7 minute read
Protect, Grow and Sell Health Commissions
By Phil Calhoun & David Ethington
We take pride in providing health insurance professionals with fresh ideas and new ways to grow your book of business. Many active brokers look for ways to help older brokers who over the next 2 to 10 years will look to exit the business.
Why would a successful broker consider acquiring a book of business?
Why would an active broker need to plan for their future?
When you look at the trends it becomes clear there is a significant opportunity for younger brokers to grow their book of business while helping older brokers protect their hard-earned commissions. Using a proven planning approach the younger broker can be equipped to help an older active broker.
Top Three Concerns:
• What is my book worth?
• How will you pay me?
• How do I stay active but plan for my exit someday?
Learn more about these concerns and how you can be a professional who works with a proven process for commission planning.
TRENDS:
◊ 75% of all current health insurance professionals are Baby Boomers.
◊ In California there are about 130,000 licensed life and health insurance professionals, so roughly 97,000 are Baby Boomers.
◊ Over the next 10 to 15 years most Baby Boomers will retire. The youngest Boomers are 60 and the oldest are 80.
◊ This means approximately 97,000 who own a book of business will retire. How brokers will choose to retire is unknown.
◊ Within the next 15 years hundreds of brokers will either sell their book of business, give their book to someone licensed (employer or a colleague), or they will pass away while active and the carriers keep their hard-earned commissions.
FACT - ALL Active Brokers need to have a plan in place to protect their hard-earned commissions.
Why Would YOU not want to help solve this problem?
Consider This Case Example:
After years of helping brokers as their successor or Buyer, our success has led us to focus on two new areas.
1. Buyer and Seller matching service: We connect Brokers who have commission planning needs, to capable brokers trained and proficient in filling these roles. In this service we find brokers who want to sell while others who want to buy. Other brokers want to stay active and in doing so they need help to protect their commissions.
2. Consulting Service: The second area is our consulting service for brokers looking for planning assistance. Buyers as well as Sellers reach out to us for help with their planning process. Over 12 years we have built processes that work. We provide the required agreements, and we stay current with the carrier commission transfer requirements. We also built a client and commission transfer retention plan that works. So, when an Active Broker needs to protect their commissions, we answer their questions, and they can hire us to build a plan for them. Often, two brokers decide to work together but need our agreement, or commission transfer help, and the retention plan. After a call to get their questions answered they can choose to hire use to build a plan for them.
In this consulting role we provide answers, and all the tools needed to complete commission planning.
One Example:
• Rob is 77 and has a Group book of business wants to protect his commissions then retire in a couple years
• Linda wants to acquire group business.
We matched Rob and Linda as Active Broker and Successor. Linda completed our training program and is doing the work to be a subject matter expert in Commission Solutions. Our training provided all the tools required to be a Successor and complete the Commission Protection agreement. Linda received our information and is becoming proficient in Commission Protection as a Successor Broker. The training enabled Linda to introduce the idea to Rob and explain how she could help him protect his commissions. Linda then arranged a meeting with our team to go over more details on the options to protect commissions, and then move to review the key components of the Commission Protection agreement with Rob in mind. The next step included a review of the agreement page by page as we covered all the key deal points. After the agreement review was completed, we included Rob in the agreement review. When both parties had all their questions covered, Rob was given the option to get input on the agreement from his advisor. Once ready to sign we did a final review and used DocuSign to execute the agreement. We then moved to complete the carrier forms required for the future transfer of commissions once the Active Broker decides to retire. Then we calendar a time to do an annual update of the carrier’s forms and client list. Finally, we guided the process to prepare for the client relationship transfer which is a key process leading to retention of both clients and commissions. With the plan in place, we toasted the deal and know that Rob as an Active Broker now has Linda as their Successor, and the risk of total commission loss threat Rob had before met with Linda is eliminated. For the comprehensive planning work and consulting on this deal we assisted Linda to perform, including all three of the steps above, our consulting fee was a small fraction of the book value of Rob’s commissions. Rob agreed to pay the consulting fee and Linda agreed to pay the annual fee. Their planning process ended successfully with Linda looking forward to acquiring Rob’s book of business in a few years. Rob is pleased to have Linda protecting his book while he continues to work for a few more years. UPDATE: As often happens within a couple months after the Commission Protection Plan agreement was signed, Rob began to think over his planning, and he decided to retire after the next open enrollment period October to January. Linda is enjoying the new business. She has 35 new groups with $200,000 annual revenue. They are using our transfer process and client retention plan. Rob is pleased with the payout, with the process Linda provided, and Linda is enjoying a huge boost to her Group Business.
75% of All business owners, including health insurance professionals, are Baby Boomers
Be a Solution Provider AND Grow your Book!
Nearly ALL Boomers will exit the business in 10-12 years.
Be a Solution Provider AND Grow your Book!
• 20% of the Active Brokers we speak with decide to Sell within 3 months.
• 20% of the Active Brokers decide to Sell some of their commissions but keep some lines of insurance.
• 40% Retire within 5 years of signing a Commission Protection Plan agreement.
• 20% Stay Active and complete a Commission Protection Plan then decide to Sell to another broker--- You Keep the refundable Fees for doing Successor work!
Integrity Advisors is a health insurance agency which specializes in educating health brokers on the importance of commission protection. Commission Solutions is a program offered by Integrity Advisors.
Phil Calhoun MBA is a board member of the Exit Planning Institute Orange County Chapter, he owns Integrity Advisors.
714-664-0311
David Ethington is an expert in the process to acquire and transfer health commissions. He has trained numerous brokers in commission education, and he built the commission transfer planning module for Medicare commissions which is provided to our broker colleagues.
714-664-0605
