have been in business for myself for over 20 years. For the first 14 years opening multiple and very successful clinics. After a divorce 7 years ago, I became a Realtor/Investor in the state of Fl and have been fortunate enough to start from scratch and enjoy a successful business. In the last 3 months, I have referred at least 30 of my clients/friends to this one particular P&C Agency that I really like. They are exactly what an agency should be. It has caused my attention to start looking at opening an agency for myself. I would mostly focus on HO, then auto and then would want to eventually bring in all lines...I think. I have a sister that has an active 2-20 license and has been in the business for 15 years, mostly working in call centers for large companies like Progressive. If it can be done, I know I can do it and I know it will be slow at first. What I need to know is this:
1. How difficult is it for a new agency to rep insurance carriers? Do I have to carry a certain ammount of volume before I am looked at as reputable by some Carriers?
2. Wouldn't it be wise for myself to at least get certified with a 4-40 then possibly move to a 2-20?
3. Since I have an available 2-20 agent w/ experience, is it adviseable to skip myself working as an agent for a firm?
4. Any way that anyone can tell me how much the commish is when you are the agency...I have been told it's around 10% if you are the agent.
5. Finally, any seasoned overall advice is greatly appreciated and respected. Or anything I should know but am too green to even ask!!?

Most Respectfully,

 

[J.R.]

Firstly... a bit of back ground. I am 41 and have been in business for myself for over 20 years. For the first 14 years opening multiple and very successful clinics. After a divorce 7 years ago, I became a Realtor/Investor in the state of Fl and have been fortunate enough to start from scratch and enjoy a successful business. In the last 3 months, I have referred at least 30 of my clients/friends to this one particular P&C Agency that I really like. They are exactly what an agency should be. It has caused my attention to start looking at opening an agency for myself. I would mostly focus on HO, then auto and then would want to eventually bring in all lines...I think. I have a sister that has an active 2-20 license and has been in the business for 15 years, mostly working in call centers for large companies like Progressive. If it can be done, I know I can do it and I know it will be slow at first. What I need to know is this:
1. How difficult is it for a new agency to rep insurance carriers? Do I have to carry a certain ammount of volume before I am looked at as reputable by some Carriers?
2. Wouldn't it be wise for myself to at least get certified with a 4-40 then possibly move to a 2-20?
3. Since I have an available 2-20 agent w/ experience, is it adviseable to skip myself working as an agent for a firm?
4. Any way that anyone can tell me how much the commish is when you are the agency...I have been told it's around 10% if you are the agent.
5. Finally, any seasoned overall advice is greatly appreciated and respected. Or anything I should know but am too green to even ask!!?

Most Respectfully,

Welcome to the forum. I cannot help answer any of the aforementioned questions because it's outside my areas of expertise. However, I do hope you can help me with something.

Do you know of any companies (preferably based in the US) that offer non-recourse loans for 401K plans?

-J.R.

 

[insureitnow]

I will try to answer some of your questions. (Its my lunch hour)
I am a Florida P&C agency owner and 220 licensed. The easy questions first:

2. Wouldn't it be wise for myself to at least get certified with a 4-40 then possibly move to a 2-20?

The 440 license is a CSR license whereby you must be appointed under a 220 principle agent. The cost to get the 440 and the 220 are not much different. There are online courses you can take through Seminole Community College . The hardest part is passing the test. I have known persons that have taken it 8 to 10 time. Is it that hard? No. To pass the test you need to do 2 things. Study and Focus. If you lack either you will not pass. (Same as the RE salespersons exam)

4. Any way that anyone can tell me how much the commish is when you are the agency...I have been told it's around 10% if you are the agent.

The personal lines admitted carriers will generally pay 12% new and 10 renewal. Some MGA's will pay 15/15 but mostly "as earned"

1. How difficult is it for a new agency to rep insurance carriers? Do I have to carry a certain ammount of volume before I am looked at as reputable by some Carriers?

This will be your biggest challenge. You will most likely have to write with MGA's or be contracted under another agency to get carriers while your starting out. You will also need E&O of at least 1 million which will cost at least $2,700 annually and maybe more due to inexperience. Your welcome to PM me if I can help further. Good Luck!

Doug

 

[Mr. Bill]

JR, what the heck??? A non-recourse loan for a 401(k) plan? You're kidding, riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight?

 

[J.R.]

JR, what the heck??? A non-recourse loan for a 401(k) plan? You're kidding, riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight?

How do you mean?

 

[Mr. Bill]

Well, perhaps you might explain when a non-recourse loan would be applicable to a qualified plan.

 

[Mr. Bill]

Back on topic, why bother starting your own agency. Getting a P&C license should be no problem, then just decide who you want to refer business to and split the commish. Seems like a lesser headache.

 

[J.R.]

Well, perhaps you might explain when a non-recourse loan would be applicable to a qualified plan.

To purchase real estate with funds from a Solo 401K (roth account or not) using a non recourse loan. Here's one site I recently found Millennium Trust Company - Our Services - Solo 401(k)

I do like some of the added features I can use with a Solo 401K vs. a SEP IRA or Roth IRA.

I've only recently started researching the various types of qualified plans, so I'm not yet at a point to understand the finer details of each plan. As of today, I have signed up for one seminar with Pensco Trust in order to learn more about IRA's and 401K's. I've also looked into Equity Trust Company and The Entrust Group.

If you know of any good websites, classes, books, etc. I can explore I'd love to hear about them.

 

[Mr. Bill]

If you're serious about real estate, I would suggest you consider the disadvantages vs. advantages of using a 401(k). The tax benefits are so great with real estate and would be lost using this. Especially in this tax environment (low) you'd really have to consider whether deferral is appropriate, because what exactly are you deferring? What tax rates do you expect in the future?

 

[J.R.]

If you're serious about real estate, I would suggest you consider the disadvantages vs. advantages of using a 401(k). The tax benefits are so great with real estate and would be lost using this. Especially in this tax environment (low) you'd really have to consider whether deferral is appropriate, because what exactly are you deferring? What tax rates do you expect in the future?

That is what I'm currently doing right now Bill, but I don't have all the information, nor do I know what details you are referring to.

What specific tax advantages pertaining to real estate would be lost using a Solo 401K and/or Roth Solo 401k vs. not doing that? Deductions, 1031 exchanges, Cost Segregation Analysis???

I expect to be in a higher tax bracket down the road, so I'd prefer to pay taxes now vs later. Here is what I know so far. Do you know of any publications that go into details about everything pertaining to the rules of Solo 401K. Most of the material I have found is very generic and does not go into specifics, so it's making it hard to analyze the pros/cons of the different strategies.