Moraen:

[quote=BerkshireBull] Simply put, business owners are better off with someone with an insurance background, employees are better with a FA with an investment background.
[/quote]

Why do you believe this? Many of us that have investment backgrounds have analyst or accounting backgrounds and understand the financial of business owners a lot better than people with an insurance background.

I agree with BondGuy. Strongly disagree with this statement.

  First of all, I strongly think that the specifics of the situation will determine who is best.   However, I, not surprisingly, think that in many situations the insurance guy is better for the business owner.  That's a bad statement.  Let me rephrase it.   I think that in most situations dealing with a successful business owner, a competent insurance person is more valuable than a competent investment person.   Why do I say this?  The biggest asset that a successful business owner has is often his own business.   We don't have investments that are better than his business.  There are only 5 ways in which one can exit a business.  1)Death 2)Disability 3)Voluntary Sale 4)Retirement 5)Bankruptcy.  Proper insurance needs to be in place to guarantee that the owner can get maximum value for his business.   Ex. Tony is a dentist.  He has a very lucrative practice.  He has had offers to sell it for $1,200,000.  He has put lots of his revenue back into the business to help it to grow.   If he becomes disabled, the value of his business drops precipitously.  That's nice that the investment guy put together a better 401(k) than the insurance guy, but he's now selling his business for $400,000 instead of $1,200,000 because there is no buy/sell agreement in place with proper funding. 

Anon, net to pocket is what they make, taxable income, not the gross commish to the house. Are the insurance guys doing $500k gross with a % payout to themselves at some level or is that $500k their taxable income?

  I know of no LI agents making 1/2 million or more.

anonymous:

[quote=Moraen] [quote=BerkshireBull] Simply put, business owners are better off with someone with an insurance background, employees are better with a FA with an investment background. [/quote] Why do you believe this? Many of us that have investment backgrounds have analyst or accounting backgrounds and understand the financial of business owners a lot better than people with an insurance background. I agree with BondGuy. Strongly disagree with this statement.

First of all, I strongly think that the specifics of the situation will determine who is best. However, I, not surprisingly, think that in many situations the insurance guy is better for the business owner. That’s a bad statement. Let me rephrase it. I think that in most situations dealing with a successful business owner, a competent insurance person is more valuable than a competent investment person.



Why do I say this? The biggest asset that a successful business owner has is often his own business. We don’t have investments that are better than his business. There are only 5 ways in which one can exit a business. 1)Death 2)Disability 3)Voluntary Sale 4)Retirement 5)Bankruptcy. Proper insurance needs to be in place to guarantee that the owner can get maximum value for his business.



Ex. Tony is a dentist. He has a very lucrative practice. He has had offers to sell it for $1,200,000. He has put lots of his revenue back into the business to help it to grow. If he becomes disabled, the value of his business drops precipitously. That’s nice that the investment guy put together a better 401(k) than the insurance guy, but he’s now selling his business for $400,000 instead of $1,200,000 because there is no buy/sell agreement in place with proper funding. [/quote]



Anon - an investment guy who doesn’t make sure his business clients have a buy-sell agreement in place with proper funding is an idiot. I fire any business owner client who doesn’t think they need a business succession strategy.



As far as offering products, the insurance guy likely knows more. I was talking more of a helping the business owner with his business (cash flow analysis, determining most profitable lines of business, reviewing financials for areas of improvement, etc.). Somebody with a background in financial analysis or accounting would be more suited to this.



I agree that a 401k is likely not to be his most valuable asset. In my opinion, if you are not covering all of the bases, then you are not being a good quarterback. Insurance, investments, legal, etc.



In my business, we refer all of the insurance business out (you guys are the experts after all), but we definitely make sure all of the bases are covered.

I know of no LI agents making 1/2 million or more.   Pure LI, I don't know anyone personally but I'm sure they're out there.  But I started in a local office with two TOT producers doing north of $500,000 in first year commissions (as Anonymous said, half that amount had to be from LI/DI/LTC/Annuity commissions, they were closer to double that number factoring in their AUM and insurance renewals. 

[quote=BondGuy]Anon, net to pocket is what they make, taxable income, not the gross commish to the house. Are the insurance guys doing $500k gross with a % payout to themselves at some level or is that $500k their taxable income?

  I know of no LI agents making 1/2 million or more. [/quote]   That is their taxable income before any business expenses that they may or may not have.

[quote=Full Throttle]

I know of no LI agents making 1/2 million or more.   Pure LI, I don't know anyone personally but I'm sure they're out there.  But I started in a local office with two TOT producers doing north of $500,000 in first year commissions (as Anonymous said, half that amount had to be from LI/DI/LTC/Annuity commissions, they were closer to double that number factoring in their AUM and insurance renewals.  [/quote]   Anyone making TOT is a monster.  That's my goal.  It's tought to make TOT and not be earning $1,000,000.

"Anon - an investment guy who doesn’t make sure his business clients have a buy-sell agreement in place with proper funding is an idiot. I fire any business owner client who doesn’t think they need a business succession strategy. "

  I purposefully used disability as an example.  Even if a business owner has a good lawyer, CPA, and investment guy, you can bet your last dollar that the buy-sell won't be funded for disability unless he also has a top notch insurance agent.

"As far as offering products, the insurance guy likely knows more. I was talking more of a helping the business owner with his business (cash flow analysis, determining most profitable lines of business, reviewing financials for areas of improvement, etc.). Somebody with a background in financial analysis or accounting would be more suited to this."   In this regard, both the investment guy and the insurance guy are pretty useless.  The area in which I can help personally is in the basic running of a business.  This has nothing to do with my insurance or investment background and everything to do with the fact that I am a business owner. 

The reality is that we all need a place at the table.  The best trait that a good advisor can have is integrity.  One of the major parts of this is knowing and admitting to what we don't know and finding someone to fill those knowledge gaps so that we can always benefit the client.