The Insurance Producer’s
4-Step Guide
To Fast-Tracking the Next Move
a publication of
A desire for a move toward independence seems to be growing. In a recent PwC study, 86% of employees said
they “agree that they have a strong desire to work independently…because independent work is perceived to
allow greater flexibility in schedule and control over work environment, the opportunity to earn more money,
and a better work-life balance.”
But independence is not enough; planning must be part of a successful move as well. Northwestern
Mutual’s Planning and Progress Study found that 34% of Americans have not taken steps to plan for their
financial future. Additionally, 67% of adults expect more financial hard times like we experienced in 2008, and
23% do not believe their plans can weather market fluctuations. Clearly, it’s time for better planning.
Under the best conditions, vocational and financial planning can be tricky. But today you must factor in
such things as company leadership fluctuations and philosophy, narrowing opportunities, increased mergers
and acquisitions, and other events that might have a negative impact on personal goals. As an insurance
industry producer, your options for significant growth in your current position may be narrowing or indefinite.
Perhaps you’ve even decided after careful consideration that your
current company is not the best fit for your goals.
So, what’s next?
Step
1
Be Sure a Move Is for You
In our two previous ebooks, we looked at the key trends currently
impacting the producer’s financial future and how to determine if your
company is a fit for your goals. If you’ve come to the conclusion that
you want to make a move, be sure you dig deep into what that means
in reality. How will you determine if another compensation model is
right for you in real terms?
2
23% do not
believe their
financial plans can
weather market
fluctuations.
There essentially are two
compensation models—corporate and
entrepreneurial—and with them come
differing levels over oversight and vastly
different levels of financial opportunity.
One has a much tighter leadership
involvement than the other. One keeps the pressure on, and in the
other, the pressure is dictated by you. If you do not function well with
a high level of autonomy, stay where you are. But if you want more
control and autonomy is your friend, read on.
Within the entrepreneurial model, there are differing levels of
tools, support, culture, compensation, and ownership opportunities.
That is the where the hard work and research come in.
inforum-online.com
Step 2
Dive into the Details
In a typical corporate agency setting, producers are paid an average
of 40% commission for new business and 20% on renewals. For
the entrepreneurial model, the best agencies pay producers 50% or
higher for new and renewal commissions equally. A book generally
consists of 20% new business and 80% renewals. So for a $500,000
book of business, the average difference in the two models, including
expenses, would be about $100,000 per year.
At retirement, producers in the corporate model typically do not
own equity in their book and have no stock ownership in the company.
Retirement help is provided largely through 401(k) participation since
pensions are quickly going the way of the dodo. In the best agencies
using the entrepreneurial model, producers have equity in their book
as well stock ownership.
As you can see, the two models are vastly different. You will
also discover that agencies using the entrepreneurial model have
widely varying benefits as well. Find the
agencies that offer the entrepreneurial
An
model and begin to compare packages at
average
a
granular
level. You’ll want to be able to live
difference of
with all the pros and cons before you make
$100,000/yr. makes
a move. Here is where a comprehensive
a new model hard
checklist of all the wants, nice to haves, and
to ignore.
must haves come into play.
Step 3
Negotiate the Best
Package for Your Future
Like buying a car, everyone has a different set of options that will
make them happy. For example, there are agencies that not only will
offer equity and stock options, but their buyout package at retirement
is as high as two times the value of the producer’s book of business.
Some even offer additional benefits that take legacy producers into
consideration.
As you consider what you want, do not hesitate to approach
the agency with all your questions. For example, geography today
should not be considered a hindrance. “The 9-to-5 day has taken
on amorphous hours, bleeding life into work and work into life. And
remote offices are becoming increasingly popular,” according to the
PwC study. Not only can people work from home; they can work from
anywhere. That means that part of your research should include
whether your ideal agency will allow you to stay where you are. If
leadership is attracted to what you have to offer, they will likely be
open to negotiating location. They may even want to open an office in
your area, and you are what they have been looking for.
Do you have a noncompete you think may be a hindrance?
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3
The best agencies will work with you to accommodate any hiatus a
transitional period may demand. Candidates who demonstrate their
worth clearly will motivate agency owners to consider whatever it will
take to achieve a favorable transition for all.
Narrow your list of top agencies and talk with their leadership
about the best package available for you. For the producer who is a
proven professional, you may be surprised by the willingness of some
companies to negotiate terms to get the best people on board.
Step 4
Use a Checklist to
Compare Top Choices
A checklist facilitates a thorough examination of your current needs,
wants, and goals. By working through a comprehensive tool, such
as the Producer’s Optimum Compensation Model Checklist, you can
confidently examine every aspect of what a successful future looks
like for you. It may take some time, but it will be time well spent.
If you have a resistance to working
through a checklist, consider this: Atul
Gawande, surgeon and author of The
Checklist Manifesto: How to Get Things
Right, introduced checklists to eight
hospitals in 2008. The result of this simple
act was a 36% drop in major surgery
complications and a 47% drop in deaths.
Who wouldn’t want that kind of success?
Use of
checklists
caused an
impressive 47%
drop in deaths.
Once you’ve worked through the checklist, research the
companies that fit the bill for your goals. At present, there may
be an agency with a model that you’ve not only dreamed of, but
one that you might even say is too good to be true. Finding them
is the key.
Do the hard work to get to the
right place.
Thinking outside of the box and asking for what you want will be
critical in this process. The entrepreneurial model is out there,
and there are innovative agencies that are offering top producers
nearly everything, if not everything, they are looking for. Do your due
diligence to seek them out and get to the place where you’ll never
want to move again.
WHAT’s NEXT? The Top Tools Insurance Producers Need to
Succeed. Follow us on Twitter and LinkedIn to be sure
you get updates on our next release!
4
About the Author
Bruce Eades
Bruce Eades is a regional president and partner with Insurance Office of America (IOA).
He consults regularly with executives from a variety of fields to help them understand
how risk management concepts can impact their business and to give them a better
understanding of current commercial property and casualty trends.
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5
Insurance Producer’s Optimum Compensation Model Checklist
Here’s where the hard work begins. Use the Optimum Compensation Model Checklist to help make sure you’ve covered all the
important elements of your ideal position and to narrow down the top contenders in your search. Each agency’s business model will
provide a different set of benefits. Using this list of vital components, you can thoroughly evaluate and compare models. It may take
some effort, but in the end, the result will provide you with the confidence needed to make your next move the right one.
Here is a sample of a completed worksheet. Be sure to download your own copy today!
Job Component
Current
Model
Entrepreneur
Model
Difference
Commissions – New
What percentage is paid and what
is the difference from your current
compensation. How much pressure is
there to focus heavily on new business
versus renewal of accounts.
Commissions – Renewal
What percentage is paid and what
is the difference from your current
compensation. What is the typical
balance of new accounts versus
renewals?
40% x $100,000
52% x $100,000
20% of Total Book
20% of Total Book
$12,000/yr.
Access to Markets
Does the company have access to
highly rated markets? If so, how many?
Health Insurance
Does the company offer a robust
health insurance plan?
Payroll Support
Does the company offer support for
handling all payroll details?
6
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










Are marketing expenditures provided
by the company?


Car/Travel Expenses


Does the company offer support for
account and technology?
Claims Advocate Support
Does your company provide support for
your clients when they have a claim?
20% x $400,000
52% x $400,000
80% of Total Book
80% of Total Book
$128,000/yr.
Proprietary Tools
Does your company provide Fortune
500 quality tools for customer aid and
retention?
Office/Desk Space Rental
None
Is office/desk space part of your
package, or must this be rented?

> 5 years
Account Executive/Office Staff
Are you provided with a quality staff
support team?
Stockholder Options
Is there an opportunity to own stock
in the company? If so, when is this
option available.
Entrepreneur
Model
Accounting/Tech Support
Equity Ownership
Is there opportunity for equity
ownership? If yes, how long does it
take to build this up.
Current
Model
Job Component
None
Office Expenses/Utilities

Are your offices expenses covered?
> $250k






35
35
Licensing
Same
Does your company take care of
management and fees for ongoing
licensing?
Marketing
Are you reimbursed for auto and other
travel expenditures?
Difference
Job Component
Computer/Technology Hardware
Does your company provide upto-date technology, or does your
company tend to lag behind or allow
too long of a gap in upgrades?
Ownership/Corporate Values
Do the values of the company’s
leadership align with your own?
Current
Model
Entrepreneur
Model


Fairly current tech
Fairly current tech


Leadership Oversight Style
Do the leaders of the organization
take an approach to leadership, e.g.,
hands-on or hands-off, that aligns with
your style?


Community Involvement
Does your company have a
commitment to its community? How is
it involved with the people?


Mentors – for You
Is there an opportunity to be
mentored by senior executives?
Entrepreneur
Model



None
No
Yes
60%
99%
Difference
Opportunities to Mentor
Is the company dedicated to the
growth of its junior producers? Are
there opportunities to participate in
their growth?
Noncompete/Restrictions
Does your company have a
noncompete? If so, how restrictive is it?
Does the company’s leadership make
it clear that it will work with you if
you want to leave, regardless of a
noncompete?
Does the company know their
retention rate, and what is the
percentage?
Relocation
Does working for the company mean
that I will need to relocate?


Involved with many
charities


Involved with many
charities and teams
Commitment to Employee/Team
Health
Is your company focused on the
overall wellness of its employees?
Are there extended programs that
promote well-being?
Current
Model
Producer Retention Rate
Leadership Also Producers
Is your leadership in touch with the
core business of providing insurance
solutions to clients, or are they strictly
executives?
Job Component
Freedom to Leave
Leadership Transparency
Does your company leadership
share openly about the decisions,
direction, and financial health of the
organization?
Difference
No
Negotiation for Transition Period
Assistance
If I have a noncompete and want to
move, will the company work with me
regarding finances during a transition
period?
39%

Willing to
work with my
concerns
Ready for your next move?

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Click here to download your copy of the
Optimum Compensation Model Checklist
and get on your way to your next move.
7
Don’t miss previous installments of the Inforum series:
Download “5 Trends That May Rock the
Insurance Producer’s Financial Future”
ebook to learn about the key trends that are
happening right now that will change your
financial trajectory.
Download “The Secret Truth” infographic
to see a side-by-side comparison of the
corporate and entrepreneurial model. The
bottom line just may shock you.
Download “6 Questions Producers Should Ask
to Ensure Their Company Fits Their Goals”
ebook to determine whether your company
and compensation model aligns with your
personal goals.
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