Exclusivefocus Spring 2013 - National Association of Professional ...

If you are a successful agency owner
who’s had a good relationship with
Allstate, good for you. Unfortunately,
the vast majority of agents don’t share
your experience.
I write this note to all of you current
and prospective Allstate agents for one
purpose—to remind you that you don’t
and will never own anything. You will
not be entitled to rights that are generally
afforded to most other “independent
contractors.”
I purchased a book of business in Wisconsin
in October of 2007, right before
the great recession. As consumers became
more price sensitive, I began losing
clients and it became more difficult to
replace them. Six months into operating
the agency, my corporate partner came to
my office to tell me, “You’ve tried marketing
your way, now you have to do it
our way.” Pardon me That didn’t sound
like a partnership to me; it sounded more
like a master/slave relationship. It certainly
wasn’t how I learned to partner
with independent contractors in the financial
services industry to help them
become successful.
It was shortly after this meeting that I
first learned about “Expected Results” –
now called “Agency Business Objectives”
– and the consequences of not meeting
them. On my birthday, with tears in my
eyes, I explained to my wife that I may
have made a mistake by buying an Allstate
agency. I explained that the 100% leverage
using our property assets could be in
jeopardy. I told her I had recently learned
from NAPAA that I could lose the agency
for failing to meet my P&C or securities
production requirements. This concept
stunned me. My previous work with a
nationally recognized financial planning
company taught me that there are no
production requirements for independent
feature
Lessons Learned
By Mike Handrick
contractors because imposing them would
violate well-established government rules
regarding worker classification.
I was told none of this by Allstate; I had
to learn it all on my own. I take full responsibility
for not conducting my due diligence
before buying the agency. I wrongly
assumed that Allstate was a large company
that had figured out the independent contractor
model. After all, they had converted
their agency force to “independent contractor”
status in the year 2000. But I was
wrong – dead wrong.
There was another agent in town who
was ready to retire, but I was told I did
not qualify to buy his book of business
because of my Expected Results. However,
they then permitted an outside buyer
– with no experience in financial services
– to buy his agency and agreed to let him
buy mine too. They also allowed him to
combine them into one agency. This defies
logic and confirmed that I was hitched
to a leaderless company. It was clear that I
had to find an exit strategy.
I was also told I was “required” to attend
meetings. Really What part of “independent
contractor” didn’t company
leadership understand, and why was it
that many top producers in the region
didn’t attend Did the mandatory attendance
requirement extend to them or not
Why were there nine corporate people at
these meetings and 11 agents How come
only two corporate people spoke during
the meetings Why were we paying the
other seven to be there The only other
time I witnessed such waste was working
for the federal government.
As time wore on, Allstate continued to
change the rules for purchasing books of
business: More liquid cash reserves, requirements
to hire more producers and as
always, final approval by Allstate. That’s
why I say that Allstate agents don’t own
anything. You might as well own another
vehicle. It looks pretty when you first get
it, but the shine wears off quickly. Then
it begins to depreciate in value and there
is nothing you can do about it.
Allstate has failed in creating a management
culture that serves its independent
contractor agents. The company saves millions
each year by not having to pay employee
expenses. The problem is that they
forgot to dispense with their manager/slave
management culture and the managers
who continue to adhere to it.
They simply don’t get it, and it is apparent
to me that they never will until the
board and CEO are replaced. Any plumber
will tell you that “stuff ” flows downhill. It’s
really a shame that such a highly recognizable
name like Allstate is being destroyed
by its Machiavellian-style leadership team.
If you have noticed that your stress level
has risen and you are having bad dreams
that involve death and murder, or if you
spend inordinate amounts of time thinking
about how and where to hide bodies, it
may be time to re-examine what you think
you own as an Allstate agent.
On January 1, 2011, I began as a true
independent contractor insurance agent.
In July of 2011, I merged my independent
agency with a major financial planning
practice in Central Wisconsin. I’ve
returned to my financial planning roots
by completing my professional designations.
We are successfully operating a financial
planning shop that also handles
personal insurance. You can’t operate an
Allstate Insurance agency and launch financial
services from it. The public does
not believe they can get quality financial
planning help from a P&C shop. It may
sound like a decent business model, but
it won’t work. If Allstate was smart, they
would drop the securities business and
focus on their core competencies of insurance
and protection products.
For those Allstate agency owners who
remain, I wish you nothing but the very
best. As for me, the future is bright. At
the success rate I am having, the $150,000
loss – associated with my three-year buying
and selling experience as an Allstate
agency owner – will be gone in 24
months. And I’m one of the lucky ones.
What is your exit strategy Ef
26 — Exclusivefocus Spring 2013