How to Deal with Commiting to Farmers

[thekmeisterishere]

Well nowadays, I have decided I may plan to commit to joining with Farmers as an agent. I want to be extremely careful when I make a commitment, so I won't be forced to pay any secret fees or secret costs that I do not know about.

I had a talk the other day with the Business Development rep at my local District Manager's office and I understood one part about how I need to sell 10 P and C policies and 1 Life policy each money in order to get my $2500 dollar monthly stipend. But what will happen if I end up having some months where I meet the requirement, and other months, I fail to meet the requirement? Will I end up having to pay back certain amounts of money after I am done with the 3 year subsidy paid to me.

Because I heard some people had to pay some money if they did not meet a certain requirement and the business development representative said that if I have some times where I don't meet the 10-1 requirement, I may end up having to pay 100/monthly after my 3 years are up. The business development rep at the local district manager's office explained how the system works in a vague manner.

I was wondering if anyone understand how this subsidy issue works and can explain to me in a very clear and concise manner, since when I talked with one of the representatives, she only explained in a vague manner. I need to clearly understand so I can make a smart and informed decision.

 

[xrac]

Here is some information. I don't know if it is current or not:

Insurance Journal Forums • View topic - Farmers Insurance

Be VERY careful. The fact that you refer to their subsidy program as "base pay" is evidence that you either do not understand their compensation plan or , more likely, that your DM did not explain it thoroughly to you.
Farmers DM's and recruiters are responding to just about every application on hotjobs, monster and all the other online employment services. They will accept almost anybody, regardless of their liklihood of succeeding in the insurance industry. They job depends of new blood.

2 major points, among many, that you need to be aware of.

1) The base pay is a subsidy program. Meaning that it is dependent on you hitting your quotas on a monthly/quarterly basis. Miss your quotas and not only will you probably be let go, you will also need to repay at least a portion of the payments that you received. This is will go on for 2 years. If you do not meet those requirements you will be required to pay back 50% of all subsidy payments received in the first 12 months, and 100% of those received in the second 12 months. It is not uncommon for a new agent to miss the quota, be terminated and owe Farmers thousands and thousands of dollars in subsidy re-payment.
Here is a link to the contract and subsidy agreement that you will be required to sign.
http://www.ufaa.com/page/PDFS/New-Agent ... eement.pdf

2) Regardless of what you are being told. YOU DO NOT OWN YOUR OWN BUSINESS. You only own the debt associated with the agency. Rent, phone, utilities, insurance, advertising, payroll are all YOUR obligations. However, Farmers can cancel your contract at any time, WITHOUT CAUSE, with a 90 day notice( Section C (1) of the contract ) and you are still responsible for those financial obligations. If you think they won't do that, ask agents in the Houston area. Farmers just cancelled amost 500 agent contracts there a few months ago. It should be apparent that when another entity can demand production quotas from you with the power to close your business if not met, or put you out of business for any other reason with 90 day notice, you do NOT own the business.

Can an individual still make a carreer with Farmers? Absolutely, but the game has changed substantially and is stacked against the agent. In many of its operating territories, Farmers is grossly uncompetitive, making meeting even minimum production quotas difficult, if not impossible.

For more information go to United Farmers Agents Association - UFAA - Agents Helping Agents

 

[thekmeisterishere]

As I was talking with the district manager, it seemed like as if they made it seem that when you miss a quota and if you don't hit certain targets, they claimed I will only be charged 100/monthly. But from what I have been reading, people are suggesting that you have to end up paying the subsidy in a full payment method. So if I were to commit to working with Farmers, I will most likely not take the subsidy since it would be a big risk for me financially. I am glad that I am learning about the hidden details and not rushing into making decisions suddenly (probably because I am going to head out of town very soon for a vacation), because some people make commitments to big franchises and they get suckered.

Another thing is if I commit with Farmers and cannot afford to rent my office space yet, will they charge me any money to use a computer, use a phone, or use a desk, if I were to work from the District Manager's office? I need to know so that way I can also make sure I am not taken advantage from this realm as well, especially speaking. I know why there are plenty of Farmers, as well as State Farm and Allstate offices, too.

Are there any other companies which won't require a minimum capital requirement and won't deceive you in a certain way. Or, should I just go back to my original plan of working through Primerica. Or, should I take the independent brokerage route instead. I honestly don't know what to do really now, since there is so much complicated politics involved dealing with these big 3 Insurance services companies. Its hard to figure out for a mid 20's kid who just got out of school especially speaking.

 

[xrac]

I would consider American Family, Nationwide or Shelter. State Farm is also a possibility. Personally I would avoid Farmers, State Farm or Allsnakes.

 

[thekmeisterishere]

Ok, are there any capital/financial requirements for the following places? Because right now I have limited capital sources for franchising fees and plus I just recently finished up school (which is why I am not that rich to begin with).

Another thing is if I still commit to Farmers, there is a thing called being a "reserve agent" where they test and try to see if you can sell 40 P and C as well as 4 life policies like I said before. Will Farmers cancel your contract if you are not able to make such thresholds when you go through a process from reserve to career agent.

 

[xrac]

I would consider American Family, Nationwide or Shelter. State Farm is also a possibility. Personally I would avoid Farmers, State Farm or Allsnakes.

I do not think these places have any financial requirements. Here is something to keep in mind about Farmers. They take anyone who can breathe. I had a guy who waited my table at a small town diner who was also a Farmers agent.

 

[thekmeisterishere]

Wow it seems like Farmers really wants to massively expand and become very dominant in the market. They want to be so dominant to the point it will destroy their competition in a way. But anyways, if I commit to places like Primerica, Farmers, or possibly Nationwide (the other companies mentioned are not available in the state I live) and things fail, I would aim for possibly launching my own independent Insurance Brokerage, or get into to High Net Worth Wealth Management/Financial Planning.

 

[RWKAgency]

Wow it seems like Farmers really wants to massively expand and become very dominant in the market. They want to be so dominant to the point it will destroy their competition in a way. But anyways, if I commit to places like Primerica, Farmers, or possibly Nationwide (the other companies mentioned are not available in the state I live) and things fail, I would aim for possibly launching my own independent Insurance Brokerage, or get into to High Net Worth Wealth Management/Financial Planning.

You almost hit the nail on the head. You see, in our business there is no such thing as a free lunch. Employment contracts are a cut throat business. If you go to work for one of the bigger houses, the subsidies (the draw, if you will) can punish you at termination with the carrier still owning the business. The smaller agency will do much of the same things as the big guys in terms of owning your book.
You have to search long and hard for an agency that will help train you and agree to a schedule of book ownership over time. The agency is going to want your book because everyone knows renewal income is where it's at. You have to find an agency willing to negotiate with you for a schedule in which over a set period of time, if you choose to leave you can take your book with you. If you can't take your book with you, why bother? Going independent may be a tougher start but over the long haul you will be better off.

 

[WorldIsMyOyster]

Farmers has a recruiting sign hanging in a local fast food place here where I live...if that tells you anything.

 

[indienoise]

I was an independent contractor for a nationwide agent before opening my independent agency. As far as captives go, they get a pretty good deal. I can't comment on financial commitment for a scratch agency, this guy bought an existing one. Company support is great though, commissions are good (comparable to what im getting now), their brokerage is good and they have a great program for purchasing smaller independents if you want to go that route. Check around to see if their product is competitive in your area, they are great here.

You still don't own your book, you just have a financial interest in it, they buy you out if you are on good terms when you leave/retire.

If you are going to go captive, I really don't have any bad to say about them. Independent is still better. But you'll have a rough go of it if you are new. Get a job as a producer for a couple years, then decide if you want to risk it all on your own agency.

I would not make independent your contingency plan. If you cant make it with a good captive, you won't make it independent. It is definitely more work.