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Best Practices for Agency Operations Webinar Series
Avoiding the Train Wreck: Producer Recruiting
Brian McNeely / Reagan ConsultingJune 2019
The Issue
46.6 4747.8 48 48.4 48.7 49.3 49.4 49.5 49.7
51.151.9 52.5 51.9
52.9 53.354.5 54.4
53.3 53.7
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
WASA and WAPA in the Last Ten Years
WAPA WASASource: IIABA Best Practices Study
The Issue
Source: IIABA Best Practices Study
18.2%
9.4% 9.7%
13.5%
10.9% 9.9%
24.8%
16.5%
20.0%
27.9% 28.0%
25.0%
33.7%
28.8%
33.1%
26.4%
29.8%31.2%
23.3%
45.3%
37.2%
32.1% 31.4%
33.9%
< $1.25M $1.25M-$2.5M $2.5M-$5.0M $5.0M-$10.0M $10.0M-$25.0M > $25.0M
% of Total Book by Producer Age
Up to age 35 Age 36-45 Age 46-55 Over age 55
The Issue
55% - 60%Percentage of firms
not hiring enough producers
Source: Reagan Consulting Producer Recruiting and Development Study
The Issue
The Issue
How much is Enough?Defining your Hiring Needs:How Much Should We Invest in New Producers?
Consider the NUPP(Net Investment in Un-validated Producer Pay)
• Difference between compensation paid to the producer and what that producer would earn under agency’s normal commission schedule
• Not to be confused with “gross investment”
Step 1: Find the total compensation of all unvalidated producers
Number of unvalidated producers 7
Actual payroll of unvalidated producers $500,000
Step 2: What would the unvalidated producers earn under the
agency’s normal producer commission schedule?
Unvalidated producers’ total book of business $500,000
Agency blended commission rate 30%
Implied (“earned”) compensation $150,000
Step 3: Calculate the NUPP as a percentage of
revenues
Actual payroll of unvalidated producers $500,000
Implied (“earned”) compensation $150,000
NUPP $350,000
Agency Net Revenues $20,000,0
00
NUPP as a percentage of revenues 1.75%
How much is Enough?Defining your Hiring Needs:How Much Should We Invest in New Producers?
NUPP as a %of Revenues Outlook
Less than 1.0%
1.0% to 2.0%
2.0% or greater
Consider the NUPP(Net Investment in Un-validated Producer Pay)
Potentially unhealthy level of investment
Borderline low level of investment
Healthy level of investment
Recruiting Drives Growth and Sustainability
48.7%63.9%
Firms withNUPP < 2%
Firms withNUPP > 2%
Producer Success Rate
51.1
49.0
Firms withNUPP < 2%
Firms withNUPP > 2%
Weighted Average Producer Age (WAPA)
4.5%5.8%
Firms withNUPP < 2%
Firms withNUPP > 2%
Organic Growth
11.7%
13.4%
Firms withNUPP < 2%
Firms withNUPP > 2%
Sales Velocity
55.3
53.6
Firms withNUPP < 2%
Firms withNUPP > 2%
Weighted Average Shareholder Age (WASA)
15% Higher 29% Higher
2.1 Years Younger 1.7 Years Younger
31% Higher
Source: Reagan Value Index
6.1
6.7
4.5
6.2
7.1
Looking in theRight Place
Knowing YourTarget Profile
Recruiting andProspecting
Interviewing andScreening
Selling theOpportunity
Recruiting and Hiring Self Evaluations (on a 1-10 scale basis)
Recruiting as Skill
Source: Reagan Consulting Producer Recruiting & Development Study
The Process
Select Source(s)Recruit and
EvaluateTrain and Mentor
Monitor
Recruit Select Source(s)Recruit and
EvaluateTrain and Mentor
Monitor
Producers Hired Using Outside
Recruiters12%
Producers Hired Without Outside
Recruiters88%
Use of Outside Recruiters
55%62%
Producers HiredUsing Outside
Recruiters
Producers HiredWithout Outside
Recruiters
Outside Recruiter Success Rates
Source: Reagan Consulting Producer Recruiting & Development Study
Recruit Select Source(s)Recruit and
EvaluateTrain and Mentor
Monitor
Source: Reagan Consulting Producer Recruiting & Development Study
Using social media for recruiting
41%
Not using social media for recruiting
59%
Use of Social Media as a Recruiting Tool
“The best recruiters we have are
our successful young producers in
their late 20s and early 30s. These
people are contributing greatly to
growing our sales culture and
helping us recruit.”
CEO of a High-Growth
Southeastern Firm
Where Do You Find Them?
“There is no more important role for me to own than driving producer recruiting and creating the sales culture that we must have to succeed.”
CEO for Regional Insurance Broker
Source: Reagan Consulting Producer Recruiting & Development Study
Reagan Consulting
Brian McNeely joined Reagan Consulting in 2007 and is a partner of the firm. Brian primarily works with clients on mergers & acquisitions, agency valuations and strategic consulting projects.
Prior to joining Reagan, Brian spent approximately five years at The Home Depot in roles of increasing responsibility. Most recently, Brian focused on mergers and acquisitions, participating in due diligence exercises, performing financial and strategic analyses and leading acquisition integrations. Prior to The Home Depot, Brian was an auditor with Arthur Andersen, LLP.
Brian is a Certified Valuation Analyst (CVA) and obtained his undergraduate degree and Master of Accountancy degree from Auburn University. Brian currently maintains the Series 63 and 79 FINRA Registrations through Reagan Securities, Inc., the affiliated FINRA-registered Broker/Dealer of Reagan Consulting, Inc.
Brian McNeelySenior Vice [email protected]