KP on PD
Kelly Parrot
the
cost FRE E A of
bout a week after the first shut down, my email was filled with offers from organizations wanting to help me and my business cope through the pandemic. It wasn’t just the insurance companies that wanted to make sure I was going to make it through this. Our prime minister, my bank, county office, chamber of commerce and even my massage therapist were sending inspirational messages or invitations to attend free courses to assist through these changing times. Free courses are a tempting way to keep professional development (PD) budgets under control, especially now, with the impact of COVID on incomes. As a brokerage owner, I understand the importance of keeping staff costs down—education and training is expensive. As a PD content creator and insurance program facilitator, I know it is tough for associations like IBAA to compete with free. Education and training is expensive because delivering quality educational programing is expensive. As I embark in my new role at the IBAA, I see the opportunities to bring our members quality, timely and practical educational events; but friends, your association cannot do this for free. With COVID-19, there have been a staggering number of free course offerings available to brokers—many from vendors and many specific to insurer products, like a product infomercial or a focus on a specific carrier’s offering. But what is the true cost of any free course? While I believe
it’s important that brokers understand what they are selling, your staff might not need to see the same presentation more than once, the subject matter of every course might not be relevant or the changes to a policy might not warrant an entire course. It’s important to balance courses specific to vendors or insurers with more inclusive training in finding and retaining clients, understanding the bigger picture of loss prevention, creating overall client satisfaction, building a high performing team and evaluating insurer products in terms of best meeting your clients’ needs. Brokers need to know how to tackle tough questions and manage clients through a hard market. They need to understand how the industry works and how to increase profitability. This is a completely different level of learning and is costly to develop. Before you take advantage of a course just because it is free, ask yourself if it adds value to your bottom-line strategy. You need to remember that although you might not be paying a course fee, you are paying a productivity price. Basic brokerage cost budgeting is not complicated. Most brokerages only have a few types of income:
26 The Alberta Broker December 2020-January 2021
commissions, fees and interest charges. Generally, there are two types of expenses: administrative or sales and staff. Like many service-based industries, our largest expense tends to be our staff. Though I was no accounting expert when I purchased my little agency in Legal, Alberta, a quick tally showed me that I needed to make about $200 a day just to keep the lights on. A wise old insurance broker once (okay, it wasn’t once, it was exhaustingly) told me, “Every desk is a profit centre.” Now, before I can project a desk’s profit, I need to know that desk’s costs. Excluding commission sharing arrangements, a licensed, client-servicing, brokerage employee typically earns $42,000 $60,000/annually based on their level of experience. However, an employee’s salary is not the true cost of an employee. Along with CPP and EI, many brokerages offer benefit plans,
