In this throwback episode of The Power Producers podcast, David Carothers and co-host Kyle Houck talk about the significance of understanding the service fee and why it’s considered as a great tool.
Episode Highlights:
- David thinks that it’s significant to understand the difference between the fee for service as an agent and charging broker fees. (2:03)
- David mentions that agents in the middle market don’t understand that a service fee is a great tool. (2:37)
- Kyle thinks that most of the agent doesn’t know that it’s also an option. (2:46)
- David hopes that more than 1% of the listeners could take action on what they talked about because it could change their career. (2:54)
- David shares that he learned about service fees from the first agency that he worked at. (3:58)
- In terms of service, did David plateau at some point? (4:55)
- David shares a story about an international restaurant chain that they represented. (4:59)
- David explains why he does service fees. (10:05)
- David mentions that in other states, they charge additional broker fees. (11:44)
- David shares that another primary example of people who charge fees are agencies who do non-standard auto. (12:13)
- David mentions that the issue they run across in Florida when they have that conversation is that they can’t charge a fee and take a commission on the same policy. (14:08)
- David mentions that it gets a little tricky when it comes to workers’ compensation because the rates are mandated by the state and the commissions are already built-in. (14:44)
- How would David determine who’s a good fit for a service fee? (16:32)
- Where do David and Kyle need to be if they take a cut on the front end? (16:46)
- David thinks that the accounts that are a good fit for the service fee are the ones with $25,000 to 50,000 in agency revenue. (17:11)
- David learned that HVAC companies are not good candidates for service fees. (18:00)
- David thinks that it’s significant for agents to understand that you can be more creative, with how you’re compensated with a fee. (21:09)
- David shares that the fundamental philosophy is to get into an account early when you’re not going to be able to get commissions. (27:11)
- David mentions that once renewal hits, your commissions will be stripped out of the renewal, and you’ll recover the money that you’ve spent ahead of time paying them a service fee. (28:43)
Tweetable Quotes:
- “There’s no reason for you to continue to get paid more and more money just because they’re growing when you’re not doing more work at the same rate at which they’re growing.” – David Carothers
- “I’m gonna put some skin in the game, I’m going to show them that I want to invest for the long term, and I’m gonna explain this to them. Point blank, I have no problem covering what my compensation is for the agency when I’m talking with anybody.” – David Carothers
- “I think it’s important for agents to understand that you can be a lot more creative with, how you’re compensated with a fee. So it’s no secret that we’re going into accounts that have MOD issues. It’s no secret that they have claim issues on the other lines of coverage, or whatever else.” – David Carothers
- “There’s a whole lot of stuff you can do inside of service fee arrangements that you just don’t have flexibility. Again, it gives you the ability to change perception, it gives you the ability to start a conversation that otherwise, you’re not going to have.” – David Carothers
Resources Mentioned: