 ( …Continued)
- Choosing (and transferring to) a broker-dealer.
- Getting errors and omissions insurance (E&O).
- Getting a business owner’s insurance policy (BOP).
- Getting workers’ compensation if you will have employees.
- Exploring health insurance, retirement plans and other benefit plans.
- Contracting with three or four insurance companies for each line of business you plan to offer (life, long-term care, health, disability income, property and casualty insurance, etc.).
- Registering as an investment advisor (RIA) if necessary.
- Maintaining your own state insurance licenses.
- Getting licensed for variable products (if necessary). And the list goes on.
Specialize!
The biggest mistake newly minted professionals make is trying to be all things to all people in the desperate scramble to make ends meet and gain clients. Big mistake. Even though you’ve probably been in the industry for a number of years, you are (almost) starting over when you hang out your own shingle. Pick a few areas and become an expert.
Once you pick your areas, evaluate the top providers (insurance and mutual funds) in each one, and get your contracts with them. Consider joining a producers’ group. These groups have sweet contracts with top insurance companies and independent broker-dealers. This is a great way to get excellent payouts, access to E&O insurance, training and maybe even free or low-cost continuing education programs.
Make sure you join the right organizations to ensure access to potential clients, centers of influence, and fellow professionals. That means joining (or staying with) NAIFA, other professional organizations, at least one chamber of commerce, a business leads group, and as many networking and business groups as you can afford and manage. Being a specialist is important—the professionals you meet will want one or two simple ideas to take away when they have talked to you.
Compliance, licensing and insurance
You can’t get a lease without a BOP. You probably can’t find a reputable broker-dealer or contract with top insurance companies unless you have E&O.
Compliance is going to be much harder because there is no one watching over your shoulder any more. So:
- Become very good friends with your broker-dealer compliance officer.
- Subscribe to as many industry publications as you can.
- Maintain and read all the compliance documents from your broker-dealer, your state and the insurance companies with which you are contracted.
Make sure you have the right active licenses before you solicit the sale of any product—you need variable, insurance, and/or securities licenses in all appropriate states before you try to place a product or service. You may need to be an RIA.
Keep up with continuing education requirements. You may not have a supervisor to do this for you any more.
You are still subject to compliance and NASD review of communications. Don’t overlook the review and approval process.
Other considerations
If you are going to hire staff, make sure you can afford to pay them. Make sure they have the appropriate licenses. Consider doing a background check and/or other prescreening tests before hiring anyone.
Safeguard client data and your computer systems. Shred, don’t trash, anything with identifying information on it. Have and use firewalls, encryption and antivirus software.
Be a success story
There is a lot to do if you want to set up your own practice, but there are thousands of resources out there to help you. In real estate the key to success is location, location, location. In business, it’s plan, plan, plan.
Useful websites
Online magazine for insurance-related technology: www.insurancetech.com
Website/free newsletter for insurance-related technology: www.soundingline.com
CPA website with useful insurance practice information: www.aicpa.org
Janet Arrowood is the managing Director of The Write Source Inc. She can be reached at info@TheWriteSource.org.
Part 1 | 2
June 2005 Service With Style
A Lifestyle Decision
Keep It REAL
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