Advances

[Baseball7]

How many of your carriers do you keep on full 9 month advances?

I have three of my secondary carriers on 6 month advances, and one FE carrier on as earned. Wonder how you have this set up?

 

[Newby]

How many of your carriers do you keep on full 9 month advances?

I have three of my secondary carriers on 6 month advances, and one FE carrier on as earned. Wonder how you have this set up?

My opinion is you are doing it exactly right. The more you get away from big advances the more stable your monthly cash flow becomes.

 

[jdeasy]

How many of your carriers do you keep on full 9 month advances?

I have three of my secondary carriers on 6 month advances, and one FE carrier on as earned. Wonder how you have this set up?

I quit taking advances years ago. As earned with everyone.

I might still be on a 3 month advance with Americo? Haven't written one in so long I don't remember.

 

[Baseball7]

JD, how many years til you felt safe doing that?

 

[LostDollar]

JD, how many years til you felt safe doing that?

Baseball-you know I'm not an agent--so take this in that light.

I wonder if the better question is sales volume rather than time?

 

[Baseball7]

I carry a high persistency so I don't have any need to come off an advance with my primaries. The secondary carriers I care not to carry debt on random fall off is more the motivation.

 

[jdeasy]

JD, how many years til you felt safe doing that?

I was 2 or 3 years in before I started changing to as earned. And it took a couple years to get there after that. I had very few 9 month advancing anyway. Most of mine were 6 months. The ones that were 9 months I moved to 6 months. Then after 6 or 8 months I moved all of those to 3 month.

Then 6 or 8 months in I starting moving those to as earned. RNA doesn't have a 3 month so they didn't get moved.

I moved the companies that charge interest on advances first. Aetna, Equitable, etc.

While I had grange I was on a 9 month advance with them. But only because they said they didn't pay as earned.

But, it's really just personal preference. I know many long time agents that are very successful that still get advances and have no plans to change. Their argument is that since they don't charge interest then it's an interest free loan. I just have a problem with the "loan" part of that.

The ones that charge interest? As earned is the only way to go with those in my opinion.

 

[NSRH]

If a company is charging interest for the loan, or 1099's you based on advance balance (not sure if any companies still do that), taking an advance is a foolish business decision.

 

[Newby]

One way I've always looked at it is that many agents come to us from agencies where they were on 80% commissions (give or take) and 75% advances.
When they come to us (or many others) and get 115% on that same contract they could change to 50% advances and be making about the same thing they already were on their advanced money.
But at month seven they would notice a whole lot more money starting to come in. Their financial stability would be greater because chargebacks would be smaller and your pay throughs would be much bigger.
I think it's smart to do that but the majority of agents don't.

 

[HoosierLife]

I'm still at 9 months advance. I guess I could go to lower advances. Haven't thought about it in a while. Glad it got brought back up. I might just do that.