$200,000 to Invest in the Business. Looking for Advice

luv2sell · 09-29-2009, 01:41 AM

Hello all,

This is my first post, so I will do my best to avoid getting flamed by introducing myself and sharing my situation in detail. Then I will ask for advice. Before I start, I want you to know that I have been lurking and reading as many posts as possible on this site. I think it's amazing and I love the information here. I appreciate everything you have to offer and I have done my best to gather some information before my first post so that I don't sound like a total fool.

About me: I began my career as a CPA and later transitioned into the world of Executive Recruiting. I have been in this business for over 10 years and have been very successful. I have long lasting relationships with a multitude of clients and candidates. These relationships took years to develop through disciplined marketing plans, cold calling, perseverance, relationship building skills, and the ability to close a deal. This is an extremely competitive and challenging industry where nothing is handed to you. I know that nothing happens overnight, but I have proven to myself in three different environments that I consistently outpace the growth and success of my peers in a much shorter amount of time than the average performer. If you think it's tough to get someone to buy insurance, try stealing them away from their employer when they are not even "looking". I have managed multiple offices, recruited my teams, and have always maintained my own book of business with the responsibility of producing. Every year (after my first), I have always been a top biller in my environments in an industry that has a drop out rate above 90% within the first twelve months.

I am 38 years old, so I feel I have enough experience that people take me seriously during business and life decisions/discussions, but I am young enough that I still have a ton of energy and many working years ahead of me (God willing). I actually love to work, and I love to sell. At the same time, I have to sell something I believe in. I have turned away clients if I think they offer a bad working environment or if they have an unscrupulous reputation. At the same time, being able to tie my compensation to my ability to produce is much more rewarding than my years in corporate America on a fixed salary. This all said, we are growing our family and have been blessed with some young, beautiful children. My wife and I are thinking of a way to get closer to family, which gives us the options of Michigan or Arizona.

I have been researching the insurance business for over a month. I am drawn to it because I like the idea of selling a product that people need (or should have). Even during a recession, it seems that responsible people will spend money on insurance and cut back in other areas first. Also, assuming we do move, I do not have a desire to conduct my current business from afar, especially if we wind up in Michigan (which would be the ideal location). The time difference would mean working evenings every night to service a west coast audience. I already work regularly from 8:30 AM to 7:00 PM, which would mean working until 10:00 PM in Michigan (many of my candidates cannot speak until after work). I would miss every upcoming sporting event and school recital. I wish to remain a good dad as well as a successful individual, so those hours won't work long term. Insurance is also appealing because I think I could learn the products quickly because of my financial background. I would rather invest my energy in this field than starting another search firm, especially when job growth is questionable over the next few years. Plus, I administer the benefits for my business currently (I own it) and I have explored and exercised options tied to health, life, disability, E&O, general liability, P&C, and more (I spend too much money on insurance!). I don't know much, but I think I have a better foundation that a complete newbie.

OK, the business part: I am not rushing into this. I am going to get licensed soon in life and health with the assumption that I will execute a plan that will take some time (at least a year due to current commitments), so I am beginning heavy research. If I opt for P&C, I will change my licensing plans.

I have at least $200,000 in liquid funds that I can allocate to my transition plan. I can either use this as cushion during a transition, or I could use it to towards buying a book of business to get started. I plan on being independent with the longer term plan of building an agency.

OK, this is the part where some of the tougher members of the crowd tell me to work for a captive agency, learn the ropes, and then go independent. I understand why some might say that, but personally, I would rather hook up with an eFinancial or IHIAA and invest my own time into training on the products and then selling. I know I won't be perfect in the beginning, but I also don't think I'll make any catastrophic mistakes that can't be corrected quickly.

Here are some of my thoughts and questions, so I would appreciate your honest opinions and replies:

1) Life and Health are more appealing to me than P&C unless I can buy into an existing P&C brokerage and work with an owner on their way out. P&C seems like a tough way to make money unless you are established and have some residuals coming in.

2) If you were in my shoes, would you use the money to buy into an agency and grow it from there, or would you start from ground zero. Please realize that I am a disciplined worker, whether I am home or in my office. I make 50 to 100 cold calls daily (and would make more if I did not have business ownership admin issues to deal with). I also embrace technology. I use software designed for my business to track all client information and sales activity. I have also seen gains in business using regular emails through StreamSend (it's a competitor to Constant Contact). If I have to start from home, I already know I won't be flipping through TV channels or checking the fridge every hour). I would also carve out a space away from the family and my kids already have been trained to leave me alone if my office door is closed.

3) I am a little confused on the ease (or appeal) of sale debate tied to Health vs. Life. A lot of guys have said they lead with the health and cross sell the Life. This is where I may show my newbie stripes, but it seems like Life would be a quicker sale, especially if you push term (med or non-med). Am I wrong here? Or is it just that the payouts and residuals are so much stronger with Health that it makes it a more lucrative path than Life?

4) There seems to be a number of options with eFinancial, IHIAA, and others that could allow me to setup from home (or perhaps I would lease a space at a local office suite), keeping the admin work to a minimum, while lowering the chance of making admin errors. Are these the best places to start?

5) For the firms that are the agency of record (sorry if that's the wrong term), I assume they keep a percentage of the commissions. Do you have to break free from them to start your own independent agency (my hiring agents to work for me) or can you build an agency without ending that relationship? Also, if you have an option, is it better to maintain the affiliation or better to end it?

If you read this far, I thank you for taking the time to put up wth this long post. You might as well reply with something at this point...

I am sure I will have more questions as I go along, but I'll do my best to be more succinct next time. Hopefully I will one day look back on my neophyte status with a smile on my face and even more money in my pockets, and then I'll be willing to help some other new guy/gal looking to get into the business by sharing the wealth of knowledge that I too will gain.

Be well and I wish all of you continued success.

CHUMPS FROM OXFORD · 09-29-2009, 09:07 AM

Well...first of all...best of luck to you.

Re..."but it seems like Life would be a quicker sale"...

Just my opinion, but if I were starting, I would want to sell a product where I am "replacing" business a good bit of the time rather than asking the client ( in many cases) to purchase an add-on product.

Of course....the future of individual health care is a bit up in the air right now. It should turn out fine, but compensation for brokers may take a hit.

Ken Westphal · 09-29-2009, 10:27 AM

I would recommend going independent under a good General Agent on the Health and Life side. Buying someone elses book means you are getting any issues they have and the business may fall off quickly. They don't take money out of your pocket, and they provide training and better compensation usually out of the gate. Due to your financial state, do not do advance but take as earned.

Select no more than 4 states to call into using cold calling to small business owners. I would select these states based on your location. If Michigan I would recommend you sell there, and two other mid west states, then add at least one east coast state so that the time works better.

Study the carriers I get appointed with endlessly so you know the answer to the questions you will get if at all possible, including the UW guides.

Start slow doing mainly cold calling to get your skills honed so that you are comfortable and can then train someone else to also do these calls to create leads for you. Once you are comfortable and successful at this, hire 1-2 telemarketers to create leads for you by cold calling.

I would continue to cold call 25% of the time, but then the remainder of your time you will be working the leads your telemarketers created for you and servicing your business.

Lead in with health and then cross sell life, as cold calling for life is not very successful.

If you do go as earned, then your $200K will help cover your costs and needed earnings while you build your commission pipeline.

Be careful not to get into too much techy toys that are expensive and do not necessarily get you return on investment.

somarco · 09-29-2009, 10:35 AM

Most folks are under capitalized. This does not seem to be the case here unless your lifestyle is like Donald Trump.

As others indicated, I would not buy a book. Too many snakes to deal with.

If I were in your position, I would look at building an employee benefits block. It takes longer but can provide a very good living over time.

Markingriffin · 09-29-2009, 11:26 AM

You should take all the Guru on the forum including myself on a nice trip and over drinks, we will tell you all of our secrets and train you.

You can also call me and I will talk you head off and give you some free ideas, but the trip idea would be better.

GonnaFlyNow · 09-29-2009, 11:58 AM

You should sell medsupps.
It's great residual income.
It's easy.
It's a huge market and getting bigger.
It's something you can sell over the phone or face to face.
It's daytime selling so you don't miss any of your kids evening activities.

luv2sell · 09-29-2009, 12:20 PM

Hi Mark (and others),

I like the trip and drinks idea, but we'll flip the timing. Once I am up an running with steady income coming in, I'll look into sponsoring the trip!

As for the invite to call, I will definitely be taking you up on that. Thank you for the offer.

Originally Posted by Markingriffin

You should take all the Guru on the forum including myself on a nice trip and over drinks, we will tell you all of our secrets and train you.

You can also call me and I will talk you head off and give you some free ideas, but the trip idea would be better.

BrooklynV · 09-29-2009, 12:51 PM

I think a lot of agents are wanting way too much for their books of business.

HarryRenard · 09-29-2009, 08:46 PM

If you have managed to save that much money to the point you can invest 200k into a new venture, I would think long and hard about leaving it.
But on the same hand if you were successful in your other venture there arent to many reasons you cant repeat, the truth is like otheres stated one of the main reason many fail is limited funding.
Personaly i would look to grow your own book and save your money and your sanity. There are good books out there but they are the exception not the rule.
Either way good luck to you.

Cornelius · 09-29-2009, 09:56 PM

As I don't speak about opportunities anymore I would suggest you consider the Life/Health Insurance License and the Series 65. Gather Assets Under Management.

dgoldenz · 09-29-2009, 10:37 PM

I would take part of your $200k and take some CLU and ChFC classes, get a solid background in estate planning concepts, and get ahold of your high net-worth clients. That's where the big money will be.....the sky is the limit on life insurance if you're really good. Do you want big sales that aren't as consistent, or do you want to build up another book of business with residual income doing health insurance, potentially to get screwed with the legislation passing through Congress?

GonnaFlyNow · 09-29-2009, 10:57 PM

Originally Posted by dgoldenz

I would take part of your $200k and take some CLU and ChFC classes, get a solid background in estate planning concepts, and get ahold of your high net-worth clients. That's where the big money will be.....the sky is the limit on life insurance if you're really good. Do you want big sales that aren't as consistent, or do you want to build up another book of business with residual income doing health insurance, potentially to get screwed with the legislation passing through Congress?

Medsupps are not going away.
The last thing congress wants to do is increase the medicare budget. the only way to get rid of medsupps would be to dramatically increase the medicare budget.

It's a lot easier to make a lot of little medsupp sales than to sell a handful of large estate plannign cases. and a lot less stress too.

Plus the residual income can't be beat.

dgoldenz · 09-29-2009, 11:01 PM

Originally Posted by GonnaFlyNow

medsupps are not going away.
The last thing congress wants to do is increase the medicare budget. the only way to get rid of medsupps would be to dramatically increase the medicare budget.

It's a lot easier to make a lot of little medsupp sales than to sell a handful of large estate plannign cases. and a lot less stress too.

Plus the residual income can't be beat.

It might be easier, but if it paid that well and it was that easy, everyone would be doing it. Agents with an extensive estate planning background are few and far between. The guy already said he has a list of contacts from his other job....I don't see him selling med-supps to those contacts.

CHUMPS FROM OXFORD · 09-29-2009, 11:20 PM

Luv2sell...You're in luck!

The Thread to End All Internet Lead Threads - Page 3

JSO · 09-29-2009, 11:24 PM

I've worked in both captive and independent, with that in mind I'm in FL where there are no captive agents that can sell property insurance any longer. So, the only choice is independent. As for Life, Health, Home or Auto, ask yourself this? What do you have to have? If you have a mortgage you have to have hazard insurance or the mortgage company will force place coverage and it's at least 4x's what it cost buying it on your own. That's a no brainer. Second auto insurance, if I recall when I sold auto policies in MI you have to have auto insurance if your car is regeistered for the road and you have a tag. If you don't your license will get suspended, your rates will sky rocket etc.... get pulled over and go to jail in some cases. In today's economic situation Life and Health insurance is a luxury and I can tell you from experience it's a much harder sale than home or auto insurance. If you've got 200k to invest the going rate down here for a book of business is 1x's the commission maybe 1.5 depending on who it's written with. AM Best carriers or Demotech will determine that. Plus, once you take over ownership of the book your no not responsible for what the other owner did in the past. you simply put togethr a good welcome letter and you'll retain probably 80% of the book. I started from scratch 1 policy at a time so, if you come to FL let me know, I'll show how to make some $ in P&C. Just my .02

Lance320 · 09-29-2009, 11:44 PM

Well Ive seen some good Ideas so far but they seem kind of vague as to how to develop your business. I would definitely go as earned with my commissions if I were you. But you need a Good CRM tool to help you through the "now" and "later" of your business. Once you have that you need to find a good lead source. (i prefer internet leads.) You will need a constant supply of interested leads to make it in this business. So try using some technology to automate as much of the business as possible to avoid wasting time with the little tasks.

I have used numerous vendors for internet leads so if you want some advice on that end of it feel free to give me a call 817-999-5906 and also when it comes to the CRM tool I have found the best tool so I'll be happy to pass that along to you as well.

luv2sell · 09-30-2009, 12:08 AM

HarryRenard: Yours is a very valid point, and it's a big reason I'm not abandoning my current business and rushing into another venture until I do a lot of research and build a business plan (which will involve a target plan and a hedged plan in case things don't go as quickly as I predict). I have been considering a lot of options and keep coming back to insurance. I have been blessed by my current business, but it is something with a long sales cycle and then big commissions. It has worked for me personally for 10 years, but it's not a model I want to have forever and it makes it difficult to build consistently successful teams. Because of the long sales cycle, we hire some people that can cost us $10k or more and then they might leave without closing a single deal. Just as important, we have no residuals in our business (I guess our positive reputation results in repeat business, but repeat business is unpredictable).

More importantly than all of this, I have learned that only chasing money is dangerous. I chose my current profession primarily for the money. So now I have a nice house, a couple nice cars, a nicely funded pension, and some other liquid funds. Having kids has changed my perspective a lot. I work a ton of hours and have nice things, but I barely see my kids during the week and they almost never see their grandparents, aunts, and uncles. I am willing to make less to have more quality time with my immediate and extended family.
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Dgoldenz: This is definitely something worth looking into. I was a CPA with Deloitte. The status is currently inactive, but I could reactivate it. I could reactivate it and get some of these other designations. Do you know of a good source or website for me to read to understand the commission structure/potential with products targeted to high net worth individuals?

Originally Posted by dgoldenz

I would take part of your $200k and take some CLU and ChFC classes, get a solid background in estate planning concepts, and get ahold of your high net-worth clients. That's where the big money will be.....the sky is the limit on life insurance if you're really good. Do you want big sales that aren't as consistent, or do you want to build up another book of business with residual income doing health insurance, potentially to get screwed with the legislation passing through Congress?

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OXFORD: HA - LOL! We should have a drink or two together before you start spending my money for me!

[quote=CHUMPS FROM OXFORD;191396]luv2sell...You're in luck!

dgoldenz · 09-30-2009, 12:31 AM

Originally Posted by luv2sell

dgoldenz: This is definitely something worth looking into. I was a CPA with Deloitte. The status is currently inactive, but I could reactivate it. I could reactivate it and get some of these other designations. Do you know of a good source or website for me to read to understand the commission structure/potential with products targeted to high net worth individuals?

The fact that you've got a head start on potential tax ramifications is definitely a good thing. With most life insurance products, you can expect commissions ranging from 70-120% of the target/annual premium for a policy, depending on the company and your production level. If you can prove a high level of production, you will get better commissions.

A second-to-die policy on a 60 or 70 year old couple for a couple million dollars in death benefit can be anywhere from $20-100k annual premium or more depending on age, health, and face amount. As I said, the sky is the limit.

somarco · 09-30-2009, 09:18 AM

chasing money is dangerous.

That is a valuable lesson that will serve you well. I have seen a lot of folks flame out (or worse) after a few years of chasing the almighty dollar and now have nothing to show for it.

I was a CPA with Deloitte. The status is currently inactive, but I could reactivate it. I could reactivate it and get some of these other designations.

Industry designations mean almost nothing to the general public. If you are working with HNW individuals, your CPA designation would mean more to them and their advisors.

Do you know of a good source or website for me to read to understand the commission structure/potential with products targeted to high net worth individuals?

Life insurance and annuities can definitely play a part in marketing to HNW folks. Good money to be made there if you know your stuff and have the patience to wait on the sale.

ABC · 09-30-2009, 11:43 AM

If I were to give you advice in the health side of it:

I would go to work for an agency that specializes in health and employee benefits. You would be very foolish to go and buy a agency with no real back ground in the health field.

Most agencies would hire you on a commission only basis.
You would want to interview many agencies to find the right fit for you.

At that point learn products and the market that you are selling in. Once you are able to sell then you will find out real quick if your cold calling skills can pay the bills.

Let me be honest with you. With the current economic conditions you might be at a real dis advantage if you are competing for a case. A lot of us so called season agents have had to fight a lot harder for deals because there are less and less of them. Currently in our country only 38% of businesses under 50 lives are offering group health benefits.
The expect that to drop another 5% in 2010.

If after 2 years of working for agency if you are making $60,000 then you should look at going out on your own.

Hang on to your $200,000 because you might need to live off of it.