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Aug 11, 2009 11:04 am

I  have 1 offer with MetLife and might have one with MSSB.

I was curious on the member's take on the payout. The guy at MetLife said a guy managing 50 AUM was grossing 350k on the financial side. I am assuming that the payout at MSSB is much lower?

Why the difference?

Aug 11, 2009 5:29 pm

The guy at Met is getting a payout twice what the MSSB guy gets

Aug 11, 2009 6:06 pm
BerkshireBull:

The guy at Met is getting a payout twice what the MSSB guy gets





The Director at Met said his payouts, in general, were much higher than any retail shop.



Is this a standard difference between insurance and retail brokerage?

Aug 11, 2009 6:26 pm

This decision shouldn't be about payout. It should be "What do you want to be, an investment person who does insurance or an insurance person who does investments?


Most insurance guy's investment side consists of nothing more than mutual funds. Not exactly a full quiver. OTOH, investment guys offer a full suite of insurance products. And yes, on those products the yield to pocket is substancially less than what the insurance guys are making on those same sales. So what? Insurance is only a part of the picture, not the entire picture.


 
As an example I recently had a prospect give us 2.5 million dollars. One million went into an annuity and 1.5 mil was invested. We could offer a full range of investments which helped us win the account.
 
On the money, i know my share of insurance guys and i don't know any who are bringing home 350k. I should say life insurance salesman, because i know some P&C guys knocking down well over a million a year. Back on the $350k, I know many people on the investment side making that money and more. Much more!
 
Still, your decision should be about who you want to be- insurance guy or investment guy?
Aug 11, 2009 7:19 pm
BondGuy:

This decision shouldn't be about payout. It should be "What do you want to be, an investment person who does insurance or an insurance person who does investments?


Most insurance guy's investment side consists of nothing more than mutual funds. Not exactly a full quiver. OTOH, investment guys offer a full suite of insurance products. And yes, on those products the yield to pocket is substancially less than what the insurance guys are making on those same sales. So what? Insurance is only a part of the picture, not the entire picture.


 
As an example I recently had a prospect give us 2.5 million dollars. One million went into an annuity and 1.5 mil was invested. We could offer a full range of investments which helped us win the account.
 
On the money, i know my share of insurance guys and i don't know any who are bringing home 350k. I should say life insurance salesman, because i know some P&C guys knocking down well over a million a year. Back on the $350k, I know many people on the investment side making that money and more. Much more!
 
Still, your decision should be about who you want to be- insurance guy or investment guy?
 
BG, I gotta disagree.  I'm very familiar with the investment platforms for both wirehouses and career agencies.  There really isn't much available at a wire that you can't get at an insurance company.  SMAs, managed futures, REITs, other than IPOs there isn't much that isn't available.
 
One thing we do agree on though - do you want to be an insurance person who dabbles in investments?  Or do you want to be an investment person who dabbles in insurance?  Fact is, whatever you choose, you'll get very limited training on the other. 
Aug 11, 2009 8:01 pm

DK, generally speaking, no arguement.  Still, I don't know any insurance guys who are working with individual stocks and bonds. The ones i talk to say they can't get them. Is this true of all? I don't know for sure ,but i believe it is.

 
And let's face it, even if they could offer these investments, how competitive would they be?
 
One of the competitors on a 900k rollover from about two or three months ago was an insurance company guy. The guy offered nothing but mutual funds. He was very weak, surprizing considering the prospect had done LI business with him for years.  I blew him away. I will say that the ML guy gave more of a fight. Even double teamed the prospect with his BOM in tow. I guess it take two boys to do a man's job? I finished him on price and selection.
 
That said, i realize that even the investment side is trying to turn the individual stock and bond biz into a dinosoar business. Everyone wants the managment fee. However, in this "Me Too" cookie cutter world making such offerings is where real value can be created. I offer myself as proof, an average guy who specializes in something rich people can use. My clients make money, i make money and while i offer something they can get from many sources, few offer it. Even fewer do it right.
 
To quote Bob Dunwoody the question remains "Who be you?"
 
 
Aug 11, 2009 8:14 pm

BG, most registered insurance reps don't do individual selection.  That's not their speciality, much like I have to imagine structuring protection portfolios is not yours.  However, I have to imagine you can consult a specialist who can help you structure protection plans for your clients.  Just like an insurance rep can talk with someone who specializes in individual security selection. 


 
To the OP - go with what you like and feel you can add the most value through.  I would argue (and I imagine BG would second this), if you're "speciality" is putting together a fund portfolio, you're gonna be like a one-legged man in an ass-kicking contest.  Just like if you sell the occasional term or LTC policy, you're gonna get run over by a top-notch insurance agent when the big clients come through.
Aug 11, 2009 8:46 pm

Simply put, business owners are better off with someone with an insurance background, employees are better with a FA with an investment background.

Aug 11, 2009 10:21 pm
Otane:

I  have 1 offer with MetLife and might have one with MSSB.

I was curious on the member's take on the payout. The guy at MetLife said a guy managing 50 AUM was grossing 350k on the financial side. I am assuming that the payout at MSSB is much lower?

Why the difference?

 
Otane, it really depends on what your product mix is. 50 million in a fee based product at a wire house would generate 500K in gross commission credit (at an average 1% fee for management).  And this would recur every year as it is charged annually for your services, like an attorney on retainer.
 
An annuity or "A" share mutual fund purchase will produce @5% of the sale in gross commission upfront and generate only a .25% annual trail thereafter. The purchase of a 30 year municipal bond will generate @ 1% in initial commission and none thereafter until it is sold or matures.
 
Most MSSB or wirehouse brokers average a yield of about .75% on their book generally more in the early years, less in the later years unless they have converted to a fee based business. Therefore most with 50 Million in AUM are very easily grossing 350K as is the Metlife guy, but they have much more to offer the client.
 
What is known s "Grid" is how much of gross commission goes to the broker. Indie brokers can retain up to 90% (but they pay all their own expenses). In general wirehouse producers at the 500k level will retain 40% of gross with no expenses, and have all the usual benefits/insurance/disability etc.
 
Starting new you will likely be offered a salary plus bonuses until you build a sustainable income based on gross. Also remember that a book built at a wirehouse can be transferred to another wirehouse or indie firm. I don't know that insurance business can be nearly as easily.
Aug 11, 2009 10:37 pm
BondGuy:

This decision shouldn't be about payout. It should be "What do you want to be, an investment person who does insurance or an insurance person who does investments?


Most insurance guy's investment side consists of nothing more than mutual funds. Not exactly a full quiver. OTOH, investment guys offer a full suite of insurance products. And yes, on those products the yield to pocket is substancially less than what the insurance guys are making on those same sales. So what? Insurance is only a part of the picture, not the entire picture.


 
As an example I recently had a prospect give us 2.5 million dollars. One million went into an annuity and 1.5 mil was invested. We could offer a full range of investments which helped us win the account.
 
On the money, i know my share of insurance guys and i don't know any who are bringing home 350k. I should say life insurance salesman, because i know some P&C guys knocking down well over a million a year. Back on the $350k, I know many people on the investment side making that money and more. Much more!
 
Still, your decision should be about who you want to be- insurance guy or investment guy?




 
There's no question that the insurance guy's quiver isn't as full.  Most can no longer offer individual stocks and bonds on a solicited basis.    The investment guys tend to not have a full selection of insurance products.  They tend to be limited to a few carriers.  Even if they aren't limited, their knowledge usually is.   For instance, I have never seen a client buy disability insurance from his wirehouse rep. 
 
I probably make 3-4x the money on an insurance sale than what BondGuy makes on the same sale.  On the other hand, big investment sales are probably easier for him to make. 
 
BG, if you don't know life guys making 350K, you simply don't know any successful life guys.   Walk into any successful agency of NML, MM, or Guardian, and there should be at least half a dozen guys making that.  My office has 10 guys making $500,000+.  It's an interesting mix because it's not just life insurance.   For instance, one guy barely makes his contract numbers, but he does a couple of hundred thousand with outside carriers and makes (I'm guessing) $5,000,000 from his group health business.  2 guys are making closer to $250,000 just from DI renewals.  Only one of the guys is making that kind of money primarily from investments.
 
Most of the guys are making it from pretty well rounded business.  What might be typical for someone earning $500,000 would be a breakdown as follows:
 
$150,000 first year commissions from life/DI/LTCi/annuities from primary company
$50,000 fyc from other companies
$100,000 in renewals
$75,000 in overrides
$100,000 from investments
$25,000 from group health
 
I don't think that it's just insurance guy vs. investment guy.    However, I will agree that if someone wants to focus on investments for people with lots of money, the investment guy route is the way to go. 
 
I don't know which is the better route for someone wanting a $1,000,000+ income.  I am convinced that it's easier to make $250,000+ going the insurance route.
 
Aug 11, 2009 11:30 pm

Thanks for your help guys.

That said, i realize that even the investment side is trying to turn
the individual stock and bond biz into a dinosoar business. Everyone
wants the managment fee. However, in this "Me Too" cookie cutter world
making such offerings is where real value can be created.

Can you elaborate on this? I talked to a BM, and he said that I could manage money with the client's permission. Not sure if this is the same thing.

Aug 12, 2009 6:43 am

You don't get to make any decisions.  Everything that you do must be approved by the client in advance.

Aug 13, 2009 2:25 am

Not true, You can manage money on a discretionary basis where you make all the decisions without the client's consent provided the client signs the agreement. Most firms require experience and additional education to participate in their portfolio manager programs.

Aug 13, 2009 3:39 am

It seems that the industry to going towards the managed money route - especially with brokers managing more money than some hedge fund managers.

Aug 13, 2009 9:52 am
feebasedrep:

Not true, You can manage money on a discretionary basis where you make all the decisions without the client's consent provided the client signs the agreement. Most firms require experience and additional education to participate in their portfolio manager programs.


 
In other words, as a new guy, he is not going to be able to do this and will have to get the client's approval for everything that the does.
Aug 13, 2009 12:28 pm
BerkshireBull:

Simply put, business owners are better off with someone with an insurance background, employees are better with a FA with an investment background.

 
I gotta disagaree on this. Business owners are better off with experts in both. Insurance guys sticking to what they do best and investment guys doing like wise. The problems start when one or the other offers on stop shopping. The client pays in spades for that.
Aug 13, 2009 12:31 pm
anonymous:
BondGuy:

This decision shouldn't be about payout. It should be "What do you want to be, an investment person who does insurance or an insurance person who does investments?


Most insurance guy's investment side consists of nothing more than mutual funds. Not exactly a full quiver. OTOH, investment guys offer a full suite of insurance products. And yes, on those products the yield to pocket is substancially less than what the insurance guys are making on those same sales. So what? Insurance is only a part of the picture, not the entire picture.


 
As an example I recently had a prospect give us 2.5 million dollars. One million went into an annuity and 1.5 mil was invested. We could offer a full range of investments which helped us win the account.
 
On the money, i know my share of insurance guys and i don't know any who are bringing home 350k. I should say life insurance salesman, because i know some P&C guys knocking down well over a million a year. Back on the $350k, I know many people on the investment side making that money and more. Much more!
 
Still, your decision should be about who you want to be- insurance guy or investment guy?




 
There's no question that the insurance guy's quiver isn't as full.  Most can no longer offer individual stocks and bonds on a solicited basis.    The investment guys tend to not have a full selection of insurance products.  They tend to be limited to a few carriers.  Even if they aren't limited, their knowledge usually is.   For instance, I have never seen a client buy disability insurance from his wirehouse rep. 
 
I probably make 3-4x the money on an insurance sale than what BondGuy makes on the same sale.  On the other hand, big investment sales are probably easier for him to make. 
 
BG, if you don't know life guys making 350K, you simply don't know any successful life guys.   Walk into any successful agency of NML, MM, or Guardian, and there should be at least half a dozen guys making that.  My office has 10 guys making $500,000+.  It's an interesting mix because it's not just life insurance.   For instance, one guy barely makes his contract numbers, but he does a couple of hundred thousand with outside carriers and makes (I'm guessing) $5,000,000 from his group health business.  2 guys are making closer to $250,000 just from DI renewals.  Only one of the guys is making that kind of money primarily from investments.
 
Most of the guys are making it from pretty well rounded business.  What might be typical for someone earning $500,000 would be a breakdown as follows:
 
$150,000 first year commissions from life/DI/LTCi/annuities from primary company
$50,000 fyc from other companies
$100,000 in renewals
$75,000 in overrides
$100,000 from investments
$25,000 from group health
 
I don't think that it's just insurance guy vs. investment guy.    However, I will agree that if someone wants to focus on investments for people with lots of money, the investment guy route is the way to go. 
 
I don't know which is the better route for someone wanting a $1,000,000+ income.  I am convinced that it's easier to make $250,000+ going the insurance route.
 
 
Are those net to pocket numbers? Because I have yet to meet any insurance guys making that kinda dough.
Aug 13, 2009 12:31 pm
BerkshireBull:

Simply put, business owners are better off with someone with an insurance background, employees are better with a FA with an investment background.





Why do you believe this? Many of us that have investment backgrounds have analyst or accounting backgrounds and understand the financial of business owners a lot better than people with an insurance background.



I agree with BondGuy. Strongly disagree with this statement.

Aug 13, 2009 3:07 pm

BG, first let me retract one thing that I said.  I said that most guys are making it from well rounded business.  That's true for some, but "most" may not be accurate.

 
Are those net to pocket numbers?  Yes, no, maybe.  I'm not quite sure how to answer that.  In the example that I gave with the person making exactly $500,000, that is how much money would hit his paycheck.   Depending on how he structures his business would determine what he has in business expenses on top of that.   
 
I'm not sure what to make of your comment of not knowing anyone making that kind of money.   It's either because you don't know big producers or you simply haven't talked numbers with big producers.   The expenses can be fairly small.  They can also be pretty big.
 
By the way, you can know big insurance guys and not even think of them as insurance guys.  For instance, I think you are in the New York/ New Jersey area and Lenox Advisors comes to mind as an example.
 
Let me try to use some factual numbers instead of the "I know x guys".   There are approximately 1600 people in the U.S. who will qualify for MDRT's Court of the Table this year.  Many people qualify, but don't care about joining, so they don't qualify.  As a guess, I would peg the number of people who hit the qualification requirements at at least 2000, but less than 2500.  Let's be conservative and use 2000. 
 
These people need to do $263,700 of First Year Commissions.  No more than half of this money can come from investments or group health.   Once things like renewals and overrides are factored in, this should come to about $500,000 of income.   So, as a good guess there are 2000-2500 people who have the production levels to qualify for Court of the Table. 
 
Others make the income and wouldn't qualify.  For instance, of the 10 guys who I know work with making that kind of money, I think that 4 would not qualify because they don't have 50% of their business coming in a form that counts.
 
When I attempt to extrapolate these numbers a little bit, it's reasonable to think that about 3,500 make $500,000+.  Based upon Top of the Table numbers, which require twice the production, 1/3rd of thes guys qualify, so 1000 insurance guys across the country making $1,000,000 sounds reasonable. 
Aug 13, 2009 3:19 pm

I am leaning more towards the investment side because of my background. I saw the top 50 reps out there with billions under management, and wondered what the members thought of the managed money side....it seems it is the trend...whether it is managing the money or being a funds-to-funds.



From what I read about cold calling (that is a different subject) don't know how you would incorporate this type of strategy with insurance without seeing the clients...or is it the same as the investment side?



Also, I don't get why some reps choose to be in management (non-producing side) after building a successful book?