B/D vs Insurance

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Oct 21, 2009 11:52 am

Seeing how some insurance comapnies are offering alot of the same financial products as B/D, why would anyone want to work for a B/D's with payouts roughly 50% of insurance companies? 

Oct 21, 2009 11:58 am

Edward Jones has been ranked one of the top places to work for years on end.  Why would anyone not want to work at one of the best companies in the world?

 
EDJ#1 
Oct 21, 2009 12:08 pm
Otane:

Seeing how some insurance comapnies are offering alot of the same financial products as B/D, why would anyone want to work for a B/D's with payouts roughly 50% of insurance companies? 

Good question,
while I personally havent looked into the insurance route for B/D services, I have read on several posts how the payouts are CONSIDERABLY higher on the investment side. Can anyone on here who has experienced both sides expound on this point and give an objective comparision?
Thanks,
DC
Oct 21, 2009 12:52 pm

The payouts can be considerably higher for investments and insurance sales don't have to go through a grid.  There isn't a product out there that I can't offer through my B/D (except for EIAs).  The downside is, if you're a rookie, you won't get the fat salary a wire will offer.  Plus you will have to pay for some (or all) office expenses. 



 
There Is No Such Thing As A Free Lunch.
Oct 21, 2009 1:34 pm
At my insurance B/D.
 
Wrap payouts are 80% for everyone
 
Load funds and VA upfront are a sliding scale between 50-85%  I'd say the avg for someone hitting minimum goals is about 60%.  Once you hit $12mil in trailing AUM you get 70% minimum up to 85% if you're just crushing it.
 
12b-1 are:
 
0-$3mil trailing 20%
 
$3mil-6mil trailing 35%
 
$6mil-10mil trailing 55%
 
$10mil-12mil trailing 70%
 
$12mil+ trailing 85%
 
Things you pay:
 
$150/mo for office rent & supplies
$50/mo for E&O
$12/mo for voicemail
- You pay your postage, long distance, ticket charges if you do things through a brokerage account instead of direct
 
$300/ann "agent licensing"
+$400/ann for Reg Reps
+$400/ann for IAR's
 
The company reimburses $200/mo as an "agent allowence" if you're hitting their minimum goals.
 
Oct 21, 2009 5:53 pm
deekay:

The payouts can be considerably higher for investments and insurance sales don't have to go through a grid.  There isn't a product out there that I can't offer through my B/D (except for EIAs).  The downside is, if you're a rookie, you won't get the fat salary a wire will offer.  Plus you will have to pay for some (or all) office expenses. 



 
There Is No Such Thing As A Free Lunch.
 
That is the Catch 22 of the financial service business. It almost seems that you are working for the Mafia.  It is easier, I think, during these times to sell someone insurance and annuities than managed funds. I am currently with a B/D, and alot of the advisors are barely scraping by - well educated and been in the biz for 5-10 years. That is not a good sign. 
Oct 21, 2009 10:41 pm
BerkshireBull:
At my insurance B/D.
 
Wrap payouts are 80% for everyone
 
Load funds and VA upfront are a sliding scale between 50-85%  I'd say the avg for someone hitting minimum goals is about 60%.  Once you hit $12mil in trailing AUM you get 70% minimum up to 85% if you're just crushing it.
 
12b-1 are:
 
0-$3mil trailing 20%
 
$3mil-6mil trailing 35%
 
$6mil-10mil trailing 55%
 
$10mil-12mil trailing 70%
 
$12mil+ trailing 85%
 
Things you pay:
 
$150/mo for office rent & supplies
$50/mo for E&O
$12/mo for voicemail
- You pay your postage, long distance, ticket charges if you do things through a brokerage account instead of direct
 
$300/ann "agent licensing"
+$400/ann for Reg Reps
+$400/ann for IAR's
 
The company reimburses $200/mo as an "agent allowence" if you're hitting their minimum goals.
 
 
BB, I'm sure that you won't say but I'd like to know what company you are with.  It's certainly not my current/soon to be former mutual company. 
 
First of all, under 4 year agents are not allowed to do wrap accounts...even so, most don't have a 7 anyway. Load funds and VA, the grid starts at 35% for everyone and goes to 85%.  However, again under 4 year agents are strongly discouraged from selling anything but insurance anyway so it doesn't really matter. 
 
The standard fees apply for registered reps and agent licensing.  We've only got 2 IAR's in the entire office so...and E & O insuance is $30 twice monthly, copies and faxes are 9 cents per and there's free rent for the under 4 crowd.  However, once you hit the five year mark the rent starts at $600/mth and goes up depending on the size of your office/etc.
 
A small allowance is avaliable for assistants which amounts to about 4% of your gross commisions (I know because I had one...emphasis on HAD), the remainder of their salary comes out of your (the agents) pocket.  The company strongly encourages that you obtain an assistant within your first 12 - 18 months, it shows a level of dedication.
 
Of course the agent pays postage, long distance, etc.  They nickle and dime you to death. 
 
To the thread starter: The one thing to remember about insurance companies is just that...they are just that...insurance companies.  Most have no interests in agents selling equities period.  Most are masquerading as full service financial planning outfits when premium dollars are all that matters. 
 
Peace
Oct 21, 2009 10:59 pm
Otane:
deekay:

The payouts can be considerably higher for investments and insurance sales don't have to go through a grid.  There isn't a product out there that I can't offer through my B/D (except for EIAs).  The downside is, if you're a rookie, you won't get the fat salary a wire will offer.  Plus you will have to pay for some (or all) office expenses. 



 
There Is No Such Thing As A Free Lunch.
 
That is the Catch 22 of the financial service business. It almost seems that you are working for the Mafia.  It is easier, I think, during these times to sell someone insurance and annuities than managed funds. I am currently with a B/D, and alot of the advisors are barely scraping by - well educated and been in the biz for 5-10 years. That is not a good sign. 
 
Not necessarily the case.  Folks rarely and I mean RARELY want to talk about risk management (insurance).  Out of the 100 things a person has to do in their day, talking to their insurance agent is number 101.  However, at least talking about investments has the appearance of being sexier.  Folks always want to talk about the market...good or bad.  That's one of the main reasons that so many of the big insurance companies are masquerading as financial planning firms...because they know that NO one wants to talk insurance and the only way to get through the door is to pretend that they can do a complete financial needs analysis when the only thing really important is GETTING THOSE PREMIUM DOLLARS in the door. 
 
Then, in a lot of instances when you take the time and effort of presenting a well put together personal needs analysis and uncover a severe shortage in the individuals risk management, they chose to take the inexpensive route of all term insurance.  A million bucks of term insurance on a healthy 35 year old amounts to just enough in commissions to treat you and your spouse to a decent meal at a moderately priced eatery.
 
And if you should sell that expensive whole life policy that the company prefers that you sell...thing about this.  Throw in the fact that folks are losing their jobs left and right in this market...trying to cut back and the first thing to go is you guessed it, that expensive whole life insurance premium.  If the client hasn't suffered out the payments for 13 months, get ready for a "rollback" in your commissions.  There's nothing more fun than getting a negative commission statement.
 
So before you think that insurane is an easier sell, think about all the obstacles involved.
 
Peace
Oct 21, 2009 11:35 pm

What the Jones/wirehouse guys don't understand is that at insurance companies a lot of the decisions are made at the agency level.  Of course insurance companies want agents/advisors to write insurance, but they will let you do all the other things because they know they need to be competitive to attract top talent and retain those that have taken their practices to true financial planning.

Leverage:  I know Northwestern Mutual has equally high payouts on their investment products as we do.  I'd guess most insurance B/D offer a higher payout and to get the highest payouts you need to be doing a decent level of insurance business.  Our insurance production factors into our investment payout.

icecold:  We don't do any of those things you listed, the day is coming when we will be able to, but it's not here yet.  The majority of our clients don't need and probably wouldn't want to do those things.  I don't think we'd want to do many of those in client accounts.  I write covered calls in my Ameritrade Account and have speculated on futures with a little bit of money but I'd never do it in a client's.  I have to believe they'd only lead to diffusion, lower production, unhappy clients, and an unhappy advisor.

Oct 24, 2009 8:32 am

I'm an "old" guy making an unexpected career change since my current industry has died because of the credit crunch. 

 
I did the homework and have boiled it down to a mutual ins co., a wire house, and that place that makes you knock on doors.  My prefernce is to sell investments, not whole life policies... but the ins co says "no prob, you can do that here!"
 
They may say that, but all benchmarks for production, bonuses, and even the requirement to get your first paycheck, are based on sales of LIFE INSURANCE (first year premiums).
 
I am very much a rookie, but I have pretty much ruled out the ins co.  My impression is that they know most people don't really want to sell insurance, so they bait us with the sexier, more desirable prospect of being an investment guy too. 
 
Anybody agree?  Disagree?
 
Now my dilema is which way to go between the other two, which can be boiled down to this... would it be easier to find 5 customers with 100k to invest, or 1 customer with 500k to invest?
Oct 24, 2009 10:59 am

There is no question that if you go with a life insurance company, you will be expected to sell life insurance.

 
For some people, it is easier to find 5 customers with $100K and for others, it would be easier to find 1 with 500K to invest.
 
If you are looking for easier, you may not want to give up on the life insurance company so quickly.  The insurance company's focus may be on investments, but yours doesn't have to be.  The key is simply that you'll have to do a minimum amount of insurance business. 
 
If you'd like, go ahead and focus on people with $500,000 or $100,000 to invest.  The difference is that if you run across someone who doesn't have a lump sum to invest, but has the cash flow to put away a decent chunk on a monthly basis, you may walk away with a sale that puts $5,000 into your pocket from someone that would otherwise be considered a non-prospect.
 
Personally, I don't have any desire to be an insurance salesman or an investment salesman.  I want to be a person who helps people achieve their financial goals while making a nice living doing it.  I'll sell what ever products (or advice) will allow both of these things to happen.
Oct 24, 2009 11:48 am

Thanks Anonymous... good input.

 
Perhaps "easier" was a poor choice of words.  The real question was... While exerting the same amount of effort, is it more likely to grab five 100k people or one 500k?  I know there is no real answer... it's just newbie uncertainty, over-analyzing, etc.
 
I, like you, want to consult... not sell.  Within that structure, I think I'd prefer to be an investment guy who can sell insurance, rather than an insurance guy who can sell investments.
Oct 24, 2009 11:58 am

I look at it differently.  I'm neither an investment guy who can sell insurance nor an insurance guy who sells investments.  I'm a business owner who earns his living helping people achieve their goals. 

 
However, I absolutely do think of myself as a salesman.  I just don't care if I'm selling advice, selling insurance, sell investments, or some combination of the three. 
 
Sometimes in talking to prospects, I will explain that I'm a financial planner who thinks that financial plans are a waste.  The true value is in financial plan implementation. 
 
Our true value is in getting people to take the necessary actions. 
 
 
Oct 24, 2009 3:00 pm

I work at a mutual insurance company. My personal experience has been that it is MUCH easier to find someone that can cut you $500/month premium versus finding someone who has $500k in ready to invest assets. This is not even consider selling these $500k prospects. A lot of the business owners that have cut me $1k-$2k/month premiums have a big insurance need, but at the end of the day they want to invest in their own business versus someone else's business. They don't care about 10-20% returns when they can get 1000% returns from their business. This is not to say the insurance route is better than a wirehouse route or vice versa, but I'm in it for the financial planning process as well, it's just that I need to ensure m survival first.




In terms of the investment payout at an insurance company, I'd say the numbers on this post has been fairly accurate. In the end, it's YOUR business so do whatever you want with it as long as you meet your contract minimums. I sell other insurance companies, non-proprietary funds, etc.


Icecold: You are correct, we are not able to sell any of the above mentioned products you have mentioned.
Oct 24, 2009 9:54 pm
LeaseNoMore:

I'm an "old" guy making an unexpected career change since my current industry has died because of the credit crunch. 

 
I did the homework and have boiled it down to a mutual ins co., a wire house, and that place that makes you knock on doors.  My prefernce is to sell investments, not whole life policies... but the ins co says "no prob, you can do that here!"
 
They may say that, but all benchmarks for production, bonuses, and even the requirement to get your first paycheck, are based on sales of LIFE INSURANCE (first year premiums).
 
I am very much a rookie, but I have pretty much ruled out the ins co.  My impression is that they know most people don't really want to sell insurance, so they bait us with the sexier, more desirable prospect of being an investment guy too. 
 
Anybody agree?  Disagree?
 
Now my dilema is which way to go between the other two, which can be boiled down to this... would it be easier to find 5 customers with 100k to invest, or 1 customer with 500k to invest?



Why are you anti life insurance?

Oct 24, 2009 10:32 pm
BerkshireBull:


Why are you anti life insurance?

 

 
It's not sexy and it won't get you on the cover of 'Financial Advisor Monthly'.
Oct 24, 2009 11:03 pm
deekay:
BerkshireBull:


Why are you anti life insurance?

 

 
It's not sexy and it won't get you on the cover of 'Financial Advisor Monthly'.



True.

I'm sick of newbies who have yet to open an account of any type thinking they're in a position to be flashy and run the type of practice that gets you magazine covers.

Oct 25, 2009 1:06 am

Ever see the movie Groundhog Day? That's a typical life insurance salesman.

Oct 25, 2009 1:10 am
ChrisVarick:

Ever see the movie Groundhog Day? That's a typical life insurance salesman.



http://www.youtube.com/watch?v=-xwCy_ai_E0

I don't think Phil would be an expert in any kind of advanced underwriting.

Oct 25, 2009 2:09 pm
LeaseNoMore:

....I, like you, want to consult... not sell.  Within that structure, I think I'd prefer to be an investment guy who can sell insurance, rather than an insurance guy who can sell investments.



Everyone who joins this industry wants to consult...and if you have the cash reserves to cover a few years, you can do it. But if you want to get out of the gate and make $75k-$100k your first year...you have to sell!!!