TWG Capital (TWGC)

A rare and unique class of alternative financing aimed specifically at agents, which recognizes their commission stream as an asset, has emerged. Selling renewal commissions for immediate capital is a debt-free alternative financing option available exclusively for insurance agents.

However, choosing an institution to purchase a book of business may be difficult, due to the unfamiliarity and uniqueness of the service. Once the agent knows what to look for, they can quickly evaluate the competition and determine the most secure and reliable boutique firm that fits their needs.

Below are tips to help find a trustworthy and reputable company to purchase a book of business:

1. Look for boutique firms that allow the agent to continue cross-selling and servicing clients. The agent does not want the firm to essentially become their competitor. The ideal situation is as follows: After the agent sells the commissions, the purchaser receives the redirected renewals, while the agent continues to manage the relationship with their clients and has the freedom to cross-sell other products to them.

2. Ensure the company is in good financial standing before doing business. A company with a history of at least 8 to ten years provides the experience and ability to offer a fair market value for your commission stream.

3. Avoid firms that charge fees for application or book valuation. This puts the agent at risk to pay the company even if the offer is unfavorable and the agent decides not to sell.

4. Choose companies that are able to purchase multi-lines or many different products. This provides a variety of options in order to achieve the greatest amount of capital. Multi-line agents are in an advantageous position because each type of product generates a different factor. They are able to "mix-and-match" certain lines, depending on the products the boutique firms purchase. This allows the agents to customize their portfolio when selling. For example, a firm may pay more for long term care than life policies, due to the persistency of the book.

5. Talk to past clients. Ask around to see who has used the company before or ask the company to provide a few names of clients that can be contacted.

You've worked hard to build up a commission stream and deserve to recognize it as a valuable asset. Choosing the right firm to purchase a part of your book or your whole book can be a tough decision. You should feel confident in the boutique firm you are choosing. A good indicator is the account manager with whom you speak.

The account manager you select should be dedicated and direct, guiding you through the process. Once you've found the right company, you'll have a partner for life, providing you with guidance and assistance even after the deal has closed.

*For further information, or to contact this author, please leave a comment and your e-mail address in the forum below.

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June, 27 2007