The Producers

| December 09, 2022

It happens every year at about this time. Clients receive calls from a stockbroker or insurance agent telling them about time-critical actions that need to be taken. Often, there is a mutual fund or annuity that they just have to have before the end of the year. Since most of these investments are continually offered, there is no time-critical reason for the client to act, but there usually is one for the broker.

Brokers and insurance agents are normally paid on a grid. How much they make can differ by month and by year. Not only can the sums involved be shockingly high, but a broker’s livelihood can also be on the line. The factors that go into the “grid” can be very complicated. For those companies owned by banks, a broker’s payout can depend on the number of referrals to the bank for loans, mortgages, lines of credit, and credit cards. The product mix is important for the firms that employ brokers.

There are also breakpoints for commissions. In other words, a broker’s percentage of commission that he or she receives depends upon how much they “produce” by December 31. Brokers who fail to “make or hit the grid” can also be punished. They may have their payouts reduced and also be put on watch for dismissal. This is why brokers are referred to as “producers” and why titles are given out by the number of commissions generated. I worked in an office once where more than 75% of the “producers” were either vice presidents or senior vice presidents. There are no actual responsibilities involved beyond commissions earned.

This is why the majority of calls that our clients receive after the end of summer involve annuities, mutual funds, or IPOs. These are the big-commission items that earn titles and accelerated payouts. When your broker tells you that he or she is a “senior vice president” the first thing that you should do is check your wallet. The real president, vice president, or CEO does not work in a branch office or sell securities.

At Treasure Coast Financial Planning we do not earn commissions or give out titles according to “production.” All of us are on salary and work together for our clients to help them to the best of our abilities. We are proud of Certified Financial Planner and Enrolled Agent on our cards for the simple reason that we earned these designations and need large amounts of continuing education for the right to continue using them.