Subject: Re: Re: The potential cost to agents selling in a captive term environment.

Comments:
: Independent is the way to go! : Agent : : If you are captive to a company, the following letter might ring true : : for you. It was sent to a gentleman that asked for advice on which : : way he should go with his career.a captive term environment or on : : his own. After reading it, if you would like to investigate doing it : : on your own, I would love to send you some info. As alwaysjust the : : info and no annoying follow-ups. Call me at 325-573-7178. : : Dear ****, : : His numbers are good. The system is working. How does that stack up : : to us? At the $1500 average and at his volume, his average commission : : would be $1995 with us. His current average commission is $1125. : : Using the fact that that he is averaging 5-6 sales at $1500 and 75% : : commission, he is earning $5625-6750 per week. He is paying $300 per : : week for leads. : : With us, the $1500 average sale would pay up to 133% commission. For : : 5-6 sales a week at that level, he would earn $9975-11970 per week. : : We will assume that he can close the same number of sales, because : : there should be little, if any, difference in the term products. : : Gross dollars, he is leaving from $3350 to $5220 per week on the : : table. In addition he has lost 5-6 customers per week to the : : company after he developed them. That's 250-300 customers per year : : that can be sold multiple products over the years by him or an agent : : that he sponsors to sell other products to this base. This market, : : homeowners, will buy annuities, medical, LTC, etc......and they are : : very likely to buy it from the person who sold them their last : : policy. It takes much less effort, time and money to keep a customer : : than to develop a new one. Part of the earnings potential in the : : insurance business is the customer base. This is where you build : : equity in a business. If this base only averages $1000 premium per : : household in follow-up sales, your friend is losing $250,000 to : : $300,000 in future commissions per year. : : His company has value without doubt. It works, but at what cost to : : the agent? Based on the numbers he provided you, he is potentially : : leaving $174,000 to $260,000 dollars of commission on the table per : : year, losing $250,000 to $300,000 in future commissions per year, and : : giving away a customer base that could build large equity value. : : This is a pretty high price to pay for a system that your friend : : seems capable of doing on his own. The only unknown would appear to : : be a source of leads, and it would appear that leads of an equal : : quality can be purchased or developed at a reasonable cost. : : I believe that his company has put together a good program and made : : it easy to participate. I think they have marketed it well to : : potential agents and have given good results to many. I just don't : : think they have told the whole story. Their leads may be a little : : cheaper, but I don't think they are of higher quality than you can : : get on your own. The commissions they pay are good, but when : : compared to other opportunities, they come up short. For the long : : term, the agent has sacrificed large long term dollars to : : participate in the system. His company recognizes that dollar : : potential, that's why they keep the customer base. The value of the : : system is that they train you to sell insurance if there is no other : : way to obtain that training. That training does come at a high cost. : : Thanks for sharing the info with me. I hope I have done the math : : correctly. I would share this info with your friend, and see if he : : agrees with what I have said. I may be missing the boat here : : and I may not see the total value of his company. From a financial : : standpoint, however, there would appear to be better options. : : Sincerely, : : Scott Richburg

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