6 Reasons Why MOST Insurance Agents Go BROKE!

Now, in this video, I'm going to show you why most insurance agents go broke. I'm going to be breaking down the six reasons the agents go broke so that you can avoid falling victim to them and be successful in this industry. So without any further ado, let's go ahead and transition over to my whiteboard of truth and justice. There's six main reasons that people go broke, and I'm going to start with reason number one, which is what I call pmm. Okay? Now, you may be wondering, what on earth is pmm? Well, I'm about to tell you. So we have our insurance agent here. His name is Bob. Right? Now, traditionally, what you're going to see a lot of times is a guy like Bob is going to come from a normal job, right? Bob has a job. So maybe Bob was a teacher, or maybe he was a personal trainer at a gym, or maybe Bob was an Uber driver or a garbage man or whatever, right? Whatever Bob did in his past life. And then one day, some random person came up to Bob and said, bob, you know, you're in the wrong industry. You need to get into insurance. So then all of a sudden, Bob went to classes, he did all the licensing. He got everything. He got recruited to this imo, this mlm. And now all of a sudden, Bob is happy. He's got a briefcase, he feels smart because he's an insurance agent, and he gets to wear a tie. Now, even though he just sits at his desk and makes calls. I'm going to show you guys what PMM is, but first, I want to kind of like walk through the scenario so you guys can kind of see what it is. So essentially, Bob is used to whenever he gets paid at the end of the week, at the end of every two weeks, let's say Bob gets 1500 bucks at the end of two weeks. Or we'll just say 2000 for simple math. So Bob gets his $2000 at the end of two weeks, right? And that's Bob's money. It's post tax. Right? It's post tax, which is great. And all he has to do is just take the money to the bank and he can spend it, right? Take it out of the bank, spend it wherever he wants. It doesn't matter. Now, the problem is whenever Bob becomes an insurance agent, he's going to have pmm, which means poor money management. Now, it's not necessarily Bob's fault because he's not used to this, but whenever Bob gets $2,000, let's say he sells a policy, gets $2,000 deposited into his bank. Bob is going to think that this $2,000 is the same as what it was before, but he's wrong because he also has to save and set money aside for taxes. He's all now spending money on leads. He's probably spending money on software, E and O insurance. And last and definitely least, but like, my least favorite, but not the least effect, like affecting him would be chargebacks. Maybe Bob didn't really know what he was doing and he wrote Ms. Jones on the wrong policy. And now all of a sudden she's gonna charge back. So this $2,000 that Bob went and spent, maybe he thought, oh, I got a fat check. I just made five grand this week. He went out and financed a new freaking truck. Now all of a sudden, that money is gone. It just completely vanished. It poofed into fairy dust. That's what I'm drawing right now is fairy dust. It's gone. So now Bob is stuck with all these payments. He's spending money he thinks he has, but he doesn't. And now it's gone. And so this is what poor money management looks like. It's really easy to overcome, but you just have to see it coming. You have to know it, right? And a lot of, a lot of you watching this video has probably fallen victim to this. You just have to track your numbers. You just have to pay attention. And so basically what I always recommend doing is open a separate bank account. So you're going to have your personal, and then you're going to have your business, right? And at the end of every couple weeks, you pay yourself from your business and you pay yourself to your personal. Whenever you get a check from the insurance company, that. That is going to be your income, right? But you also have expenses.

Income and expenses. So the money comes in, that's your money in the insurance account. I Recommend Setting aside 20% to account for chargebacks in case they come. So you're not like having to take money out of money you already have. You put it aside in like a little savings account. So puts 20% into a savings account to save for chargebacks. And then basically when you get that $2,000 check, you're not mixing it in with your personal. So you're not taking somebody out to dinner with this $2,000. It's staying in your business account. And then you're subtracting your expenses. Let's say you spend a thousand bucks on leads and other things. Now you have a thousand left over. And then just like your whole W2 thing, your job like you were doing before, then you can pay it to your personal. And now that $1,000 ends up in your personal account. So you're only spending money that you actually have, but you have to, have to, have to, have to filter it through the business. Otherwise you're going to be in a lot of pain and a lot of suffering because you're going to be spending money that you don't actually have. So that is pmm. That is exactly how to solve it. That's like the first thing that people mess up on. The second one is writing only one carrier or doing underwriting issues. Right. There's a lot of companies out there that will recruit you to sell one carrier. And so what you have to be familiar with is the difference between agent and broker. Right? Agent and broker. So an agent has only one company, whereas a broker represents a bunch of them. Right. These are all little circles. There's a bunch of different companies. So agent is like State Farm, broker is like stockbroker. They can sell these different companies, they have different options, they can match you with the best possible thing for you. So I always recommend becoming a broker because what you have to realize is the person you're selling to, particularly if you're selling final expense. Right? Let's say we have Ms. Sally here. Sally's our final expense client. She's 76 years old and she's on a lot of meds and she's also on a fixed income. So she only makes $2,500 a month.

Which is more than shopping some insurance agents. So don't judge her. She only makes $2,500 a month. When you're selling to a price conscious customer, somebody that is on a fixed income, they are going to shop around. They're gonna. When you're selling to someone who's price conscious, expect them to be price conscious. So if you're not selling them the best company for them, the lowest rate for the most amount of coverage, which is what you're not doing. When you only sell one company, expect them to shop around and look for someone else. So whenever you write Sally on this company, let's say you're only writing one company or you're writing the company that pays you the most, whatever. If it's not the best rate for Sally, she' filling out other forms online and then she's going to contact someone from our agency, like Julian, my business partner. He's going to rewrite her, take all of your money. You're going to get stuck with the charge back. Sally's going to save money and we're going to get paid a commission check because you didn't do your due diligence on the front end. This happens so many, so many times. A lot of times it's literally just because the agents don't know better. It's not like they're malicious or anything, but make sure that you're set up in a position to put your clients in the best spot possible. Otherwise you're going to get rained on with chargebacks. So I always recommend becoming a broker. Make sure you have multiple companies. That is reason number two. Now, number three, there's two learning curves in insurance, right? These are the learning curves. The first learning curve is the sales learning curve, right? You could be anywhere along this line of sales, right? You could be here in the beginning. You have no sales experience. You could be here. You're actually pretty good at sales. You're coming in with a little bit more experience. It doesn't matter where you come in, but there's two learning curves. So the sales stuff, I'm going to put that to the side for a second. The other learning curve is the insurance learning curve. Even if you have other experience in sales, you probably don't have experience selling insurance, which is why you're watching this video. And if you do have experience selling insurance, you probably don't have enough experience or you're lacking in the sales department. If you're a brand new agent, you're going to fall somewhere right here. You have no experience, you don't know what you're doing. And so basically, these two learning curves, once you get to here, then I'm going to try and draw a trophy. This is going to be really brutal, so bear with me. Hopefully it doesn't look like anything inappropriate. I think I did an okay job of not making it look terrible. This is success, right? You have to have both of these learning curves passed in order to get success. So you start out, not much success, not much success, not much success. And then once you start to get sales, you go up. Same thing with the insurance knowledge. Now, the thing is, you need somebody to guide you along these lines. Otherwise it's going to take you forever and you're going to be floundering around trying to figure things out. Which is why number three is bad training. The amount of times that I talk to agents that don't even know how to fill out an application blows my mind. And it's not the agent's fault, but it's because they're set up with someone who doesn't actually give them support. So make sure whoever you're gonna do business with is going to give you the training you need to get from here to here, right? And to get from here or here to here, you have to improve your sales skills. You have to train, you have to practice, you have to get better at objections. You have to learn the script. And if you don't have someone that's gonna train you on how to do that and help you through that process, it's tough. It's really tough. And then on top of that, you also have to learn carriers, underwriting, everything that goes into filling applications, all of that stuff, all the legal stuff about insurance. If you don't have someone to guide you, you're in a really tough spot. So the third reason, again, is bad training. Make sure that you're going to find someone who's going to help guide you along that process. And number four, something that most people really don't like hearing. And I get why. Because it's work. Everyone is sold this whole lie, this whole dream that they can make the infamous, the glorious six figures. Everyone that I talk to wants to make either this or they want to make this right now, the problem is this is a recruiting business. So people are trying to sell you into the business. When they're selling you something, they don't tell you how much work it actually takes, which is a lot. It's okay, though, because we're talking about making a lot of money. It should make a lot of. Should take a lot of work. And the better you get, the less work it takes. But you're not going to make a hundred grand making fifty calls a day. It's just not going to happen. You're not going to make 250 grand making 50 calls a day. It is not going to happen. You have to put effort in, right? Especially when you're new and you're trying to learn all this stuff. You have to pick up the phone, you have to call. So many people are scared of the phone, scared to pick up the phone, and they're scared to call. And that holds them back from having any chance of success. When you're first getting started, you need to overdo the activity. You need to do more activity than the agents that are successful because you have a skill gap and a learning gap you have to overcome. So when you're first getting started, I Recommend making like 300, 400 calls a day. To 400 calls a day. You have to. There's so Many variables when you're first getting started, chargebacks, learning this, learning that the activity cannot be a variable. The activity cannot be a variable. So if you're struggling, I know this sounds cliche, I know it sounds simple, but sometimes it literally is just simple. Just make more calls up the dials, make more calls. If you're not making at least 200 dials a day and you're not anywhere close to your income goal, it's your fault. You have to call more. You can't call for four hours a day and expect to make six figures. You have to put in full time effort to make a full time income. So that's number four, making more calls. Now, the fifth thing is an inefficient system. But there is a caveat to this. Right, I'm going to tell you guys a little bit of a story. When I first got started in the industry, I was working in an efficient system. Essentially what it was is we would get a stack of paper mailers, direct mail gift cards, and all of these gift cards advertised a free Walmart gift card if they sent the form back in. So we got a ton of people that didn't actually want life insurance, they just wanted a free gift card. This is all I knew though, so I wasn't really complaining. Now I was at 50% commission, right? 50% comp. And basically we had free leads. So the leads were financed for us. We didn't have to pay for the lead. Problem was this was all face to face, which would have been okay, but we were driving two, two and a three, two and a half, three hours to our areas to go and sell. So we would drive two and a half, three hours to an area, spend all that money on gas to go and knock a bunch of doors, sell these people that weren't actually serious about life insurance because they sent something in for a gift card. We were trying to sell them insurance so those people would charge back. And then we also had the costs that were going into it, all these different things. We had to pay for the gift cards. And at 50 point comp, I didn't make much money because it was such an inefficient system. But I was working 60, 70, sometimes even 80 hours a week. If you included time on the road, it was more like 100. So I was putting in 100 hours a week. Right. My business partner was as well.

I couldn't say whether this system was efficient or not if I wasn't putting in effort. Having an inefficient system can cause Agents to go broke. But I think, like, here's the caveat, you can't use it as an excuse. Let me give you guys an example. If I was putting the same effort into a different model, maybe where I was paying for my own leads, but I had better leads, I was making calls instead of driving, I would have been wildly success. I would have made so much money. I made like 20 grand for the year. Even though I was selling like 20k a month, I profited like 20 grand at the end of the year. If I was doing this in a more efficient model, I would have made a ton more money. But, but here's what you have to realize. If you put minimal effort into an inefficient system or minimal effort into an efficient system, there's no difference. Let me kind of give you guys an example. Let's say I have a car. I do have a car. But let's say I have a car that is a terrible car. My car looks nothing like this. That has five miles per the gallon. Terrible, terrible gas mileage, super inefficient. Now let's say I have another car that has 50 miles to the gallon. So I get more out of what I put in. If I drive both of these cars, I around the block, like, let's say my house is right here and I drive these cars like a quarter of a mile around the block every day, I'm not going to notice any difference. It doesn't matter that this is more inefficient than this. I'm not driving the car, right? But if I drive the car on the highway for like eight hours a day, okay, now I'm going to start to notice a difference. So my point being, right. An inefficient system can call cause you to have problems. It can cause you to go broke, it can hold you back from seeing success, but not unless you're putting in the effort. You have to put in the effort to even see if it's an inefficient system. Because if you're only doing the bare minimum, you're not going to find the inefficiencies. The inefficiencies are magnified when you're putting in more effort. But you have to put put the effort in before you can worry about an inefficient system. Number five is inefficient system. And the last one is terrible, terrible bad leads. Right?

This right here is one of the biggest scapegoats. But it's also for good reason because it's Also a very, very big issue. What often happens whenever agents get in is they're told to spend like thousands and thousands and thousands of dollars every single week as a brand new beginner on leads. So you're basically spending thousands of dollars on leads and then you're trying to sell yourself out of a lead deficit. This is not a great way to do it because now you're on the back burner and you're having to learn in debt. We don't want to learn in debt. We want to learn as we go. And the problem is a lot of times the leads that people are buying are very, very bad leads. So they're buying age leads that have been called a million times, a lot. There's a lot of these CRM leads that are pushed on newer agents from their imo and people will just spend, rack up thousands and thousands of dollars and the leads are like three or four dollars a pop. But you spend like you have to buy hundreds and hundreds of them to even have a chance of making a sale. So what I recommend, right, to find good leads, make sure that the leads are told it's about life insurance. Because that's what you're selling, told it's about life insurance. I'm just going to say life insurance. You guys know what I'm talking about. They're told it's about life insurance, they're not told it's free. Not free. Right. And they need to be told that they have to speak with someone on the phone. Okay. If you can find leads that are told these three things, you will be in a good spot. You don't want to call people that think it's free because that adds an extra layer to your complexity. And you're selling to people that don't think they're gonna have to pay for anything. That sounds like chargebacks. You want to sell to people that know it's about life insurance. Because a lot of times there's a state approved government benefit or all these like weird terms that people throw out. Instead of just saying it's life insurance, you want them to know it's about life insurance. So find leads. If you guys want, we have a lead source that kind of falls in these criteria. Click the link down below to learn more about it. But you need to find leads that are going to know it's about life insurance. Know it costs money, know that to speak with some of the phone, don't call leads that think it's free. Make sure that whoever you're buying leads from will show you what they're running so you know what you're getting into. Otherwise, you just. You throw in a dart blindfolded in a room full of people. Doesn't end up well. I say all that to say as an agent, the easiest thing to blame is the leads, right? And for a very small percentage of people, I think that they genuinely just don't want to take responsibility because you can still make sales on bad leads. It's just easier to make sales on good leads. But if you don't make any sales, it's probably not the lead's fault because you should still be able to make sales even if the leads are terrible. You just might not be super profitable. A lot of people will just blame leads because they don't want to take responsibility. But for most people, and I would assume including you, because you're watching this video, sometimes people will blame leads, but they're falling into the illusion of leads being bad. If they fall into the three categories where they think it's free, all those things, those are bad leads. But if you're calling leads that are told it's about insurance, they're told that it costs money and different things, and you're saying the leads are bad, it's the illusion of them being bad. Because in the beginning, you're probably bad at sales, and you don't know what a good lead is. And you don't know what a bad lead is when you're bad at sales. Every single lead is bad. So get good at sales, focus on that training, focus on putting the effort in, and a lot of these other problems will solve themselves. With that being said, those are the six reasons that insurance agents go broke. If you guys got value from this video, leave a like down below. Hit the subscribe button for more. That all being said, thank you guys so much for watching this video and I will see you in the next one. Peace.