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by Valerie Solorzano on Jun 13, 2018 8:59:08 AM

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The Struggle is REAL   Out-Laws

OUT-LAWS

 

NAIFA is #NAIFAPROUD to show off Peter Smith this week.  This story will resonate with many of you out there as this could be you. Let’s keep it real. This is a true story about in-laws becoming out-laws. Due to the sensitive nature of the truth in this one, all names are fictional.

 

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“Adversity causes some men to break; others to break records” - William Arthur Ward

In 2006, Peter went to work for his father-in-law, John, at his insurance agency.  He quickly learned the challenges of how to network, prospect, and build relationships.  After three years of struggling, he experienced the fruits of his arduous labors.  He went from “doing well” to “doing extremely well” and joined the ranks of Top of the Table producers as a Million Dollar Round Table (MDRT) member.  John’s agency grew by leaps and bounds and there was talk of a partnership.  However, during all of this, Peter’s father-in-law (his boss) hired a blood relative with no passion or drive for the insurance industry.  It was evident that the new hire came to work to collect a pay check while strutting around with a “you’re lucky to have me here” attitude. Thus, the situation at work became toxic and a councilor was hired to fix the damage. Mr. Blood-Relative was never fired, partnership never happened and Peter decided to make an offer to buy the agency, hoping to salvage any remaining family ties.

 

John took his time to think about the proposal and decided that he could not afford to sell the business.  After all, it was thriving. Through Peter’s guidance they had expanded the agency to include a broker dealer relationship and a growing concentration on financial services and employee benefits.  Of course, John couldn’t “afford” to sell.  And the reason given was that his wife, Peter’s mother-in-law did not believe that Peter could keep the agency afloat on his own.

 

Because of Peter’s dedication to his clients, his passion for the industry, and his desire to expand the agency he helped to build, Peter stayed the course even though there was an evident thread of discontent. Soon thereafter, John came to Peter to sign a non-compete since there was never one in place.  This was not going to happen and even less so with the latest developments. But the Broker Dealer would not have allowed it either since a certain amount of production had to be maintained to keep his contract and a non-compete would have made Peter a captive agent.

 

Peter again made an offer to buy the agency and this time, the reply was “You’re fired”.  Peter was not paid the commissions owed to him and his clients all received a defamation letter.  Concerned that Peter would retaliate and contact his clients, John filed a restraining order, an injunction was placed on Peter and a federal lawsuit ensued.  John continued to send out letters to Peter’s clients from Peter’s email at the agency and the company website still advertised that Peter was with the company.  This was in attempt to keep and win over Peter’s clients. Meanwhile, through all the legal battles with his father-in-law, Peter severed ties and formed his own agency. 

 Compliance

During his first-year compliance review with the Broker Dealer, karma came knocking on behalf of Peter.  When asked if he advertises, Peter said no but shared that, outside of his control, over 250 letters were drafted and sent out under his name by his father-in-law, who kept Peter’s name on the old agency website. The Broker Dealer got involved and asked the father-in-law, John, to resign from the industry or face a compliance hearing. John resigned.

 

The lesson Peter took away from these events was not one of ill-feelings towards his out-laws but, rather, a lesson in generational fears and pride. While Peter was going through his struggles just a short two years ago, he discovered that he was not alone.  Through their sharing, Peter learned that many of his fellow MDRT and NAIFA members have experienced a similar plight. Together, they concluded that some first-generation producers should “check their family ego” when it comes to encouraging and recruiting a second-generation into the business.  There are two outcomes in this scenario: the second-generation producer either survives and thrives or they flame out. Those that flame out didn’t have the passion, nor the drive, to survive the industry. However, the first-generation will not admit defeat (sense of pride) so they protect the family members, making excuses for them, feeding them leads or carrying them in the business to the detriment of all. For those of the second-generation that do thrive, these same first-generation mentors may take the credit because they feel the success of the second-generation is directly attributable to them (fear of being surpassed). The reality in this industry is that it takes years of effort and the fostering of relationships, the building a client base and managing the frequent rejection all the way to the top.

 

The ocean is vast and there are many great clients out there that need our help.  The industry is also yearning for fresh new advisors.  NAIFA is here to help them achieve a fruitful career.

 

love-316640_960_720Peter is in the middle of his second year and his business is thriving. He has nine employees, and over $1 million in revenue and climbing!  And, just in case you were wondering, the relationship between Peter and his wife has strengthened through the fire they endured.  Only time will tell if the out-laws will return to being in-laws.

 

I would love to hear from you, too, and showcase your struggle to the top!

Valerie Frank-Solorzano is NAIFA's Membership Advisor

Topics: Young Advisors Team (YAT)/ Running Your Practice/ Sales/ Retirement Planning/ Life Insurance/ Financial Planning/ #NAIFAProud/ Networking/ Multiline/ Family Business