Starting own agency- any advice is appreciated!

[Maxxh66]

Hey all! This may be a long read but your help is appreciated!

This is my first post on this forum and I’d like to start off by thanking everyone for providing tons of knowledge, information, and support for the industry.

I’m hoping I could get some insight and advice for starting my own agency. I am currently a Partner with one of the top life insurers in the industry and have been with this company for 6 years. I have nothing bad to say about my company as I would not be where I am today without all the training and support I have received over the years. By all means I don’t want to sound as if I’m bragging as I know there are many successful agents on this forum, but I’d like to give a bit of background info about me so that you may be able to give me better insight or advice.

I was an agent for 2.5 years before getting promoted to Partner (manager). I never was a high case rate writer but I offered a variety of services from life insurance, long-term care, annuities (fixed, income, variable), mutual funds, setting up employer benefits (401k, group life, group disability,etc), and so forth. I currently have my Series 6, 63, 7, 65, and 24 and will be finishing up my ChFC course by year end. I have been a Partner for a little over 3 years now and run a team of ~10 agents. I became new Partner of the year in the company during my first year and overall I feel I am running a successful team. Last year our team did approximately $400,000 in life premium and $2M+ in rollovers (yes, production seems low if it’s divided amongst 10 agents but unfortunately there are slackers on the team).

Now to the main part- I have been in a captive agency all these years and have no idea what the outside world is like. I’m confident in my sales skills from closing large cases to recruiting people to the industry but honestly (I’m embarrassed to say) I’m not wanting to go through the hustle of prospecting and grinding to rebuild my business all over again. My income last year was about $250K but I’m expecting to end this year around $160K due to the pandemic. The drop in income isn’t the reason I’ve been thinking of exploring other opportunities but I’d rather have more control of how I run my own business. If I do start my own agency most of my team will follow. Ideally I would like to recruit 50% and sell 50% of the time. I enjoy running and closing meetings for my agents more than anything but I don’t like the babysitting part that I have to deal with at times. Oh and I hate my boss and the fact that I am working hard for them! If I were to step down from management and go back to the field, I’d be keeping my monthly renewals of about $2200/mo but if I leave the company, this is gone. I understand independent agents get over 100% commission compared to the ~50% I get with my company but I believe there are pros and cons to both. With my company I have the tools, support, pension, expense allowance, and higher renewals (which I will never own) so I feel it’s a matter of, more money now or more money later. I dislike the fact that if any of my agents quit the company, their book of business is recycled and I don’t get any renewals for the business. With all this being said, my goal is to hit a 7-figure income while having more control of my business. My current company does provide me the platform to earn this type of income but I’m not sure if this is the route I’d like to take. If I were to start my own agency, I’d like to continue offering all the services my current company offers, including securities. Two of my top agents will be a partner/manager and they will help with growing the firm. Ideally, I’d just be taking a fair cut of their production. I’m just not sure where to begin. I do have capital saved to get the company started and I’d be able to offer hands on training with our team to develop them into successful advisors. Please keep in mind, I only know the captive company I am currently working for and feel like a frog stuck in a well not knowing what’s on the outside.

If you were in my same position/situation, what would you do? Do I get contracted with an IMO that won’t make me sign a non-compete and allows for an easy release if I were to switch IMOs? How do I go about getting appointed with a broker-dealer? Does my idea of running my own agency seem feasible?

Thank you for reading this far! Please feel free to provide me feedback or any advice.

 

[fed up]

I would think twice about taking your team with you. Non-competes and lawsuits over such an action could really tie your hands.

 

[Maxxh66]

I would think twice about taking your team with you. Non-competes and lawsuits over such an action could really tie your hands.

A previous Partner took his team when he transferred companies as well. I don’t think there is a non-compete for what my agents want to do. But definitely something I should look into just in case. Thanks!

 

[DHK]

Double-check your contract. I remember signing a non-solicit agreement that I would not replace personally sold business OR recruit agents from the agency for two years.

Non-competes are generally illegal, but non-solicits are done all the time.

 

[DHK]

Last year our team did approximately $400,000 in life premium and $2M+ in rollovers (yes, production seems low if it’s divided amongst 10 agents but unfortunately there are slackers on the team).

Um... how big is your team?

$2 million in GDC rollovers? Or $2 million in assets being rolled over?

$400,000 in life premium... divided by how many agents? 5 or less... okay. 10+... you have a problem.

You might have a lot more to learn and teach them to become more effective. You're not ready to lead a team on your own.

Watch my NAIFA webinar from last week on Exceptional Prospecting Practices. While it was my first time teaching this, I think you'll get a lot out of it.

Welcome! You are invited to register for a recording.

 

[DHK]

I understand independent agents get over 100% commission compared to the ~50% I get with my company but I believe there are pros and cons to both.

You're probably leaving out any bonus programs as well as employee benefit programs in your analysis? So I'd assume 30% more comp rather than 50%.

 

[DHK]

Oh and I hate my boss and the fact that I am working hard for them!

This is your problem right here. You always work for yourself. You're just contracting your services to another company to reward you for your effectiveness.

You also see "riches" in building a team rather than becoming a better producer being more concerned about a "fair cut" than improving your skills, message, and referrability.

You're not ready... at least to me.

What if you could be a $1 million annual producer and not worry about a team?

 

[DHK]

Unless you can help your agents earn 6+ figures a year... from the get-go (1-2 years)... you're not ready.

I work with Thomas F. Love in The Breakaway League. Our average CASE... is $58,000 in commissions... working with upper-middle and HNW clients. How we get them is through a conversation we call "The Explanation of Services".

 

[ehall2]

I would definitely look into the consequences of taking your team with you. My best friend is an attorney and he just represented a guy who left New York Life and brought his team with him. New York Life was suing the guy and my friend represented him. Both parties agreed to a settlement without going to court. I don't have any idea what the settlement was.

 

[Maxxh66]

You might have a lot more to learn and teach them to become more effective. You're not ready to lead a team on your own.

Watch my NAIFA webinar from last week on Exceptional Prospecting Practices. While it was my first time teaching this, I think you'll get a lot out of it.

Welcome! You are invited to register for a recording.

Hey DHK, I appreciate your feedback and not putting on any filters haha. I actually saw your post in regards to this NAIFA webinar and was searching for this so thank you. I'll be taking a look to get more insight. And you're right, I should first learn to make my team successful and effective before thinking about venturing off on my own. Most of the team production is driven by 4 of my agents only. I'm just trying to tell myself that the grass isn't always greener on the other side and that it's greenest where I water it. But I have to first know what's on the other side to realize this.

This is your problem right here. You always work for yourself. You're just contracting your services to another company to reward you for your effectiveness.

You also see "riches" in building a team rather than becoming a better producer being more concerned about a "fair cut" than improving your skills, message, and referrability.

You're not ready... at least to me.

Once again, thanks for the constructive criticism. This is true that I should be more concerned about improving myself and hopefully my team doesn't think I only see them as a number. Hopefully it's not too late to make changes but regardless of where I go, I should learn to become a better leader.