You Want How Much!


Many employers are beginning to realize the benefits of hiring a fee based insurance consultant in lieu of a commission based insurance broker. There are many advantages to hiring a fee-based insurance consultant that we won’t go into here.

The most interesting phenomenon regarding fees to be paid to insurance consultants versus commissions to be paid to an insurance broker/agent is the employer’s perception of costs. There seems to be a difference in writing a check to the insurance company who in turn pays the agent a portion, than in writing a check to the insurance consultant every month.

Imagine having to pay your withholding taxes every month by sitting down at the kitchen table and actually writing out a check to Uncle Sam instead of having Uncle Sam’s “fee” automatically taken out of your paycheck!  Chances are you would think unkind things about Uncle Sam making you do this. You would probably want an explanation of how and where your money is going to be spent. That would be a logical thought process.

So, what is amazing to us is the reaction we sometimes get from prospective clients who are considering a fee-based approach over a commission driven approach. Here is a typical exchange:

Consultant: Sir, based on what you expect from us in the form of scope and services, and the time involved, our fee will be $25,000 per year, payable 1/12 per month for 12 months. If at any time you are unhappy with our services and see no further use of our experience and expertise, you can fire us without notice.

Employer: You have to be kidding me! That is a lot of money! I cannot afford that expense. Thank you for your time!

Consultant: But sir, you are paying your insurance agent $150,000! So why is $25,000 too much?

Employer: I pay my agent nothing, the insurance company pays him!

Such is the life of a fee-paid insurance consultant. Most do five times the work of an agent, at 1/6th of the cost.

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