Regardless of the “relationships” you maintain, ultimately you will be
compensated based on your productivity — or will you? It isn’t the “gross income” that
counts, but rather the “net”.
Most producers do not really know their net income. Virtually all know their
“gross income” and their “taxable income”; however, because of IRS Form 2106
expenses or Schedule C expenses (some of which directly feeds and otherwise benefits
the producer), most simply don’t know their true net profits.
By the same token, most producers do not truly appreciate or understand their
gross compensation. Commissions and expense reimbursement allowances are seldom all
the compensation a producer receives. Other forms of income for most producers
include, but are not limited to, qualified retirement plan contributions, subsidized group
life, health and disability coverages, rent and clerical subsidies, “fronting” of postage
and phone costs, top producer education/vacation-type reward meetings and fees. A
limited number of producers have been charging fees for analysis and service work. In
the past, this work was done as part of the sales process. There has been a lot of talk, but
little real action thus far on the subject. Fees may offset overhead but seldom create
profit. In addition, many states prohibit commission being paid to a producer who also
received a fee for making the recommendation that led to the sale.
