Considering Becoming an Agent, Seeking AdviceGo to Top
Hello,
I am considering becoming an insurance agent, and would like some advice. I am 25 years old, with a bachelors in Economics & Management from a liberal arts college. I have been working for a **highly successful** Farmers Insurance agent in Michigan for the past 9 months doing marketing and customer service. He wants me to become a licensed agent, and work under him for two years.
I have several questions and concerns, which I am hoping you all can answer, because I don't feel comfortable discussing all of them with my boss.
How would my pay be determined - is the amount of commission I would receive negotiable? What is a typical compensation scheme for someone just starting off? How much comission would I receive on the homes and autos that I write? How much on life? Is two years a normal amount of time to "work under" another agent? If I work my butt off how much could I expect to make in my first year?
If I do this, I would like to eventually reach the point where (a) I could sell the business for a 6-figure sum (b) I could have a competent staff run the agency, with minimal involvement on my part, while I earn significant yearly income. Is that possible?
I have read that in the future, the most successful agents will be independent ones, who are able to write policies with many different companies. Would Farmers allow this?
I may also be interested in branching my business into financial services in the future. The agent I work for sells retirement plans through American Funds. Is this a good company?
Any advice you all can offer would be greatly appreciated!
If I do this, I would like to eventually reach the point where (a) I could sell the business for a 6-figure sum (b) I could have a competent staff run the agency, with minimal involvement on my part, while I earn significant yearly income. Is that possible?
Umm b is completely out of the question. A would take awhile. Why would you not want to be involved in a business that has your reputation on the line?
I am considering becoming an insurance agent, and would like some advice. I am 25 years old, with a bachelors in Economics & Management from a liberal arts college. I have been working for a **highly successful** Farmers Insurance agent in Michigan for the past 9 months doing marketing and customer service. He wants me to become a licensed agent, and work under him for two years.
Sounds like a great opportunity, what is he offering regarding commission, benefits, training, etc. Will you be a 1099 or W-2 employee?
How would my pay be determined - is the amount of commission I would receive negotiable?
Everything is negotiable!
What is a typical compensation scheme for someone just starting off? How much comission would I receive on the homes and autos that I write?
P & C is not my forte, but I do know that those two lines pay a low amount but the renewals are nice. Perhaps one of the P & C guys can elaborate on the subject.
How much on life? Is two years a normal amount of time to "work under" another agent? If I work my butt off how much could I expect to make in my first year?
As much as you want. The median income for insurance agents back in 2004 was $41,000, while the top 10% grossed more than $100,000. See here http://www.bls.gov/oco/ocos118.htm#earnings the great thing about insurance is that if you want to make more money all you have to do is sell more products. People in Corporate America have to get a raise, obtain a 2nd job or pray they get overtime. NO THANK YOU!!!!
If I do this, I would like to eventually reach the point where (a) I could sell the business for a 6-figure sum (b) I could have a cmpetent staff run the agency, with minimal involvement on my part, while I earn significant yearly income. Is that possible?
Anything is possible, but what are your motivations behind wanting to hire a competent staff to run your agency w/ minimal participation of your skills and leadership. You might be looking at things the wrong way. You are 25 and still have about another 40 years of working if you stay within societal norms. Why settle for a 6 figure sell off price????
It seems you want to be able to get in and get out quickly. That is not possible w/ adhering to business ethics in the way you approach insurance, unless you have a substantial cash basis for marketing, support and energy drinks at least 1x a day. I rather leave an agency for my son or daughter and keep it in the family versus having somebody else make money off of my years of hard work, but that is just me.
I have read that in the future, the most successful agents will be independent ones, who are able to write policies with many different companies. Would Farmers allow this?
I have no idea how farmer operates in that regard. I believe that Frank has a friend who is a farmers agent.
-J.R.
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"Tell me and I will forget. Show me and I will remember. Involve me and I will understand." Confucius
I have several questions and concerns, which I am hoping you all can answer, because I don't feel comfortable discussing all of them with my boss.
Seems odd that you won't ask him how he's planning on paying you. If your relationship isn't good enough to ask him a simple question like this then there is a problem.
I have read that in the future, the most successful agents will be independent ones, who are able to write policies with many different companies. Would Farmers allow this?
No, you will be a captive agent with Farmers. The only thing you will be able to write outside of Farmers is lines of insurance they don't offer like Health.
Sounds like you want to get the ball rolling and then let the business roll. Insurance is a tough job. You have to work at it along time before you can "sit back" and count the money.
If you're serious about working hard and growing a business go out on your own and start your own agency. If you don't want to work that hard and still make a little money keep working where you are at.
Everything is possible. Some things are just more possible than others.
I think you should first get established as an agent. Build your business and credibility. Become an expert in the products you sell. I mean a real expert, as opposed to just telling people you are. Start out being incredibly organized with an awesome marketing plan. Use your computer in your business from day one.
In three to four years of lots of hard work you may be in a position to begin looking toward having other agents contract with you. Plan on your personal production going down as you hire and train them. Have a well organized training program. Don't just tell them how great you are and hand them a stack of applications. (I've had that happen before.)
Give them intense product knowledge and help them build their own dog and pony show, not just use yours or something you get from a book. Work closely with them and take a regular interest in how they are doing.
In another 4 or 5 years you may have the beginnings of a very strong agency, one someone else may be interested in some day. However, why would you want to sell it? What would you do then? Start a new career?
You can stay involved, do something you enjoy without the pressure of knocking yourself out every day prospecting. I have never understood the concept of totally retiring from this business. So you get couple of hundred thousand dollars for selling it. That isn't that much money today to quit working. If you think you can get $500,000 +, it better really be a kick ass take serious names agency. That ain't gonna happen is just a few years.
You can travel, work a little less intensly and still stay involved. When Jacqueline and I travel I take my office with me. With a cell phone and my laptop I can and have "taken care of business" from every place we have gone, even from other countries. Even though we are "on vacation" I still check e-mail and phone messages every day. I like what I do and really don't consider it "working" when we are out of town.
Besides, when you get home you aren't inundated with tons of "catch up" work this way. That kind of negates the fun of "taking some time off", knowing you are going to have to work your ass off when you get home. I hate coming home to a bunch of surprises.
She does the same with her medical clients, it lets both of us spend a lot more relaxing time and stay longer. (She trains doctors and their staff to learn to use an electronic medical records program. She also has two other trainers working for her that she stays in touch with.)
This is the greatest business in the world, technology has just made it even better.
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I have been working for a **highly successful** Farmers Insurance agent in
What you are seeing is probably the result of years of working 12 hour days and weekends. Living, eating and breathing insurance. Putting his career ahead of everything else including spending a lot of time with his family.
One does not become that successful in this business working an eight hour day five days a week or less. You will have to be incredibly self disciplined, and extremely well organized, driven even. There really is no "end of the day". You will constantly be thinking of insurance and new and innovative ways to increase your business.
As "the Wolf" said, is that like "the Donald", haha, this is a very tough business, one where probably over 70+% of new agents never make it to their second year or content with a $50 to $60 thousand a year income.
Ask yourself, do you really want to work that hard? Most agents I know don't.
Why can't you talk to him about those things? It sounds like you are intimidated by him. This is not the business for timid people.
What you are seeing is probably the result of years of working 12 hour days and weekends. Living, eating and breathing insurance. Putting his career ahead of everything else including spending a lot of time with his family.
One does not become that successful in this business working an eight hour day five days a week or less. You will have to be incredibly self disciplined, and extremely well organized, driven even. There really is no "end of the day". You will constantly be thinking of insurance and new and innovative ways to increase your business.
As "the Wolf" said, is that like "the Donald", haha, this is a very tough business, one where probably over 70+% of new agents never make it to their second year or content with a $50 to $60 thousand a year income.
Ask yourself, do you really want to work that hard? Most agents I know don't.
Why can't you talk to him about those things? It sounds like you are intimidated by him. This is not the business for timid people.
Well put Frank. Also consider the fact that Donald has to work his ass off like the rest of us. He almost lost his empire back in the early 90's but he used some creative techniques to come back.
Well put Frank. Also consider the fact that Donald has to work his ass off like the rest of us. He almost lost his empire back in the early 90's but he used some creative techniques to come back.
He is really no different than the rest of us. He is in sales. We all sell all the time. Every time we are talking to someone we are selling, even if it is only a thought or ourselves that we are trying to get the other person to "buy". (Ever try getting a date without first "selling yourself"? The guys with the coolest dates were usually the best "salesmen".)
I'm selling right now. I'm trying to get you all to "buy" what I'm saying and to think that it was worth your time to read my post. That's what all of us do when we post here. Sometimes it works, sometimes it doesn't, just like selling insurance.
Some just work harder and are better at it than others. He must be really, really good, even better than I am. Oops, got to go, they just called and said my corporate bike is aired up and ready to go.
He had to really work his ass off and be willing to take a chance to be as successful as he is today. Anyone who doesn't have a lot of faith in themselves should not be in this business.
Thanks for all the replies. To clear up the relationship with my boss a bit.. Honestly, I am somewhat intimidated by him. Does he strike fear in my heart? No, of course not! And I am certainly not a timid person. I have many references to vouch for that.
As to why I don't have a clear compensation picture for my potential career working under my boss.. I want to have a good idea of what is fair to ask for. One of the reasons that my boss is so successful is that he is **TIGHT** with his money, and keeps his employee costs to a minimum. Before I discuss money with him, I want to know what is fair for me to make, in terms of commissions on both new business and renewals. I am certain that he will try to low-ball me. I have talked with other agents that took the same route under him, and they say that he offers much less than other agents. The trade-off as I see it is being able to learn from one of the most successful agents in the country. So again, my question is: 1) What is fair commission for me to earn on auto & home (a) new business written (b) renewals. 2) What is fair commission for me to earn on life?
As to my motivations for wanting to stay in the business a relatively short amount of time.. My motivation for beginning a career as an agent in the first place is to make money. I know myself well, know that I will be able to put in the long hours, I know that I can sell, I know that I can be successful. However, I do not see insurance as a *calling*, rather a way to make a lot of money. Truth be told, I don't know what my calling is, so I figure I might as well make some big $ while trying to identify it, rather than continue to dick around. But, I don't want to be in the insurance biz for the rest of my life. I am concerned that I will get burned out after a period of time and look for a new challenge. And if that is the case, I want to be sure that I can continue to get paid for my hard work (whether it is in a lump sum which I re-invest or as the defacto owner with limited involvement continuing to profit from the agency). It sounds like this is certainly possible based on what you guys have said.
I would appreciate any further advice on my compensation/commission questions. Thanks for your time!
*bump* Anybody? However, I do not see insurance as a *calling*, rather a way to make a lot of money
I would suggest you go into sales, but not insurance. It takes too long, is too complex a product, is too competitive, and the money is not there early on for you to be happy. Find a product you LIKE and which you USE and which you know about and see about getting a job with the company that sells whatever that is.
There is nothing wrong with trying out different fields when you are young, but I suggest fields that are easier to succeed at. The failure rate is very high in insurance... because you need to be good in TWO areas... prospecting FIRST and sales SECOND. When you are just starting out you are probably 'good' at neither.
Try retail first.
If you want to 'bum' around a bit, I'd say sell autos. You will learn sales but won't have to prospect. Or maybe sell jewlery. Find some high-ticket item that you will be on commission with, and give it a go and see if you like THE PROCESS of sales... talking to people and overcoming objections.
If you do like it and are good at it, then go out and get a sales job where the customers don't come to you.... you have to find them.... maybe sell advertising where you have to cold-call. If you are good at that part of the equation, then you have a good shot at being successful in the financial services market.
If you can't sell in retail, you will not be able able to sell in any sector that requires you to prospect. It just won't happen. But if you can sell in a retail environment, you have half the 'problem' solved... you will then have to learn if you can prospect... perhaps better put... if you can 'stand' the process of prospecting. Many people who are good at it don't like it. You don't have to like it, but you have to be able to do it. Those who are not good at it, don't make it.
It sounds like he has the impression that there are hundreds of thousands of dollars in insurance. There can be, but like anything else, only a few who try really reach the top of their profession.
I admire the fact that he wants to be one of them but his time line is way too short. It doesn't sound as though he necessarily likes insurance, just thinks he can make a ton of money in a relatively short time.
When I started in insurance I knew I was good at selling, I had been successful at it and enjoyed it. However, I didn't know anything about prospecting, still have a lot to learn. Prospecting just plain and simple sucks! Some mornings I would rather walk around a junk yard bare-footed, kicking broken bottles and bricks than pick up the telephone.
It sounds like he has the impression that there are hundreds of thousands of dollars in insurance. There can be, but like anything else, only a few who try really reach the top of their profession.
I admire the fact that he wants to be one of them but his time line is way too short. It doesn't sound as though he necessarily likes insurance, just thinks he can make a ton of money in a relatively short time.
When I started in insurance I knew I was good at selling, I had been successful at it and enjoyed it. However, I didn't know anything about prospecting, still have a lot to learn. Prospecting just plain and simple sucks! Some mornings I would rather walk around a junk yard bare-footed, kicking broken bottles and bricks than pick up the telephone.
Well put! Then you get an appointment or two, hopefully a sale, and start to feel NICE and get into your groove.
Well put! Then you get an appointment or two, hopefully a sale, and start to feel NICE and get into your groove.
I have had days where I was tickled to death just to get a couple of appointments, let alone make a sale.
When it works it is like having a license to steal, when it doesn't it is the worst job I have ever had. It seems like you are either at the top of the mountain or three feet under whale poop. Wouldn't it be nice if you could at least be floating on the water all of the time?
I have had days where I was tickled to death just to get a couple of appointments, let alone make a sale.
When it works it is like having a license to steal, when it doesn't it is the worst job I have ever had. It seems like you are either at the top of the mountain or three feet under whale poop. Wouldn't it be nice if you could at least be floating on the water all of the time?
I equate to a sales profession to having a drug, food, etc. addiction.
The highs are great and the lows are bad. Funny thing is that this can happen all in the course of a day. Keep trucking....
I equate to a sales profession to having a drug, food, etc. addiction.
The highs are great and the lows are bad. Funny thing is that this can happen all in the course of a day. Keep trucking....
Yes it can, and often does.
One good thing is, I no longer have to go to the junk yard to avoid the phone. Now I have an insurance forum that I can go to and sometimes even convince myself that I'm actually working.
Thanks a lot for your replies fellas. Very helpful. I do not to ask myself some tough questions. In the meantime, I also have some more if you all would be so kind as to address...
1) What are actual commission rates (industry averages, specific to Farmers, specific to any company in the industry, achieved by independent agents) on home and auto policies sold as (a) new business (b) renewals?
2) What is fair commission for me (as a licensed agent working under a
Senior agent) to earn on home and auto (a) new business written (b)
Renewals.
What is a typical compensation scheme for someone just starting off?
What is my take, and what is his take?
3) What are actual life commissions, and what would be fair to ask for
As my take?
4) Is two years a normal amount of time to "work under" another agent (and be giving him a percentage of my sales)?
5) Do you have any more advice as to going the independent route instead of being a captive agent?
I do not recommend working for two years under an agent as a producer. Get a direct appointment with Farmer's. Or search around and interview with other companies who are hiring. You will gain some added experience by working under an existing agent, yes. But if you are already working in an insurance office you know more than the average person entering the industry.
Success comes down to seeing enough people/quoting enough people. Do that and your success potential goes way up.
I spent 5+ years selling life insurance for MetLife and 7+ years for a captive p/c company before going independent. I recommend also keeping your eyes and ears open to working for an independent agency.
Thanks again for your replies. I was wondering if anyone can answer the specific questions below - any data you can provide would definitely be helpful. Or if you can refer me to another avenue to ask these questions, that would be fine as well.
1) What are actual commission rates (industry averages, specific to Farmers, specific to any company in the industry, achieved by independent agents) on home and auto policies sold as (a) new business (b) renewals?
2) What is fair commission for me (as a licensed agent working under a
Senior agent) to earn on home and auto (a) new business written (b)
Renewals.
What is a typical compensation scheme for someone just starting off?
What is my take, and what is his take?
3) What are actual life commissions, and what would be fair to ask for
As my take?
Considering Becoming an Agent, Seeking Advice
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