Sharing success with a colleague can pay off big
By Phil Calhoun
Preparing for a life change that involves transitioning your hard-earned commissions and loyal clients? Sharing your success with a colleague can be a great solution. While each situation is unique, a common exit path begins with conversations with industry colleagues about your intentions to sell your commissions to someone who will continue to take good care of your clients. These exploratory conversations usually lead to connecting with experienced sales solution providers. Many opportunities may present themselves, and I recommend considering all your options.
Full disclosure: my company, Integrity Advisors, is one of those experienced sales solution providers. We consult with brokers who have questions about selling or protecting their commissions. In the case where a broker has a buyer identified, we help complete the purchase process using proven professional and legal tools. When a seller is looking for a buyer, we can help find a buyer and then provide a process to complete the sale. The buyers we work with use our best practices guidelines and complete a proven process we have seen produce consistently strong results over many years.
Here’s one broker’s recent story that illustrates a common path when seeking to sell a book of business.
In 2022, Jane, a Medicare broker who built a solid book of business, was searching for ways to sell her book of business. Her approach to finding a solution is very typical. Jane grew her business over 20 years which resulted in a Medicare book with over 400 clients. As a solo broker, Jane worked hard to serve her clients. She added new clients mostly through referrals as she placed a high level of importance on personally handling her client’s service needs. Jane decided early on to stay local with her marketing efforts. She concentrated on building referrals, focusing on doctors and the local senior center where she became well known as a client advocate. A few years ago, Jane started to research her exit plan. She spoke with her field marketing organization (FMO), then with a few colleagues. She also reached out to several carrier representatives. Along the way, Jane filtered through what can be described as both subjective and objective information. She researched planning for a sale, finding a buyer, and how to come to a favorable price, respecting her required deal points outlined in a written agreement. Eventually, Jane called me after reading our book “The Health Broker’s Guide to Protecting, Growing and Selling Commissions.”
When we spoke and went over her questions, it was clear she wanted to learn about how to evaluate buyers and offers. Jane knew the difference between selling to a solo broker and an agency with a specific process in place. She knew that a proven transition and retention process would be ideal for her clients and satisfy what she wanted to get paid. We talked about her needs and her clients.
From Jane: “For me, the number one priority was to make sure my client’s needs would be taken care of. Once I saw how the process would work for an Annual Enrollment Period (AEP) and how client support was handled, I felt confident my clients would still receive the level of service quality I had provided them for years.”
I explained that the best practice we employ begins with a work alongside step where for a period the buyer and seller work jointly to assist clients. This process then follows into AEP with a joint effort to plan and implement AEP processes for the first enrollment period after a sale. The process sounded great to Jane. She could see how this would give her confidence because she could be involved in the process and have her standards met.
More from Jane: “My next priority was to understand how the transition process worked and how I would be paid out. The agreement we worked out clearly and concisely outlined everything and followed the points agreed to in our discussions. The compensation is extremely fair, and the references all assured me that the transfer and retention process would work smoothly, and that pay outs would be made every month, supported with detailed monthly statements.”
Jane then wanted to know how retention rates from the past would apply to her clients. With a deeper dive into what we call the “ideal process,” Jane wanted to connect with the references of the buyer we thought would be a fit. Jane spoke with brokers who had sold to the buyer over the past 7 years. Jane’s confidence grew, and the process moved to develop a purchase agreement.
Jane understood the advantage of a payout over time from a tax planning perspective. When she went over the deal points, she also realized how her monthly payout would include commission increases carriers pay over time, and that any client plan changes during her payout period would stay in her payments. Jane was delighted as she had not heard about these points before. Finally, with the opportunity for Jane to refer people from the sources she developed over years, she was pleased to know any referrals provided would count in her payout.
Jane’s story is both unique to her but very common for many brokers we speak with in our consulting work. A hard-working broker builds a book of business and looks to find a buyer that will take care of clients and pay a fair amount to reward them for years of hard work.
Phil Calhoun operates Integrity Advisors, a consulting business for health brokers looking to protect, grow and sell their health commissions. The Commission.Solutions website has information helpful for interested brokers. Phil is dedicated to educating and assisting brokers to address two situations: how to protect 100% of their hard-earned commissions in a life event, and help brokers successfully sell their commissions for the highest value when at retirement. He is also the publisher of California Broker Magazine, and owner of Health Broker Publishing, LLC.
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