Anyone in commissioned sales has at one time or another been subject to great swings in cash flow. In some months the amount received is more than we need. In other months incomes may be less than the bills and expenses which must be met.

For the first several years in the industry these swings in income were my most common complaint. Yet since that time the problem has diminished progressively. It hasn't disappeared, but it has diminished.

Most of the reason for the irregularity in my income was obvious. Some months I sold and placed in force more coverage than others. When the good months occurred it was all that I could do to pay off the accumulated indebtedness, let alone put money away for a rainy day. So I often found myself "in the hole" without any reserves in the bank.

My income was continually increasing, but my comfort level wasn't. To a great extent this was because I was almost entirely dependant on first year commissions. I had very few group insurance clients and, although I was selling a fair amount of disability insurance, high first year commission life contracts still generated the bulk of my income.

Then I started to talk with agents who had been successful, in many cases for longer than I had been alive. They all said much the same things:

1. build a strong clientele (giving you access to repeat sales) of economic growers who were responsible;
2. try to develop a number of group insurance clients;
3. try to sell products which pay regular, substantial, renewal commissions, even at the expense of the first year commission rate.

All of this came down to much the same thing. If you are paid every year for every case which you have done in the past, then your income cannot help but grow each year (provided that your lapse rate is reasonable and that you continue to write a consistent amount of new business). If you get paid a fair renewal commission rate on your cases then you will be able to provide a lot of ongoing service to your clients. This will encourage them to give you more of their own business, and refer others to you, without your having to ask.

As your clients mature, and their incomes increase, their needs for coverage will also increase. This will give you an ongoing source of new business, from clients who already know and trust you. There is no rejection when dealing with existing clients.

As you get to know members of each of your group insurance cases you will begin to deal with them for their individual insurance needs. Again, there is no rejection in dealing with clients who already know and trust you. People who have group insurance with you will refer you to their friends. Business people discuss their group insurance with other business people. Everyone is looking for better plans, with better service, at the cost that they are already paying. If they feel that you can help them they will deal with you. Group insurance also results in level, annual renewal commissions. You are paid every year for the work that you do on your group clients' files.

 Many forms of coverage (such as disability insurance) pay commissions to you on an ongoing, level, basis. When bonuses payable on larger books of business are taken into account the renewals on a book of $100,000 or more of premium can be very substantial.

The result of following an active programme for developing long term business is that you will, within just a few years of starting the programme, know in advance what the renewal commissions will be, for each month of the year. This will allow you to plan a budget in a meaningful and realistic way.

Any new sales which you make will be icing on the cake once you can pay all of your fixed monthly expenses out of your renewal base. Many of these new sales will come from your existing client base, or from referrals from existing clients. Eventually you will be able to pay all of your expenses from your renewals, allowing you to spend more time doing what you want.

This is a great business. None of my friends in other professions get paid every year for all of the work that they have done in past. Their incomes are entirely dependant on what they do today. Unlike us, they can seldom afford to take as much time for the important things such as family as they would like.

But the first step is to begin to think long term. In client building as well as in commission schedules this change in your attitude may be all that it takes to make you financially independent, with a steady income stream, before the decade ends.