Taking Over Existing State Farm Office, What is the Downside?

[crawfordian]

I am looking at taking over an existing State Farm agents office and book of business. Current book would be about 1.8 million which is $180,000 in residuals. It looks like an awesome situation, but I know there has to be a downside, what is it?

 

[Crabcake Johnny]

14 hour days and sleepless nights?

 

[Norwayguy]

I am looking at taking over an existing State Farm agents office and book of business. Current book would be about 1.8 million which is $180,000 in residuals. It looks like an awesome situation, but I know there has to be a downside, what is it?

There is a very large tread on here about State Farm...I am assuming you will be contracting under their new AA05 contract and that 10% Commission you are counting on is variable. Definatly check out the becoming a State Farm agent thread.

 

[Insurance-Guy]

but I know there has to be a downside, what is it?

The downside IMHO is the fact that today people are a little less loyal as they had been in the past. So that 15-year customer that takes another 10% increase will pick up the phone and call around and WILL leave you.

I am a IA with Allstate...we have a good size Allstate book and I can tell you the loyalty people once had just isn't the same. We spend a great deal of time remarketing our existing BOB but it is well worth it. As an IA we can do that as an EA you won't be able to do that. We have several companies that we use and I have seen more 20 year Nationwide, State Farm customers the past year or so...but also my own Allstate book has deteriorated. I was down almost 6% with Allstate this year and I was one of the best in my region...we actually grew the total agency by roughly 4%...so we made up for it with the other companies.

What are you paying for the book? That would be a major factor in how much of a downside there is...


Best of LUCK to you!

 

[b61mack]

check this site in, search. put in becoming a state farm agent.. it has 695 posts on the subject. it boils down to the new contract, they now use.

 

[togatown]

Do yourself a huge favor and google "NASFA TICA forum" and read away. Be very diligent in your research, and try to talk to a few 4-6 year agents on the current contract. Ask them about their variable compensation and if they are able to pay off their massive debt on the reduced commissions, that have come to many off the 2 year default rate. The contract is a very steep treadmill after the first two years.

 

[hammaa]

I'm 40 and currently considering the opportunity after 15-years in commercial banking. Not interested in hearing from the nay-sayers and the drag-everyone-else-downers. Has anyone successfully taken over an existing agency? What were the challenges? Why did you choose that over the NMO (New Market Opportunity)? Thanks!!

 

[The Colonel]

That's a decent assignment considering you're an outsider and you don't have to pay for the book! Of course you don't own it either and you can't sell or bequeath it. You'll be expected to produce/sell financial service products such as life, health, bank and mutual funds. Folks that take over a book typically complain that they'd sell more if they weren't always dealing with the problems/challenges of running the existing book. Are you keeping any of the old team? Same location? Is the departing Agent's son that used to work there opening a brokerage across the street? Biggest problem most agent's have is HR. Hiring, training, motivating the team. "If I only had your team, I'd be a success too..." is a common ailment. Good luck-can certainly be done-get to know precisely how the contract works-preferably from a colleague who's making it work today.

 

[sludgesurfer1]

From what I've been told, you need to have the mentality of a life insurance agent. The general public identifies with State Farm as a P&C company. And many prospective and new trainee SF agents think that's what they are signing up for. Not so. You need to accept that you are a "big time" life agent, who also pushes bigtime the bank loans, credit cards, etc. And oh by the way, you also will do P&C, but need to view it as the necessary evil in order to really push hard on the financial services. If you want to be the classical agent, selling homeowners and such, this is not the job for that.

Coming from the commercial lending side, perhaps you'll be more interested in the banking stuff. If yes, and if you also love to really push hard on the life insurance angle, then perhaps the job may be a good fit for you.

 

[hammaa]

Thanks sludgesurfer...good points. Yes, coming from a banking background, having to sell those additional financial and banking products isn't that intimidating. However, I am a bit dismayed by the requirement to sell those products in order to get full/proper commission on the other traditional P&C products.