All Things Commission | 7 Figure Annuity Sales Podcast | Ep. 300

In any annuity sale, there are four entities that need to be well taken care of. The client, the agent, the IMO and the insurance company. Welcome back to the seven Figure Annuity Sales podcast. We're talking about all things commission today. We've got Chad up in Colorado, myself down here in Texas, and this is one of those topics that Chad we've just never really hit. And it's honestly, it's coming up because there's a very competitive product on the market right now, especially in the income space that I know you've sold many, many millions already and it just happens to be a seven year product, which means that the comp is about a point and a half lower than a 10 year indexed annuity with an income rider. So that's kind of what prompted it. I'm just, I mean, I know your thoughts, but for the sake of the viewers, just give us your, your quick two minute spiel on, on comp and product.

Well, I mean, comp is a very small part of the decision that I make to pick a product. I mean, if there's one that had a really huge benefit, but the comp was only 2%, you know, from the standpoint of a street FIA with an income rider, I'd be like, wait a second, that doesn't make sense. And the reason why is because just as anything you have to have money to run your business, you have to have money to live off of. So, you know, you see that at times it's like Costco. Costco breaks even on almost all of its actual products, but it makes all of its money on its memberships. So they're never going to sit there and say, well, you know what, we're not going to charge them memberships anymore and we're going to keep our food prices all the same. They just won't because there has to be a realistic amount of money that they can make and they can pay their employees. That being said though, yeah, it is, it is tough to sell product that pays so much less, but the benefits are so much higher for the client in this product. And if I look at it, I think I've actually gotten quite a few deals because of the benefits of this product. In other words, things that I might not have gotten in the future. You could say, okay, you know what, you're losing a bunch of money because you're, you know, I'm almost at the same amount I was last year, which in technicality I would definitely be lower in income. But we all know, I mean, anybody could tell you that the annuity arena has been more challenging. You know, it's, I don't know, I still haven't fully put my finger on it other than high yield savings accounts and treasuries and people just afraid to do anything, move anything, or they think they can do better in the market. But that being said, you know, comp has always been one of those things. I mean, you and I both know when agents want to work with us, one of the first questions they always ask is, what's my comp? And then the next is, what leads do I have? You know, which I'm just going, what about training? What about partnerships? What about relationships? You know, that's a whole nother thing. I'm not going to go on that little rant because to me it's, it's all about the relationships we have with our agents. And it's not about who pays the most and who gets the most leads because, you know, if you have leads that are coming out there but you're not able to write any business because you don't know how to do that or improve, then that doesn't mean anything. But back to the comp. I, I think, you know, it should be a very small part of your decision. Yes. A seven year obviously is going to pay less. And for this particular company, you have to hit 5 million before you can get even a bump up and pay. And, but I mean, for me, 5 million is not a big deal if it's a good product. Now if I got to 4,500,000 and they change the product, well, I guess I'm not getting that bump up.

Right.

I mean, that's just, it's got to be what's best for the client. And that's, that's how I always am. I mean, I've been that since day one.

Yeah, well, and the way I intro this, this whole episode talking about there's, you know, there's four entities that need to be taken care of. Obviously the product and the policy details is what takes care of, provides for the client. But then when you look at the comp for an agent in an imo, those are two entities that are necessary to the client being to being able to obtain the policy. Both of those entities need to stay in business. And then you do want your insurance company to be profitable. You don't, if you're a client, you don't want your insurance company not to be making money. So.

No, I mean, that would be the dumbest thing ever. I want to, I want the best product out there. But then I don't care if my insurance company's around. Well, your insurance product is now gone. Right. So, no, you've got to make sure they do well.

Right, Right. So, I mean, there are four pieces. They all need to be taken care of. And I think for. For agents, because that's the primary audience that we have with this podcast. The question becomes, does the comp for this sale, does it support my ability to stay in the industry? And is it best for the client? Right. Obviously, is it best for the client? Number one, that. That takes all. But I think there could be an instance where a product, if you could have a product that is so gargantuously better than everything else that it could get all of your business. And then the question becomes, if this product were to get all of my business, could I stay in business? Right. If there was a product that was designed, that was paying agents 1%, 2% for the premiums, and they took all of that extra that they would be paying in comp and reinvested it back into the product, they could create a product that just dominated everything.

Yeah, but that's not realistic in general, though, because that'd be like telling a restaurant you need to. You need to do all your goods at cost. You need to sell them to clients at cost. That restaurant, I mean, we already know 90% of restaurants fail in the first five years anyway. But nobody's going to do that. You know, nobody's going to sit there and break even. It just, it's right. And anybody. And the beauty I love is my clients are almost always like, hey, you know what? We want the insurance company to make money. We want you to make money. We don't want you working for free. You know, so it is, it is something that is important to discuss and talk about. It's just, I think it's important to just make the statement. It shouldn't. It should always be a factor in picking the right. Right product. But if we were to do a scale of percentages, I would say maybe the right product. I, I might. My thought process may be maybe 20% entertained by the comp. Sure. And then the 80% is what's best for the client in the situation. So, I mean, it goes back to, I'm not working for free. I mean, that's. There's. There's too many things that we, as you know, we're huge into charities and we're huge into giving back to the community. And me breaking even doesn't do anything.

Right. Not to mention the Cost that you spend to get in front of the person to help solve their problems in the first place.

Yeah. I mean, when you have leads that are 300 to $500 a piece and then you have someone that you literally just hit and they go, no, I didn't fill anything out. Okay, well, there goes 500 bucks gone.

Yeah.

You know, so. Yeah, it's. And if you think of the, the reality of our industry is there's so many people that make a lot of money from what we do. You know, we have our FMOs, marketers, we have, you know, all the people that, that supports all the back office, all the admin you have, all the insurance companies, all the admin you have, the agents, all the admin you have. You know, there's so many. It's. And then if you even think about that, all the admin and all the agents and all the, the managers and executives, we go out and buy stuff. So I think about the, the, the, the massive impact that our industry has on the national economy is just got to be staggering. Like, if you took insurance agents, insurance companies out of the picture, how much would that actually affect the entire benefit to the United States? I think it'd be very, very high. Well, let's just, I mean, hotel industry alone, right. When you think about when you have your conventions and you have your trips and I mean it's, it supports so many things and people don't look at that. You know, I can't say people, there's a lot of people that don't look at that, namely politicians. But anyway, they can do their own trips and do that.

Well, and then they'll, they'll let you know even if they don't look at it.

Oh yeah. I mean, it's like, you know, you, they get their trips and all their meals and all that stuff taken care of.

Yeah.

And God forbid if we ever got a reward because we did. Well.

Yeah.

Oh, God.

So.

Yeah.

Well, that's the, that's the age. Oh, sorry.

I, I will say that to the trip thing. I'm never going to sell product ever. I don't care what the trip is.

Right.

You know, I mean, I don't care if they have an all expensive pager cruise trip around the world. You know that, that doesn't.

Right.

It's not a motivation, which is a.

A crazy concept to me in general, Chad, that like that ever became an issue, if I'm being honest. Because if you're selling a product on the basis of the trip. Okay. One of two things. Is true either. It's not the best product. Okay. And so now you're. You're putting the client into a poor, poorer situation. And let's just say clients are visiting with multiple agents. Okay. And so they're getting multiple opinions. Well, by you presenting something that isn't actually the best for their solution, and you're trying to sell it on the basis of the trip, not only is that just wrong, but you're setting yourself up to lose business because they're seeing other things out there that are better for them because they're meeting with people that are actually doing it the right way.

Yeah. People don't like. I mean, I think about even this year, I mean, you know the numbers. But I think I've probably sold five to seven different companies and I don't know how many products, because there's different products in each company.

Right.

But you know, it just doesn't matter. It takes a lot of hard work for that. I mean, I remember I talk to you quite often, say, hey, you know what? Here's a situation. You know, what's the best deal? And part of it's because, you know, why would I go and look it up when I can just call you. Yeah.

You got me over here, keyboard jockey all day. I am studying these products and dealing with all this stuff. Absolutely.

We're trying to get your. Your 25 agents to do as much as I am.

So we're trying.

We're working on that right now. Now all my agents are killing it.

You multiply that by about 10.

Yeah, that's true. Oh, my gosh. We got so many agents now.

It's wild.

Which is awesome. Yeah, I love it. I love. I love seeing where we've come from and where we are now.

Yeah.

And I mean, if you would ask me three years ago if I wanted to be an fmo, I always said, you're out of your mind. No, I mean, I just. Let me write business. But we had so many just saying, hey, you know what? We want honest, ethical people. We want someone who's in the field running appointments. We want people experiences just like this. You know how. Tell me the CEO of some FMO and see how hard do they get hit by their own personal commissions? They don't. They just go, you know what insurance company, A, B and C and D, E and F, you know, they're paying us really good on the over. Override. So I think we're going to take those not even looking at the product. There's some great ones out there.

There Are great ones. There are great ones. And I've heard horror stories and, and you know, truth be told, that honestly kind of brings me to this next point. We're talking about comp. There's another piece to it and it's the IMOs that try to compete for agents on the basis of comp. So they'll recruit agents on the basis of, hey, we'll give you, you know, XYZ over street. We'll give you XYZ of the override or whatever. And it to say that there aren't certain production thresholds that warrant that. Don't, don't hear me and say that, you know, if you're a 10, 15, $20 million producer, that it's not worth overstreet. It is. But the, the place that it comes to an issue where it, where it creates a legitimate cost to the agent is when they're giving everybody over street. And their lack of margin creates a lack of support and a lack of tools, a lack of resources that actually helps you write more business. So if you're an agent. Yeah, if you're an agent making street.

I'm sorry, go ahead, go ahead.

I was just going to say if you're an agent making street, let's call that around 7% on a 10 year indexed annuity. If you're an agent making street and your IMO can come and give you an extra 50 basis points or a point. Great. Now you're seven and a half or eight on average, let's call it. Or if your IMO can come in and help you double production or triple production or quadruple, what's more valuable to the bottom line? Always the resource and the increased production because there's no way an IMO is ever going to give you enough to pay you more than what you could make if you just simply grew your production by 50% or 100% or many times from there anyways.

So you just, until we started retirement, realized financial, I mean, you know this. I stayed with an FMO for a long time and I was not, you know, I could have went anywhere and got a much higher comp. Yeah, but what that FMO did at the time to help me get more business and the back office support way allowed me to do more than what I could have done in other circumstances because I've had people literally tell me, you know, hey, I'll give you top level comp but just lose my number. You know, you don't, you don't get a bunch of support or I've seen It where somebody gets talked into moving to another fmo, they get a hired comp and all of a sudden communication just dies. You know, your back office support, you're not in a swipe because they know that street is honestly, it's a fair comp. It really is because it allows the fmo like, you know, I mean we pay so much extra for these tools and software that we have. And so it's not like we're taking that extra override, we're getting all this extra money for it. We're, we're investing, we're building the training platform, we're building, you know, systems and software that allows us to compare carriers all very quickly and accurately. You know, and so there's, we're reinvesting into our agents for sure.

Right. Because at the end of the day I would rather help an agent grow their production than be a contract house. I think the, the marketing organizations that are just recruiting agents on the basis of they don't care about you writing more, they care about getting what you're already writing. And that's great. But I'd rather help an agent go from 1 million to 2 or 2 million to 4 or 4 to 8 then to just make an extra point and over.

Yeah. When you see someone that's just, they're paying their bills and they're creating a lifestyle and then they build a legacy, oh my gosh, that is so rewarding. Even though I don't, you know, I'm not getting paid, you know, their commission. But when you hear someone, hey, we just took our whole family to Disney World or hey, we just took our whole family on a cruise or we took our whole family to Hawaii or hey, I put a down payment on my kids house. You know, those are, that's legacy and that's the super exciting things. Certainly, certainly. Yeah.

Well, this didn't end up being all things comp. I think there's a lot of other things that we could talk about. But it's, it's kind of the two big areas, right. It's agent comp and then IMO overrides and distributing that to agents where it's necessary or where it's not. So the bottom line is I Chad, I think street is very fair. I think there are production thresholds that warrant an agent getting paid over Street. We have agents that are at that threshold. That's just the nature of the game. But, but at the end of the day, if you're an agent, my encourage especially a new agent, my encouragement would be to you to find an organization that isn't going to sell out their service, their tools, their resources on the altar of you making an extra 50 basis points or a point which in the long run ends up hindering your bottom line rather than helping it.

So yeah, and make sure they're not pushing a product based off of them getting higher override. I mean I, I've seen that before. They get a higher override and they push this product and you're going, that is a dog product. Why are you even doing that?

I have heard a story of an IMO that I won't name that would print for their marketers a list of products written, numerical list, Chad, this is our number one product, this is our number two product. And it was all on the basis of override spread. So what were they making? And basically the concept was they told their marketers, hey, if a client, if an agent's client situation can fit just demographically meaning, age wise, premium requirements, all that, this is our product. If, you know, if not, and then you just go down the list and you're literally doing product selection, case design on the basis of what the IMO makes. That is absolutely ridiculous.

Actually seen that way more than once. I've seen that a lot of times. But, well, that we've, I think we've got this one taken care of pretty well and I'm not even giving you the opportunity to say, I want one more thing to add. So we'll talk to you later.

Opinionated.

Appreciate listening. Have a happy day. Happy selling. Bye.

It.