T-12 Production

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Insideman's picture
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Joined: 2008-02-28

First, this is the newb of all newb questions...How does the B/D use your trailing 12 month production in calculating your monthly paycheck?My logic tells me that, if my t-12 is around 400k they would use that number to determine my take home percentage? I.E. say that puts me in at 45% take home after their take. Then the divide that by 12?There is the part that confuses me. That would be around $15,000, then minus my personal taxes. However, if in the next couple months lets say my t-12 drops to 350k, then maybe my payout is 42%. So then take that divided by 12 and my monthly take home is $12,250 before taxes?Please advise...

Anonymous's picture
Anonymous

First, you have to have production. Then you can ask us this stupid question. 

chief123's picture
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Joined: 2008-10-28

I agree... this is one of the worst posts ever.

Spaceman Spiff's picture
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Joined: 2006-08-08

Well...not one of the worst posts, but definitely not asked to the right group for a straight answer. 
 
I'll give it  a shot and then someone who works on a grid can come in and correct my inaccurate statements.  As far as I know, they (whoever they is) won't use your T12 to figure out how much you get paid.  Typically the way it works is that your first $10K gross each month earns a 25% payout, then the next $10K 35%, and anything over that 50%.  I'm completely pulling those numbers out of the air, or somewhere darker and more fragrant, so someone can correct them if necessary.  You need to figure out what your firm's grid is. 
 
So, let's say you have a month where you bring in $35,000 in commissions.  Those are gross dollars.  Using my numbers you'd get $2500 for your first $10K, $3500 on your next $10K, and $6500 on the rest.  So, you'd net $12,500 that month.  From there they'd take out all of the taxes, insurance etc and then with whatever pitiful amount is left over, they'd put in your bank account. 
 
Now, if you were indy your net would be, say, $26,250.  
 
I'm curious to see how close I am with my guesses.   

SometimesNowhere's picture
Joined: 2008-12-22

Spaceman Spiff wrote:Well...not one of the worst posts, but definitely not asked to the right group for a straight answer. 
 
I'll give it  a shot and then someone who works on a grid can come in and correct my inaccurate statements.  As far as I know, they (whoever they is) won't use your T12 to figure out how much you get paid.  Typically the way it works is that your first $10K gross each month earns a 25% payout, then the next $10K 35%, and anything over that 50%.  I'm completely pulling those numbers out of the air, or somewhere darker and more fragrant, so someone can correct them if necessary.  You need to figure out what your firm's grid is. 
 
So, let's say you have a month where you bring in $35,000 in commissions.  Those are gross dollars.  Using my numbers you'd get $2500 for your first $10K, $3500 on your next $10K, and $6500 on the rest.  So, you'd net $12,500 that month.  From there they'd take out all of the taxes, insurance etc and then with whatever pitiful amount is left over, they'd put in your bank account. 
 
Now, if you were indy your net would be, say, $26,250.  
 
I'm curious to see how close I am with my guesses.    Well played, Mr. Spiff. Well played...

Insideman's picture
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Joined: 2008-02-28

Let's not take my question to the ultimate side of ignorance, although plenty of it is showing.

Anonymous's picture
Anonymous

Insideman,For the most part, T-12 is only used to figure out your payout.  So at $200K in 2008, your payout might be 30% for 2009.  At 500K in 2008, your payout might be 40% in 2009.  Some firms will give some consideration to your LOS as well (i.e. $200K with 1 year LOS might get you a good payout, while 200K with 10 years LOS might get you fired).  In any case, once your payout is determined (usually by your T-12), your paycheck is typically variable.Suppose your payout is 50% (to make things easy).  This pay period, you do $4,200 gross.  Your paycheck is $2,100 (gross...then take out taxes, retirement, etc.).  Next pay period (usually 2x per month, or every 2 weeks, etc.), suppose you do $1,200 gross.  Your next paycheck is $600 gross.  Suppose at the end of the quarter, your fee-based stuff hits and your gross is $50,000.  Your next paycheck is $25,000 (gross).One caveat to this - some firms will spread your fee-based stuff (and sometimes trails, basically anything that pays quarterly) over a 3 month period of paychecks.  They will say it will help you to "budget" (i..e in that $25,000 example, they may pay that out over 13 weeks).  In reality, they are making money on your fees by holding it (my firm doesn't do this, but a lot of firms do).That's about it man.  If you are looking for a regular paycheck, you're in the wrong place.  Do $10,000 in gross today, get paid $5,000 in 2 weeks.  Do $40 in gross today, get a $20 paycheck.  Up to you.

Insideman's picture
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Joined: 2008-02-28

Thank you.Essentially the answer i was looking for, that I didn't really ask the right question for, was that your t-12 effects your next years payout. At least in your situation. Currently at the insurance firms of the world, they go by Calendar year, and I could possibly inherit a book that has a payout based on t-12.This is why I wished to clarify the difference.Thanks Ice

Anonymous's picture
Anonymous

No problemo man.

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