Insurance or Property Agent, To be or not to be.

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Both an insurance agent and property agent have very similar job nature such as

• Commission-based income
• Cold prospecting
• Flexibility of time
• Sales job

It’s a difficult choice to choose either of the two when a person decides to venture into this path of “Own Time Own Target”. I happened to read an article on “Should You Be a Property Agent or an Insurance Agent?” and those who are thinking of the same question can have a read. I think it is one of the better articles comparing the two careers that I had read so far. The article brought me back to the decision making process 20 years ago when I decided to leave the engineering industry . In this post, I will share why I narrowed to these two job and why I finally choose one over another.

A little background on why I decided to leave a job that pays a monthly salary that is considered good back in 1999. It was the Asian Financial Crisis when I joined the workforce after my NS. I was lucky to be landed with a job almost immediately while some of my platoon mates were still having a hard time looking for a job. On my first day of work, I realised the atmosphere was rather tense and the colleagues are not as friendly. I ignored that and took it as typical engineering people who are not so high in EQ. After a while, then I learnt that one of their colleagues was laid off and you guessed it, I was the replacement. That guy was in his 40s n getting almost $4,000 which is good money today, can you imagine that money in 1999? I was in my 20s and will be paid half of his but likely to work twice as hard cos I’m at the start of my career while that guy is likely to be in retirement mode. I thought to myself if I want to be like the guy who was retrenched when I’m in my 40s. The summary of my thoughts are if my pay depends on someone, my job depends on them too. I’m not in control of many things and that include my career advancement. I was also sick of the politics I saw in the office. After much thoughts, I decided to be self-employed. The employment environment may have improved a lot since 20 years ago but the reality of “young replace old” remains the same.

Getting into a full-comission based job is not easy since I’m just out of NS n with little savings. It is very unlikely for me to start a business with the high overheads and amount of money for stocks or labour so I narrowed to property and insurance. The following views could be wrong since I had not entered the property sector before and most were from speaking to property agents. And the rest is history… I decided to join the insurance industry and here are the reasons for doing so.

 

• Hold stock

While there is technically no need to hold stock for both business, the fact is we can’t just have one unit of 5 room flat and expect someone to view only that unit and decides to buy it. Like any business, the more choices for the clients means higher chance of a deal. Signing exclusive with more units for marketing also means you need to advertise more and the cost goes up.

There is no stock to hold for insurance and the cost of operation is almost zero. The insurance company does the promotion and advertising of any products. Any marketing at our individual level is of personal choice. How often have we heard of property agent saying the unit that you are considering had been sold and how many times your insurance agent tell you he sold out his policies?

I was not prepared to pay for these advertising cost and subscribing to property portals etc which can cost up to thousands every month so I was more keen on Insurance.

 

• Sustainable business

To have a sustainable business means ease of new business or repeated sales. Any business needs to acquire new customers but that should not be the main source of revenue for any business. It’s tough to maintain a business relationship but it’s harder to start building one.

I ask myself how many property can one buy from me and how many insurance or investment can one get from me. Assuming a family of five, can I sell a property to every one? Maybe yes but I believe there is a higher chance of 5 selling insurance polices than 5 properties to this family. Looking back at my clients who started their career almost the same time as me, they purchased their first policy from me. They got married & got another policy. They got one for their spouse and later on for their kids. Will I have the same repeated business if I were to be marketing a house? And not forgetting the referrals that they had help to link up.

 

• Renewal income

The most distinctive difference between property agents and insurance agents!

We all know that property deal is a one-time off transaction and renewal income is common in insurance sales. This is significantly important in time like the Circuit Breaker. I know some agents who choose not to work during this period for safety reasons and is able live on their renewals.

There are property agents who do more of rentals and will have similar forms of renewals. However, most tenants or owners will renew their leases on their own to save on the commission so there can be difficulties in getting the renewals.

In additional to the renewal income from renewal premiums from existing clients, some financial advisers do investment portfolio such as unit trust and an on-going advisory fee may be paid. This amount is commensurate with the Asset Under Management or in short, the value of investment under the adviser’s care. The chart illustrates a typical commission earned over the years. As the renewal income for insurance diminishes over the years, it is compensated by the new business and Investment Advisory Fee build over the next few years. Assuming an insurance agent is happy with his existing clients and no wish to increase his client base, the Investment Advisory Fee will increase over the years either by accumulation or by growth in value.

 

 

• Personal/Family Life

Both insurance and property allows the agent to manage their time and this is one attractive reason for me to consider these industries. I was looking at the sales appointments from my friends who were insurance agent and property agents. I noticed the appointments for property viewings are usually late after working hours, during weekends or public holidays because these are times when both buyers and sellers are free. Time management is also not easy because it is difficult to arrange a common available time for the buyers, buyer’s agent, seller and the seller’s agent.

I was not prepared for that. Those who know me will know I am a football freak! I need my football sessions at least once a week and I was not willing to give this time up for sales appointment. I told myself that I will not miss any major events of my children’s life and I’m glad I’m able to fulfill that promise till now. Most of my appointment now are over lunches, tea breaks, dinner. I can be working late during weekdays and my appointments can end after 10pm especially if I’m working with couples. However, I leave my Weekends and Public Holidays for my family and keeping Thursday nights for my football. In fact, I will ask new client who wants to meet over the Weekends and Public Holidays to re-schedule if possible. I told them their off days should be spent with their family members and not their financial advisers.

• Cyclical Market

Both the property and insurance industry is heavily regulated by the relevant authorities which can affect our business and that is beyond our control. For example, property agents used to be able to represent both the buyer and seller. When the relevant bodies prohibited the practice of dual representation, the agent’s income drop. And not forgetting the negotiable agent fee that can result in a pay cut for the property agent. The insurance industry was not spared from regulatory changes. The cut of total distribution cost for insurance policies is a direct cut on the insurance agent’s comission as well. These are changes beyond our control. Another factor that affect both industries is the  market and different market will affect each industry differently.

The reality is an average property transaction gives more money than an insurance sale. But there is no diversity and I believe in spreading the risk.  When market is good and property market is soaring, I can leverage on that rally. This can be done by the mortgage loan and re-financing packages that I can share with my clients. The banks may need a mortgage insurance when they sign up a loan and I can help them with it. It is common to work with many property agents to provide these services. This are among other type of insurance that can be done and not related to property. I am not sure if property agents can leverage on insurance sales but I rarely heard of it.

Before I end, I would like to emphasis that these are personal opinions to why I choose Insurance over the Property industry. I have never enter the property industry and there may be wrong impression of the industry. I would also like to share an YouTube clip that shared similar thoughts as mine.