Common Mistakes Agents Make When Preparing to Sell
Common Mistakes Agents Make When Preparing to Sell
Written by Rachel Brammeier
Preparing to sell your Medicare business can be overwhelming, and it’s easy to make the wrong choices. Watch out for these common mistakes many agents make.
Undiversified Book of Business
Diversifying your book of business is crucial. Commissions can be affected by carriers, market shifts, or changes in government rules. By spreading your business across multiple carriers and products — including ancillary offerings — you reduce risk and protect the value of your book.
Ignoring the Age of Your Clients
Keep track of the average age of your clients and policies. Many Medicare Supplements will stop paying commissions after a certain window, so the older a client or policy is, the less valuable it becomes. For instance, if your typical client signed up at 65 and the plan stops paying commission at 80, your earning potential is limited. If most of your clients are currently age 75 in this scenario, then your book may be worth significantly less overall.
Ignoring Your Net Profit
Pay close attention to your expenses and what it costs to keep your business running. Owning property, leasing technology, and paying staff can all decrease the value of your business if costs are too high. Tracking what you spend is just as important as tracking what you earn.
Not Tracking Your Active Clients
You might have a large number of clients overall, but are you getting paid for all of them? We’ve found that many agents don’t realize how many of their clients no longer earn them commission due to age or changes to carrier compensation. If you’re unsure, take the time to review your commission statements. Too many inactive clients can significantly decrease the value of your book.
Unorganized Client Records
Having an organized book of business with updated contact information for each client can increase the value of your book. While carrier portals provide some policy information, they may not contain every detail you need, so it’s important to maintain and regularly update your own records. Touchpoints such as holiday cards, thank-you notes, birthday calls, or checking in to update drug lists can help keep your information current. Without a clear recordkeeping process, it becomes difficult to accurately value your book.
Not Incorporating Your Business
Your business structure can affect how easily it can be transferred or sold. Agents who operate without a formal business entity may face additional complications when transferring ownership. Establishing a corporation can make it easier for another person to step in if you become unable to certify or need to retire unexpectedly. Consider speaking with an attorney or tax advisor to understand how your current structure may affect the sale of your business.
Misaligned Contracts
Knowing which carriers you’re contracted with and the structure of their hierarchy is critical. Some carriers won’t allow a book of business to transfer across different top-level hierarchies, and others may refuse to release your contract entirely, causing delays when selling your business. Consolidating your contracts under a single hierarchy can help streamline the transfer process and make it easier for a new owner to take over.
Selling your business is a big deal — and the difference between a smooth sale and a disappointing payout often comes down to preparation. Small oversights, like the ones mentioned above, can quickly erode the value of your hard work. Take a close look at your business now, fix these common mistakes, and set yourself up for a sale that truly reflects everything you’ve built. Don’t leave money on the table. Protect your book and make every decision count.
For more information, please call us today at (800) 689-2800!
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