What is a Fair Salary/comm Split for Newbies?

[Rick Deckard]

I have a lot of sales background and experience, also college educated although I don't think have a 4 yr degree matters in terms of money because ultimately success and failure will be based on my decisions.

The agency I am connected with and have already made a little money for is eager to make me a full time employee. To this point I have just made a few cold calls a few hours a week and actually have helped these folks close some business from the lay down leads I pass on to them.

I would like a base salary for a little while as being a P&C agent takes time to make those commercial connections. In the meantime I plow ahead with personal lines.

What is a fair split with say a $35k salary 1st year? Eventually I want the salary to disappear once I have a small book and can make somewhere in the 6 figure range from renewals and obviously new sales. My goal long term is to build a book of somewhere in the $3MM-$5MM range so on Jan 1st I know I am going to make 6 figures before I even expand or bring in new business.

Am I way off in my thinking? I read 50/25 splits as pretty standard. I would like a little more, maybe 30 on the back, eventually 60-70 on the front when i have less salary or no salary.

And tips or advice would be most welcome.

Thank You!

 

[FireDragon]

I would say you are perhaps being overly optimistic about getting those types of commissions WHILE taking a salary (unless it is a draw against your commissions). With a salary of 35k, I would offer you MAYBE 20/20. My advice would be to set that 35k up as a draw against future commissions and go for 50/50

 

[Rick Deckard]

I would say you are perhaps being overly optimistic about getting those types of commissions WHILE taking a salary (unless it is a draw against your commissions). With a salary of 35k, I would offer you MAYBE 20/20. My advice would be to set that 35k up as a draw against future commissions and go for 50/50

Excellent. I appreciate your post and I would like to add that I don't expect to make a lot the first year.

However, I would prefer the salary is not a Pseudo Draw...if that is going to be the case then maybe I would consider doing it all myself but I want to stress that I do not view partnering with an independent agency and them ultimately taking half my Comm, it's easy to overlook the incredible amount of overhead this agency incurs. I owned a business a few years ago, moving company and sold it because being a business owner can be overrated sometimes.

I know the great upside of owning my own agency but I also know the downside and why so many bomb out. You need some good mentors or people around you that want to help you even if it is for their own profits.

I don't have any insurance appointments. Big deal I got a P&C Lic, you still gotta pay your dues and I'm OK with that.

 

[djs]

You might be able to get 50 on new business in excess of $50K premium per month. You can probably separate out commercial and personal and maybe do a bit better first year on the commercial policies.

Salaries for producers are a tough thing, you can only justify them if they are doing service work as well as producing. If they are doing service work, then they don't have time to produce like they need to. Big catch 22. Other option is a production goal they have to meet.

Dan

 

[todd02]

Agree with DJS. Ask a higher split based on premium production. This eases the agents mind and makes you have skin in the game.

This makes me like something like this.

10k premium - 10%
20k - 20%
30k - 30% and so on.

Then renewals at 20-50% based on the months production.

Sales solves everything in my mind.

 

[Rick Deckard]

Agree with DJS. Ask a higher split based on premium production. This eases the agents mind and makes you have skin in the game.

This makes me like something like this.

10k premium - 10%
20k - 20%
30k - 30% and so on.

Then renewals at 20-50% based on the months production.

Sales solves everything in my mind.

TY for the post Todd. I have a question.

Salary that decreases over a 36 month window and a Commission structure that increases. We enter Year 4, as a Producer what is a fair number with no salary? Is something like 40/30 normal? I agree though I would like to have some goals based on production or an escalator in the Comm Structure.

Great feedback from everyone

 

[indienoise]

Depends on who is servicing. If I were a producer on commission only, I'd expect at least 50% new and probably 25% renewal. If you're servicing also, I'd match renewal commissions to new business and shoot for 60-70%.

 

[Ins235Ins]

Good luck getting anyone to work for you and succeed on <50% commissions in this day and age. If they do succeed, they will leave to break off on their own even with a non-compete (like I did). I offer my guys 60% new/55% renewal, and it's still not enough to get them to succeed and stay because my fellow millennials lack the GRIT to succeed. A two to three year ramp up is too much for their tiny souls to commit to, even with the promise of freedom and financial security after year three.

 

[Ins235Ins]

I agree with IndieNoise. With the skill level of newbies, they'll struggle to make money in the first few years without a good split, and then they'll leave you. The real good producers will learn from you and then leave you, even with a non-compete, if their spreads aren't any good.

You need good spreads to obtain and retain raw talent. Always a good idea to put a reconsideration clause after year 3 for what the payouts will be.