BY PHIL CALHOUN
I WAS ABLE TO WRITE SEVERAL ARTICLES over the past four years, centered on the topic of educating brokers about commission protection. These articles have received many comments, and even income from our consulting work. We also have enjoyed helping retiring brokers and have assisted a number of active brokers with commission protection agreements. We continue to hold CE courses and with our book we focus on commission protection “A Health Broker’s Guide to Protect, Grow and Sell Commissions.”
California Broker Magazine was very helpful to reach many readers looking for information about their business. We feel protecting commissions is the #1 risk brokers face. The solution is a successor who is selected and agrees to provide the protection if and when the broker has a health event while active. We love to spread the word on this important topic.
The response for brokers has been strong. In addition to the emails and calls with support to write more articles, I was able to land a couple of arrangements where we help active brokers continue working while also enjoying peace of mind that they have a plan in place to protect their commissions. Many call our work “commission income insurance” or a life and disability policy that covers 100% of commissions.
My favorite story is from last month’s article on beneficiary designations which led to a call from a California-based broker with 30 years in the business. Through years of hard work they built up a large book including group, Medicare and IFP totaling over $1,000,000 annually. A true success story. Imagine how many clients were served and service problems solved in 30 years.
All of this work and a great income of what my colleague says are “mailbox” checks: just go to the mailbox each month and health brokers get paid! Sometimes we forget about the impact of recurring income and how great it is we are rewarded for the work we do.
Well earned but so sweet. Anyway, the broker was thinking of retiring soon. His son was interested in the business and the two agreed to a phone consult to work through the process to bring in the son into the agency as the broker gradually slowed down. From a short prep call before the consult I could tell they had thought through many of the traditional planning steps, the steps we normally spend a few hours on especially when a broker is working with an outside buyer. I decided to have my colleague join us and for the hour most of the focus was on legal tactics and strategies to pass on value considering tax and inheritance concerns. Planning of this type usually impacts family and employees. This case was no different.
My colleague was able to address these questions with his legal expertise in estate and business exit planning. My role was to offer ideas on the transfer of commissions and possible sale of less profitable lines such as IFP which would also enable staff to handle profitable clients while receiving value for the sale. It was really a great meeting and my colleague, an experienced attorney, was available to help design the plan that father and son would need.
Another case was generated from the same article. The broker called and requested the eBook, which I emailed to him that day. He had a health scare and was highly motivated. His spouse was in the business but he wanted to learn how to protect his commissions via a proper transfer to her.
We ended up working on two levels. I provided the consult to address the transfer of commissions in the event something happened to the broker so his wife would receive full commissions. With this step, we moved on to protect the commissions via an agreement with his wife. They wanted their commissions to be paid out based on very specific amounts and over a time period to reduce down taxation. Smaller annual amounts over time can end up with a greater net after tax and provide a buyer the income to cover costs of the service work needed.
So many brokers read California Broker magazine. We feel a need to keep writing about and doing what we can to help protect health commissions. We greatly appreciate the opportunity to work with brokers.Many have years of experience in the business, love the work they do with clients, and enjoy the friendships our industry provides from carrier reps to GAs to the professional associations. CAHU, and locally for our agency OCAHU, are such great resources for education and an excellent partner with Cal Broker Magazine.
This magazine is well done and committed to our industry and so supportive to brokers. Take time to read and share with colleagues this great resource.
Editor’s note: If you’d like to contribute articles to the magazine, please reach out and let us know. Contact: firstname.lastname@example.org
president of Integrity Advisors, is author of “The Health Broker’s Guide to Protecting, Growing and Selling Commissions.” A free eBook version is available to California Broker Magazine readers through February 2021.
Go to www.healthbrokersguide. com.
Phil and his team provide personal coaching on business planning for brokers. Phil’s team includes legal and accounting professionals with experience working with brokers and health agencies. For ideas on growing commissions go to www.commission.solutions.
You can also call Phil at (800) 500- 9799 or email