Fee for Service

[rocky top buzz]

Have any of you ever charged a fee-for-service for life insurance consulting? I have heard over the years that it has been done, but personally do not know of anyone doing it.

I have an agent who recently spent several hours with a client developing a plan for funding a deferred comp plan. He had several follow-up conversations with the client who he felt was very interested. Then the client stopped returning his calls. Today he ran into the clients wife and she told this agent that her husband did go with the life insurance, but he wrote it with a hunting buddy who is a P&C guy and didn't know anything about life insurance, he just sent his proposals to his carrier and had them write it. The wife was friends with the agent, so she was telling this as she was disappointed he did not get the business.

The agent asked me what he could do to prevent this in the future. I told him the short answer is nothing, but that he may want to consider charging a $100 an hour consulting fee, but would agree to waive the fee if there is a commissionable sale. I'm just curious if anyone has taken this approach? I do not believe this would be applicable if you have a securities license though.

 

[Full Throttle]

Have any of you ever charged a fee-for-service for life insurance consulting? I have heard over the years that it has been done, but personally do not know of anyone doing it.

I have an agent who recently spent several hours with a client developing a plan for funding a deferred comp plan. He had several follow-up conversations with the client who he felt was very interested. Then the client stopped returning his calls. Today he ran into the clients wife and she told this agent that her husband did go with the life insurance, but he wrote it with a hunting buddy who is a P&C guy and didn't know anything about life insurance, he just sent his proposals to his carrier and had them write it. The wife was friends with the agent, so she was telling this as she was disappointed he did not get the business.

The agent asked me what he could do to prevent this in the future. I told him the short answer is nothing, but that he may want to consider charging a $100 an hour consulting fee, but would agree to waive the fee if there is a commissionable sale. I'm just curious if anyone has taken this approach? I do not believe this would be applicable if you have a securities license though.

I have not done it, but have heard of agents in this space charging an upfront planning fee, to be off set by commissions earned.

 

[STIBROKER]

Have any of you ever charged a fee-for-service for life insurance consulting? I have heard over the years that it has been done, but personally do not know of anyone doing it.

I have an agent who recently spent several hours with a client developing a plan for funding a deferred comp plan. He had several follow-up conversations with the client who he felt was very interested. Then the client stopped returning his calls. Today he ran into the clients wife and she told this agent that her husband did go with the life insurance, but he wrote it with a hunting buddy who is a P&C guy and didn't know anything about life insurance, he just sent his proposals to his carrier and had them write it. The wife was friends with the agent, so she was telling this as she was disappointed he did not get the business.

The agent asked me what he could do to prevent this in the future. I told him the short answer is nothing, but that he may want to consider charging a $100 an hour consulting fee, but would agree to waive the fee if there is a commissionable sale. I'm just curious if anyone has taken this approach? I do not believe this would be applicable if you have a securities license though.

http://www.google.com/url?sa=t&rct=...pIDgDQ&usg=AFQjCNHeX4M-0RdTZ2ZTcPgR1H0iw-Q6VQ

 

[rocky top buzz]

Interesting, so In Virginia if you were to waive the consulting fee following a sale that would be considered rebating. I can see that. You can charge a consulting fee, but cannot alter the fee based on whether a sale was or was not completed.

That probably makes it a little more difficult to take the approach I recommended. Any other ideas or recommendations for avoiding this situation. Obviously all of us who have worked in this business long enough have lost a sale that we earned, and someone else got for free. We have probably been the beneficiary of some of those as well. One of our seasoned agents told me his approach was to always got the word of the client, that if the proposal was good, the client would buy from him. Maybe that is all we can do.

 

[VolAgent]

Ask.

You need to flat out ask, "Now Mr. Jones, as we work on your insurance plan, once we find a solution, is there anything or anyone that needs to be consulted or that would prevent you from taking action with me?"

I'm sure M&M has better language for it, but the point stands. If you don't ask if there are other agents involved, you are just asking to get knee-capped later on.

That or just flat out charge a fee for the plan. Then you can get paid twice.

 

[MichaelQ]

I think VolAgent is right.. once we establish a need and a product to meet that need, will there be anything preventing you to complete this deal? it has happened to me in the past also.. Man it's upsetting, they just wasted your time.

 

[BNTRS]

Yes you can charge but you must become familiar with your state's specific requirements.

Some states require that you decide between commissions or a consulting fee. Some allow you to collect both with proper disclosure. Some states require that you obtain a separate license to charge a consulting fee.

You CANNOT offer to waive the fee if they choose to buy. This would almost definitely be viewed as an inducement to buy, which is rebating. Unless, of course, you are working with someone in FL where rebating is not illegal--though very much frowned upon and could get your appointment with a carrier terminated.

 

[MichaelQ]

At least in Florida.. Rebating= A not so nice letter, call or visit from the State, that equals= What the heck was I thinking?