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Building a Sustainable Practice

Use this formula on residual income to grow your practice.

By Randhir Judge

If I knew what I know now when I joined the insurance industry more than 25 years ago, I would have retired by now.

But before I give you the formula to build a sustainable insurance brokerage that includes residual income, there are some basic fundamentals that every advisor must have. I call these the ABCs of a successful life. I believe it is vital that every advisor develop these attributes to become successful:

  • A means attitude and activity. If you don’t have a positive attitude in your personal life or business, it will be a lot more difficult for you to succeed. We’ve all heard the saying, “It is your attitude that determines your aptitude in life.” Hand in hand with attitude goes activity. A consistent period of positive activity will guarantee results.

  • B stands for belief and burning desire. If you do not believe in yourself, how can you expect your client to believe in you? If you don’t have a burning desire to succeed, it is going to be almost impossible to attain success.

  • C means confidence and consistency. Remember that clients judge you within the first 30 seconds of meeting you. If you do not exude confidence, it is unlikely that they will impart financial information to you and engage you. Also, if you do things on a consistent basis, you will consistently get the results you desire. But you need to distinguish between things that work and those that don’t.

You can build a successful insurance firm with residual income.
Residual income
After you have mastered the ABCs of a successful life, you can build a successful insurance firm with residual income. Below is a chart that shows how you can build a practice when you work diligently for three years. As the chart shows, the income generated just on residual basis and renewals is more than enough to earn three times the national average.

GROUP BUSINESS

Year 1
Groups Number of Employees
1 Large Group of 100+ 100
2 Medium Groups of 30+ 60
2 Small Groups of 15+ 60
2 Small Groups of 10+ 20
  240 x $1000 = $240,000 (AMP)
$240,000 @ 5% = $12,000 per month
$144,000 per year

Year 2
Existing Groups:
(Brought forward from YR 1)
$12,000 per month
$144,000 per year
New Groups: Number of Employees
2 Large Groups of 100+ 200
3 Medium Groups of 40+ 120
6 Small Groups of 20+ 120
  440 x $1000 = $440,000 (AMP)
$440,000 @ 5% = $22,000 per month
$264,000 per year

Year 3
Existing Groups:
(Brought forward from YR 1)
$12,000 per month
$144,000 per year
Existing Groups:
(Brought forward from YR 2)
$22,000 per month
$264,000 per year
Total Existing Groups: $34,000 per month
$408,000 per year
New Business:
Groups: Number of Employees
3 Large Groups of 100+ 300
3 Medium Groups of 50+ 150
10 Small Groups of 25+ 250
  700 x $1000 = $700,000 (AMP)
$700,000 @ 5% = $35,000 per month
$420,000 per year

Total Group recurring revenue after Year 3
Total Existing Groups:
(Brought forward from 2010)
$69,000 per month
$828,000 per year

PERSONAL BUSINESS

Year 1
Life Sales
10 New Cases @ $5,000 each
$50,000
 
Retirement Income
10 Cases @ $30,000
$300,000@ 5% = $15,000
 
TOTAL $65,000

Year 2
Life Sales
20 New Cases @ $5,000 each
$100,000
 
Retirement Income
20 Cases @ $50,000
$1,000,000 @ 5% = $50,000
 
TOTAL $150,000

Year 3
Life Sales
25 New Cases @ $8,000 each
$200,000
 
Retirement Income
30 Cases @ $50,000
$1,500,000 @ 5% = $75,000
 
TOTAL $275,000

Randhir Judge, NAIFA-Mt. Diablo, Calif., president, is a veteran of the financial-services and insurance industries and has more than 25 years of experience. Judge, an MDRT Top of the Table qualifier, has international experience in the areas of personal and business planning, wealth accumulation, and preservation and transfer strategies. Contact him at 925-989-8113.

 


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