Why You Should Or Should Not Become Your Own IMO/BGA

Is this you? You have had a successful career and you feel like you have worked your tail off. As a result, you have always gotten over the obstacles that you have been presented with—at least so far. You know you are not an idiot, you’re a quick learner and you have succeeded almost every-time—at least so far. You are a student of the business and not only know the business but also how to effectively communicate the need along with that need’s respective solution. Whether your customers have been financial professionals or retail clients, those customers have always given you great reviews and as a result you produced—at least so far. You feel like it doesn’t matter what type of product or service you are given, you will always be able to use hard work and effort to make sure that you succeed—at least so far. Do you love your work, your quality of work and take pride in doing a good job as well as getting well compensated for it? Is this you?

Is this also you? As much fun as you have had over your career and as much money as you may have made, you have begun to feel somewhat of a sense of emptiness. Is this emptiness brought about by the feeling that you are not able to influence your business as much as you would like because, in short, you work for somebody else? Furthermore, do you feel that, because you work for somebody else, the ideas that you would like to run with—that you know from your vast experience will work—are not being implemented? Do you feel that there is an imbalance between how much you care about your job and how much your job cares about you? Is this you?

Now, is this also you? Have you occasionally thought to yourself, “Then why don’t I start my own IMO/GA/agency?” But every time you ask that question, does the devil in your ear say that you will fail? That devil in your ear says, “Yes, you have been successful, at least so far, at almost everything you have done—but this time is different. Starting a business is different and you will fail.” That devil in your ear has also said things like the below:

  • “The amount of knowledge around technology that you need today is beyond you…after all, you are a salesperson!”
  • “You don’t have enough contacts to get the business running quickly.”
  • “The IMO/GA/agency business is consolidating and only the big ones will succeed.”
  • “You need massive contracts in order to succeed, which are very hard to get at the outset.”
  • “Staffing at the appropriate levels is astronomically expensive.”
  • etc.
  • etc.
  • etc.

If you are somebody currently in the position that I just explained, or one of the many successful IMO/GA/agency owners that read this publication, you are probably nodding your head because you know what I am talking about. You are either there, or you have been there.

The purpose of this article is to explain my high-level observations since I started my own marketing organization months ago, after several years of listening to the devil in my ear and not doing so. If I can help somebody change their lives for the better by writing about my experience then it was worth it. Much of the fine details are beyond the scope of this article, so if you want further advice please contact me.

Just Do It
I remember as a kid seeing old western movies where the cowboy would pull up to saloon on his horse, get off the horse and take the leather “leash” and merely wrap it one time around the post in order to keep the horse from bailing while the cowboy went to drink. As a kid, I always wondered how that would keep the horse in place. Heck, if the horse pulled just a little bit instead of just standing there, he/she would realize that it can run free! That is the equivalent of the devil in our ear. That devil is the psychological “leash” that tells us to just stand there and not pull.

Your gut is almost always more accurate than the devil in your ear. If you feel in your gut that you are the person I described in the first few paragraphs, and if you are financially able to—then rip the leash from the post! The other concerns about your ability to handle the technology, etc. will take care of themselves once you jump in. That’s right. Jump in and figure out the minor details later! If you have a value proposition and a plan/strategy for getting that value proposition in front of the right people, don’t sweat the small stuff yet.

One year ago I never would have thought that I could create a website, an agent microsite, marketing material, or a company “network” in our office. I was wrong! This stuff is not that hard! Although I am getting to a point where I don’t have time to do all the minor stuff and am hiring for it or outsourcing it, I learned that I am much more capable than the devil in the ear told me I was. You would be the same if you are the person in the first few paragraphs.

Again, if you have a value proposition that is unique from your competitors, don’t worry about what the “bigger guys” are doing. We have all read about the success stories of companies like Microsoft, Apple and Walt Disney, and how they started their businesses when the odds were stacked against them. But they succeeded! If you have a unique and strong value proposition relative to your competitors you will succeed.

But first, a word of caution about money—because that is one of the top determinants, if not the top, of whether you are able to do this.

You Need Money To Make Money
Now the bad news. There is truth to the cliché of “needing money to make money.” While starting an agency is not like starting a construction business, where you might need several pieces of $500,000 machinery, you still need money. Your LLC can be started with merely a couple hundred dollars. However, there are many other expenses—most of them technology. Here is a list off the top of my head: Errors and Omissions (both personal and agency), state insurance licensing fees for each state, computers, printers, website provider, antivirus/firewall for your network, email service like Constant Contact, Gotowebinar/WebEx, prospect lists, agency management system, health insurance. And the last one: Ultimately, if your business starts taking off, you will need staff!

Two additional thoughts about “needing money to make money” are:

  • I believe that, whether one is a principal of an IMO or just a personal producer, with today’s regulatory environment he/she should have an affiliation with a broker/dealer or an RIA firm—especially the RIA firm. The fiduciary genie is out of the bottle, if not from a regulatory standpoint then certainly from a client mentality standpoint. I have been asked a few times by some personal clients if I was a “fiduciary.” Now you are probably like me in that you always act in the clients’ best interest whether you are officially a “fiduciary” or not. However, licenses matter to the regulators! One of the first things I did when I started my business was to retake my Series 66 and Series 7 exams (I dropped them years ago). Not only did the exams cost money, but the fees associated with the BDs/RIAs range anywhere from $1,000 per year to upwards of $7,000 per year. I believe that in order to build a healthy business in financial services and to hedge against regulatory uncertainty you need a securities license. Starting your own business is an opportunity to start a business the healthy way.
  • The main reason I believe you need a large cushion before you start your own IMO/GA is because of this: Relationships with agents are just like relationships with consumers. It takes time to develop. Before I elaborate, let me step back a second and discuss my opinion on the genesis of the negative reputation that “insurance agents” have. I think one of the reasons our profession has gotten the reputation it has is rooted in the way that many of us got started in the business. I was almost straight out of college when I worked as an agent for one of the big career insurance companies. I was on a “commission draw” that the company gave me for the first six months, which was good because I had virtually no money because I was young. On the very first day of my employment the clock started ticking for me to produce so I could offset that “draw” with commission. If this didn’t happen, I would be gone six months later. The urgency was huge. On day one I knew nothing about the business, but I did know the phone numbers of my friends, relatives, and even a few people I hadn’t spoken to in ten years that I was sure would be thrilled to get a call from me (sarcasm). Needless to say, over that first year I was more “aggressive” with potential customers than I am today. Why? Because I needed to be. I needed to put food on the table! I had no cash cushion.

The fact that I have been smart with my money over the years allows me to follow the pace of the customer, whether those customers are the agents or my personal clients. I am not going to starve if an agent does not have an immediate need for my services. Persistence and patience always win! Money buys patience and patience earns trust. Trust is what our industry revolves around.

Buy It As You Need It
Although you need money to make money, the good news is that you don’t have to go crazy at the outset. One thing I learned about running my own firm is that you get solicited every day. Everybody is calling you offering you this system or that system. It would eat up your whole day if you allowed it to. And some of the systems are good and you get tempted to buy. But at the outset there are certain things that you do not need, at least not until the proper time comes. For instance, one of the first systems I bought was Gotowebinar. Webinar was obviously crucial because this was how I was going to discuss my value proposition with my potential customers/agents. This was needed at the outset! On the other hand, I did not need to buy licenses in all 50 states at the outset so I didn’t. Now, however, every week I am buying a new license for a new state as a new agent from that state submits a case. Let the revenue precede the expenditures whenever possible! In other words, it’s easy to justify spending $100 to get licensed in XYZ state when there will soon be a $1,000 override check coming because of it.

So Many Reasons To Do It

  • As mentioned, if you are who I described in the first few paragraphs, then building your own business is for you. Here are just a few reasons that you should run your own company:
  • When you run your own business, it is very satisfying to know that every minute you work, every idea or tool that you create, is going toward the value of your company.
  • You are building a legacy for your family, should they ever want to work with you.
  • When you run your own company you can do business with whomever you wish. In order to run a healthy business you need to do business with those that will not be a liability to the firm—whether literally or figuratively. I have had to tell a handful of folks that I would not pursue a partnership with them for this reason.
  • The upside is unlimited. I have a friend that just sold his IMO for a very large sum. I was talking to him about money. I said, “How long did it take you to make merely six-figures when you started your own IMO?” He said, “Five years.” I was hoping he would say five months! However, he then came back and said, “But I made seven-figures within ten-years and this was 30 years ago.” That is real money. Again, if you have the cash cushion and the time, it will be worth it.

Final Tip
I have been in the industry for over 20 years, have worked with many BGAs/IMOs and have learned what to do and what not to do. I have seen some awesome firms that have created their own awesome empires. I have also seen firms that have been built in an “unhealthy” manner. However, they have gotten so big that they can’t change now. In your company’s infancy, you have the opportunity to kill that monster while it is still a baby. Kill those bad habits and inefficiencies before they grow! (I wish somebody showed me the correct golf swing when I got started 20 years ago!)

Build your company the right way from the beginning by having a securities/fiduciary affiliation. Build your company the right way by being patient with your customers versus high pressure overpromise/underdeliver tactics. Build your company the right way by focusing on the relationships versus the transactions. When people do business with CG Financial Group, they do business with me personally, not the company. Don’t lose sight of that! I have seen many companies get big and have the founder get too “disconnected.” Thus, the culture that attracted customers/agents to the firm is now gone.

Lastly, build your company the right way by affiliating with other IMOs/agencies that will give you great advice. I have learned that when you go out on your own, you realize who your true friends are—those who truly want you to succeed versus those that view others’ success as a zero-sum game. As it turns out, I have many friends that have given me a lot of help. You know who you are, and I will forever be grateful.

Charlie Gipple, CLU, ChFC, is the founder and CEO of CG Financial Group, an independent marketing organization serving life, annuity and long term care agents. He is known throughout the industry for his thought leadership on annuities and life insurance. He has conducted hundreds of agent and client educational seminars over the last two decades, ranging from small one-on-one sessions to large national meetings such as the Million Dollar Round Table, Top of Table.

Gipple is a sought-after keynote speaker for many types of events and topics. He has appeared on thestreet.com and AMBest TV. He also personally produces and conducts client seminars on a local level. He is a former executive of various insurance companies.

Gipple can be reached by phone at 515-986-3065. Email: cgipple@cgfinancialgroupllc.com.

  • TrustMark