Nearly everyone has some sort of insurance or investment product. It may be a policy for a car simply to acquire a vehicle license within a state, coverage for a home to satisfy their mortgage company, to protect against a fire in an apartment building, or a retirement fund in the form of an IRA or annuity. In all these examples, people are clients who are paying money for a company to help manage the risk of disaster or the benefit of a secure future. The profits for the insurance and investment companies are in the premiums paid or the dollars invested. Once the clients are acquired, money flows in like clockwork. The largest expense for the insurance and investment companies is finding the clientele to profit from. That's why salesmen or "agents" are hired.
In an ideal capitalistic system, everyone earns a living based on the quality of their labor. Agents are not compensated for their efforts based on the number of clients they bring to the company. Their commissions are calculated from the amount of insurance coverage purchased or the total of monies invested in the company. The agents only make a profit, and thus a living, when the commissions exceed the amount of expense and effort expended to gain those clients. Many times the survival of the agents depends on how well they can serve their current clients' needs by selling new products, or transferring or replacing existing ones. Farming the current clients is always more profitable for everyone involved.
Because the failure rate of agents is high, few insurance or investment companies want the liability of licensing and training inexperienced sales staff. It takes years and money to train a good agent. "Good" to many companies means someone with selling skills who knows how to keep them out of trouble with state and federal regulators. Many companies hire employment firms to recruit experienced agents who are dissatisfied with their current company and are open to a new employment opportunity. Agents who decide to accept that "opportunity" find that it comes at a cost.
When these types of insurance companies hire an experienced agent, they demand contact lists of one hundred to one thousand names, addresses and telephone numbers and income levels to show that the agent has a "worthwhile" pool of prospects to draw from for sales. The companies rarely supply any prospects of their own and, if they do, they are worn out leads from people who have been called so many times that they don't answer their phone when an insurance company displays on their caller ID. Viable prospects are worth far more than the agent, and are what the insurance companies really want. The companies know that clients who trust their agent are likely to follow them wherever their agent goes.
Agents leave their parent company for many reasons. Company downsizing or buyouts over the past ten years have been big ones. The most heavily recruited agents are those who own their own agency or have no non-compete agreement, which would bar the agent from taking the clients with them when they left the company. Usually, there are many incentives offered to entice those agents to come on board, but unless those promises are put in writing, they usually disappear after all of the agents' clients are transferred to the new company. If the agents complain that the reality of employment at the new company isn't what was promised, they may be reminded that they signed a non-compete agreement, all the clients transferred are now company-owned and that the company may terminate their employment for any reason they choose. When comparing the cost of a few more ex-employees collecting short-term unemployment benefits to the value of a large body of long-term clientele, the company goes for the premium income every time.
As the agent is contemplating the wisdom having moved to the new company, new mandatory sales quotas with threats of lowered commission rates miraculously appear. The quotas show that all the agent's talents for effectively serving his or her clients' needs and working in their best interests are not the new company's primary focus. If unattainable quotas don't drive the agent out, the company reserves the power to cut commissions, effectively starving the agent. If the agent decides to leave the company, they are reminded of the conditions of the signed non-compete agreement stating that they are barred from any contact with their former clients for a period of one to two years. All of the agent's expense and labor of acquiring those clients is lost.
The insurance and investment companies that follow the shady process of client body snatching have little interest in long-term employment of agents. After stealing the clients and disposing of the agents, the clients are assigned to a customer service or sales department, often populated with newly licensed personnel having intensive sales training, but questionable product knowledge. At that point, the clients' interests are rarely served and are managed only for the profit they provide. The companies can maximize their income and no longer have the liability of paying commissions and renewal fees, or health and retirement benefits to the newly discarded agents.
Only the insurance and investment companies win when clients are stolen from good agents, and the sad thing is that the clients rarely know or care about the loss. Some even think there was something wrong with the agents when they disappear. Even worse, fruitful employment opportunities for the agents are less likely now because they are barred from contacting their former clients and must rebuild their clientele anew. Rarely does anyone care about the welfare of the lowly agents who have been robbed of their livelihood.
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