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Yes Dan, correct.
The vast majority of books are sold internally, to an existing agent looking to expand...
Why Are There So Many Allstate Agencies for Sale Now?
- Thread starter FinanceGuy
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Yes Dan, correct.
The vast majority of books are sold internally, to an existing agent looking to expand...
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LGilmore has it right as does Moonlight's comments about owning and selling your office. I had a neighbor who owned one and ran a good shop. He sold it and it was more an internal sale. They always nickel and dime you to death. They tolerate you grudgingly as LG said. It is really more a job then your own business. You have a bit more freedom but it is almost like being captive.
They also tried to get them to sell CD's which paid joke commissions and were a bunch of paperwork for a few bucks.
They also tried to get them to sell CD's which paid joke commissions and were a bunch of paperwork for a few bucks.
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FinanceGuy
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All very good info. djs, thank you for your detailed response.
I did meet with an Allstate regional manager a while back. Although he did not come out and say it, it seemed as though the current mindset is "if you want to buy an Allstate agency, we are not going to stop you..." He did say there was an approval process, but that seemed to be secondary behind first locating an agency you are serious about.
It also sounded as though there are some Allstate agencies that are owned by individuals that have very little (if any) involvement in the day to day operations. Essentially they are staffed offices and the agency owner just pays the bills. Is that possible?
I did meet with an Allstate regional manager a while back. Although he did not come out and say it, it seemed as though the current mindset is "if you want to buy an Allstate agency, we are not going to stop you..." He did say there was an approval process, but that seemed to be secondary behind first locating an agency you are serious about.
It also sounded as though there are some Allstate agencies that are owned by individuals that have very little (if any) involvement in the day to day operations. Essentially they are staffed offices and the agency owner just pays the bills. Is that possible?
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They can't stop you from buying one. They can withhold approval though.
Don't get hoodwinked! To put it in the mortgage parlance, who's a better buyer...the one who is pre-approved for a mortgage up to X, or somebody that hasn't even applied yet? The vast majority of agents won't even talk to you until you're an approved buyer.
I agree with the earlier post earlier that the direct companies are affecting the way the traditional carriers do business. I hardly think they are replacing them though. I have looked at Allstate very closely, and am actually in the process of pursing the purchase of an agency. They do seem to have quite a number of agencies for sale. I agree with the comment earlier about the aging agent force. Look at these agents. Most are white haired (and well-off). I think the company is raising the bar slightly, and many of these older agents don't wan't the hassle, and they are far enough along that they don't really need the money. I think the new model is to have direct exposure, but to also have agents. Why else would Progressive and GEICO be going in this direction too (and in a big way)? It's probably true that Allstate (among other major traditional carries) have more agents than they would prefer, so some will leave. For those that stay though, it might be a lucrative endeavor. The problem I have found with most agencies is that they are losing as much business as they write. I think the challenge is to find an agency that is actually retaining it's business. I'd take a smaller agency of integrity (and high retention) than a big one that's got a revolving door in the back. 
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Life insurance side note: Allstate like other companies ~suggested~ that their agents push life insureance. Many reluctantly did. Easiest to write was term or low face UL with lager term riders. Alot were written by the long gone "Life Specialist" program Most of these guys never reviewed them. Now the Uls are imploding and the term policies are terming out. Easy picking for an independent. Especially if there are now health issues with the policy holder. Term conversions with full first year commission.
Just think about that question for a moment and the answer should become clear. There are no other agencies for sale anywhere near the number of Allstate offices for sale. I joined Allstate in 2006 and was encouraged to start from scratch because of the poor value of their current agencies. Their district manager had data to back that up. So I thought great lets build an agency. I was in the insurance industry and working for the competition at the time and had a successful agency and but I was a salaried agent and did not own my business. I thought I could do better with the good hands folks. In the first week I knew I had made a huge mistake! This company is run by fools who know very little about the business. Also if you look at the real situation you realize that Allstate was formed as a company in 1998.
What that means is they are a brand new company with no expieriance at all. Before that time Allstate agents sat at a desk inside a Sears's store and sold the heck out of insurance to people who bought it because it was SEARS! Then in 1998 as Sears nearly went in the toilet they sold Allstate to the public through Wallstreet. Their "agents" the order takers setting at the desks in the Sears store were given an opportunity to purchase a book of business and "own" their own business. Or go sell some dishwashers or dryers.... Many made a great decision and bought a book that paid very well.
However unless they were really insurance sales agents their business became worth less each year as more of their client bought insurance from others and they wrote much less business out in their own office than when they had a desk inside of SEARS.
I thought I could make it with Allstate because I had done it before with AAA in Michigan. Allstate is a new Company as insurance companies go only a little over 10 years in business. They have no idea how to market and they are a shrinking company. The only reason they are still in business is the book from when they were SEARS was big enough to hold them till now.
Agencies are for sale in mass for a reason. I was able to get out at a break-even point for me after about 5 months with them. I hit all the sales goals and made the maximum bonuses and broke even. I talked with my district manager to get out; He of course gave me the song of how wrong that decision was. At the same time he had been the top agent in west Michigan and I am not sure but maybe number one in the entire state, and he sold and went into a salaried position working for Allstate rather than being an independant agent. Does that tell you anything? Top agent sells to take a position as an area manager? His brother had an agency that was for sale in Ohio at the same time I decided to bag it.
At Allstate they have a saying. "It is what it is."
What it is? A joke that is what it is. No one there has a clue, they are still trying to figure out how to sell they're very over priced insurance without being inside of SEARS.
They could at anytime decide to eliminate their agents who are all independant contractors, and go the route of Progressive or Geico who both kick Allstate's butt!
Beware!
J.Greenwood
Greenwood Agency
Spring Lake, Michigan.
What that means is they are a brand new company with no expieriance at all. Before that time Allstate agents sat at a desk inside a Sears's store and sold the heck out of insurance to people who bought it because it was SEARS! Then in 1998 as Sears nearly went in the toilet they sold Allstate to the public through Wallstreet. Their "agents" the order takers setting at the desks in the Sears store were given an opportunity to purchase a book of business and "own" their own business. Or go sell some dishwashers or dryers.... Many made a great decision and bought a book that paid very well.
However unless they were really insurance sales agents their business became worth less each year as more of their client bought insurance from others and they wrote much less business out in their own office than when they had a desk inside of SEARS.
I thought I could make it with Allstate because I had done it before with AAA in Michigan. Allstate is a new Company as insurance companies go only a little over 10 years in business. They have no idea how to market and they are a shrinking company. The only reason they are still in business is the book from when they were SEARS was big enough to hold them till now.
Agencies are for sale in mass for a reason. I was able to get out at a break-even point for me after about 5 months with them. I hit all the sales goals and made the maximum bonuses and broke even. I talked with my district manager to get out; He of course gave me the song of how wrong that decision was. At the same time he had been the top agent in west Michigan and I am not sure but maybe number one in the entire state, and he sold and went into a salaried position working for Allstate rather than being an independant agent. Does that tell you anything? Top agent sells to take a position as an area manager? His brother had an agency that was for sale in Ohio at the same time I decided to bag it.
At Allstate they have a saying. "It is what it is."
What it is? A joke that is what it is. No one there has a clue, they are still trying to figure out how to sell they're very over priced insurance without being inside of SEARS.
They could at anytime decide to eliminate their agents who are all independant contractors, and go the route of Progressive or Geico who both kick Allstate's butt!
Beware!
J.Greenwood
Greenwood Agency
Spring Lake, Michigan.
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I agree with much of what you're saying. I am in another state and have talked to different managers about some of teh various agencies for sale here. Every last one of them try to get me to start a scratch agency. You'd think they'd want to come off as less biased, if they expected you to trust them. They don't though. If you show an interest in a scratch start, they're at your feet. If you indicate that you are more interested in buying, they act like they don't know you. It's so obvious, it's comical, once you look for it. But "deals" are the hard to get, so this should not come as a surprise. Anyone with any sense knows they are trying for new headcount. They'd rather sell you on a scratch (absolute financial suicide) and get net head count than to actually help you get into a cash-flowing operation. It's self-serving, and you can read it like a book. It's too bad, but Allstate is certainly not the only company that does it... The large majority of companies are structured so that sales and managment have a conflict of interest. Everyone knows this. You just have to recognized it and work around it.
I say this with the utmost respect, but I think you sealed your fate when you started a scratch. I think this market is simply too efficient to do this. The smarter option has to be buying an agency that is producing it's own working capital. It is soooooo much easier to keep business than to take it. I think the large majority of new agents fall for this scratch push. Most of them are enticed by the New Agent Commissions, and don't have enough foresight to see what will happen when that comp structure ends. I think it lasts for 3 years. It takes more than that to create a viable cashflowing agency from scratch. They cut your comissions in half. If you don't have critical mass by then, you're toast. This just seems like a 36 month hotbox where you are forced to burn your own capital. Tell me if I'm wrong.
On the manger who used to be an agent... I don't know, but perhaps he had his money made and just wanted an easier job? If you've amassed good wealth, a $60K gig 8-5 with a car is a dream. For those of us who are wanting to "build" wealth, you'll never amass any real wealth at that income level. So like in other endeavors, you have to take risk if you want to make income of any significance.
I'm not trying to argue with you, I'm just trying to read it too. I am trying to figure out where to make my play, so I welcome any insight you might like to share.
Look at most of the agencies that are for sale. Most of them are under $1MM, and are scratch agents inside of 5 years...
I say this with the utmost respect, but I think you sealed your fate when you started a scratch. I think this market is simply too efficient to do this. The smarter option has to be buying an agency that is producing it's own working capital. It is soooooo much easier to keep business than to take it. I think the large majority of new agents fall for this scratch push. Most of them are enticed by the New Agent Commissions, and don't have enough foresight to see what will happen when that comp structure ends. I think it lasts for 3 years. It takes more than that to create a viable cashflowing agency from scratch. They cut your comissions in half. If you don't have critical mass by then, you're toast. This just seems like a 36 month hotbox where you are forced to burn your own capital. Tell me if I'm wrong.
On the manger who used to be an agent... I don't know, but perhaps he had his money made and just wanted an easier job? If you've amassed good wealth, a $60K gig 8-5 with a car is a dream. For those of us who are wanting to "build" wealth, you'll never amass any real wealth at that income level. So like in other endeavors, you have to take risk if you want to make income of any significance.
I'm not trying to argue with you, I'm just trying to read it too. I am trying to figure out where to make my play, so I welcome any insight you might like to share.
Look at most of the agencies that are for sale. Most of them are under $1MM, and are scratch agents inside of 5 years...
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