Most corporate agencies are similar in their compensation model development. They typically feature higher commissions for new business compared to renewals with limited stock and equity ownership options, noncompetes, and a lack of decision-making opportunities for the producer. This model prohibits your financial and career growth by limiting your incentives and increasing the pressure to acquire new clients.
Enhance Your Financial Freedom
Whether you are questioning if your success is limited due to your agency’s compensation structure or you’re trying to continue to grow in your career, consider the following elements that could hinder your future plans and how to address those concerns:
Noncompetes. Although noncompetes are understandable due to the protection they provide a business once invested in an employee, it could be the death of that employee’s career. Deloitte’s Shift Index found that 80 percent of survey participants are dissatisfied with their jobs. But your noncompete may hinder or severely limit your chance to find a better option. If you have the chance, negotiate your compensation package and noncompete terms with your employer. If that doesn’t work, consider looking for a more suitable long-term opportunity.
Mergers & Acquisitions. Continued growth in the industry and increased M&A transactions over the years have created additional financial uncertainty for producers. If your firm is acquired or merged with another, your compensation could change and your commission percentages may be altered. Even more, new management could bring increased pressure to acquire new business and may move accounts around, so you may feel the pressure to drum up new clients and lose the relationships you’ve built with current clients.
Limiting Compensation Models. On average, independent P&C producers can generate income depending on their effort and time commitments. Not only do agencies traditionally avoid offering equity and stock options, but they may also cap your potential earnings. If you cannot renegotiate your contract, look for options at a producer-focused agency where your efforts are the only determinant of your success. You may even be able to out earn the CEO.
Reach Your True Potential
In our recent eBook now available for download, “The 3 Freedoms Key for Ultimate Producer Success,” we discuss the three freedoms you need to succeed as an insurance producer. One of those fundamental elements of success is financial freedom. Many producers find themselves trapped in agencies with noncompetes, no equity, no ownership, limiting compensation models, and the fear what a merger or acquisition might do to their plans. With these looming over you, financial success can seem challenging or near impossible. It may be time for you to consider a lifestyle or entrepreneurial agency.