The hard questions · A due diligence guide
10 questions to ask before you sign anything.
Upfront fees. Commission splits. No profit sharing. Lack of ownership. These are the hallmarks of most cluster programs in the market today, and the reason so many agency owners find out too late what they actually signed.
If you are considering joining an agency group, you must understand the most critical program aspects and ask the right questions, so you don't end up making a costly mistake.
How can you make an informed decision before taking the plunge?
Start by asking these 10 crucial questions. And here is how ISG United answers each of them.
Is there an upfront charge, and if so, what does it cover?
It is typical for groups to charge upfront fees. However, if those fees are anywhere north of $5,000, then it may be time to look elsewhere. A group will incur real costs onboarding new agencies, but there is a point where the fee becomes unreasonable for the services provided.
There is a point where the fee becomes unreasonable for the services provided.
Look for: a group with no upfront fees
Most groups say
A one-time initiation fee of $5,000 to $60,000, framed as onboarding, technology setup, or licensing.
ISG United answers
$0 upfront. Ever. Every dollar you spend goes toward growing your agency, not paying for the privilege of being here.
Are there monthly fees? If so, what do they cover?
Many groups charge monthly fees. Sometimes those fees cover a minimum needed to run the group at the management level. Other times they cover technology requirements mandated by the group. Monthly fees can be reasonable, but you need to ask what they are and why they are charged.
Monthly fees can be reasonable. But you need to ask why.
Look for: a flat, predictable monthly fee
Most groups say
A variable monthly fee that grows as your book grows, plus assorted technology surcharges.
ISG United answers
A flat monthly fee, starting at $299. Fully predictable. Never scales with your revenue. Never grows because you grew.
What is the commission split?
Most organizations make money by splitting commissions with their member agencies. Do the math. At $150,000 in annual commissions, a 20 to 50 percent split costs you $30,000 to $75,000 per year, forever.
$30,000 to $75,000 per year. Forever.
Look for: a flat fee, not a split
Most groups say
20 to 50 percent of commissions, forever, on everything you write through the group.
ISG United answers
Zero split. Ever. You keep 100 percent of your commissions, direct deposit from your carriers to your agency.
If there is a commission split, am I required to pay you on business written outside the group?
This may seem outlandish, but make no mistake, it is common practice. According to their contract, many groups require a cut of any business written with carriers outside the group. Some groups will not even allow you to write with carriers not on their platform. Read the contract carefully.
It may seem outlandish. It is common practice.
Look for: no claim on outside business
Most groups say
Yes, a percentage of all business you write, even with carriers outside the group.
ISG United answers
No. ISG has zero claim on anything you write. Inside the network, outside, direct appointment, personal contact, all yours.
Do you offer profit sharing or carrier bonuses?
A common scenario: a startup indie agency joins a regional MGA on an 80/20 split, receives zero profit sharing, and because they came from a captive background, they never even ask about carrier bonuses. Retaining a portion of carrier bonuses is fair for any group, but 100 percent to ownership and 0 percent to you is greed.
100 percent to ownership and 0 percent to you is greed.
Look for: bonuses shared with the agencies
Most groups say
The group keeps most or all of the carrier bonuses. Zero to the producing agencies.
ISG United answers
Up to 75 percent returned to the agencies that produced the premium. $2M+ distributed to members since 2018.
You may be noticing a pattern.
Every question, the industry answer is designed to extract value from you. Every question, ISG's answer is designed to give it back.
Five more to go
What happens when I want to exit the group?
Agency owners get excited about joining and forget to ask about leaving. The most common exit fee is 20 percent of annual revenue. On a $1.2M book with $150,000 in annual revenue, that is $30,000 to walk away and keep your customers. Some agents take out six-figure loans to escape their cluster contract.
Some agents take out six-figure loans to escape their cluster contract.
Look for: no exit fee, no forced sellback
Most groups say
A large exit fee, often 20 percent of annual revenue, plus forced sellback provisions.
ISG United answers
Zero exit fee. 30 days written notice. You keep your book, your carrier appointments where portable, and your agency.
If I want to sell my agency, can I do that on the open market, or do I have to sell it back to the group?
Requirements to sell back to the group have become more common in recent years, especially in franchise arrangements. Some require selling back for a ridiculous 0.75 x annual revenue, versus the 2.5 x factor on the open market. This is an insult to an owner who has worked hard to build a business.
An insult to an owner who has worked hard to build a business.
Look for: open market sale rights
Most groups say
You must sell back to the group at a below-market multiple, often 0.75 x annual revenue.
ISG United answers
Sell on the open market, at market multiples, to any qualified buyer. ISG has no equity, no first refusal, no forced sellback.
Do I have binding authority with the carriers?
This comes up most in MGA and franchise arrangements. Without binding authority, you have to request approval from the home office of the group. That delays business, and delays lose business. You want the ability to quote and bind immediately.
Delays business. And delays lose business.
Look for: immediate binding authority
Most groups say
Binding authority requires home-office approval, adding hours or days to every quote.
ISG United answers
Binding authority from day one, on every carrier you are appointed with. Quote it, bind it, move on.
Am I required to put the group's name on my signage and marketing material?
This may not be a big deal for you, or it may be a deal breaker. Will you be marketing your agency's name, or will you be required to display the group's name on your door and business cards? Ask the question before you sign.
Whose name is on the door?
Look for: your name, not the group's
Most groups say
The group's name on your signage, business cards, and declarations page. Your name is secondary.
ISG United answers
Your agency name on everything. Your door. Your dec page. Your business cards. Always.
How does your organization make money in this arrangement?
Greed abounds in this sector of the industry. Ask this simple question to gauge any level of it. If you get pushback, it may be time to move on. If the answer is clear, direct, and put in writing, you have probably found a winner.
If the answer is clear, direct, and in writing, you have found a winner.
Look for: a transparent answer, in writing
Most groups say
A vague answer that avoids the specifics, or pushback that the question is inappropriate.
ISG United answers
We charge a flat monthly membership fee. That is our entire revenue model from members. The number is on our website. It is in the one-page contract. That is it.
Scorecard
The entire argument for ISG United, on one page.
Industry standard
0 out of 10
ISG United
10 out of 10
This is the entire argument for ISG United, on one page. The 10-question pattern the industry cannot answer well is the pattern ISG was built to answer clearly.
In summary
Not all agency groups are bad. In fact, once you find a group that is fair and transparent, there are many benefits to joining one. Just exercise caution, and don't be afraid to ask questions.
As with many other situations in life, if someone is trying to hide something from you, they will get nervous when you start asking questions. If they are open to your questions and seek to provide thorough answers before you make any decisions, you have probably found a winner.
Ask the hard questions · We have the answers
Ask us the hard questions.
No upfront fees. No commission splits. No agency name requirements. True ownership and profit sharing for every member agency. And when you book the 20-minute conversation, you talk to a founder or partner, not a recruiter.
Prefer email? · info@isgunited.com · (817) 500-9572
Keep reading
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Read moreThe process
What the 20-minute conversation actually looks like.
What to bring, what we ask, what happens after. No surprises.
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