Today I saw the news that about 4000 agents are rallying due to the announcement by Prudential Malaysia to implement commission cuts. This is now being actively discussed in a LowYat forum thread.
I am seeing more and more of such trends everywhere- regardless of whether you are a fully salaried worker or a sales agent relying on commission, the benefits and security that you are enjoying would probably not last till your retirement.
There are 2 persons I know who are full time Grab drivers. Both of them find themselves suddenly banned from Grab due to high cancellation rate…. from customers! Here you have customers who ordered Grab car service and decided to change their minds due to long wait and proceeded to cancel (perhaps after spotting a taxi). Once you get a certain percentage of cancellation request, you would be suspended from driving Grab for one month. One of the friend of mine… I know she would drive during peak hours as there are more requests. That week where she got high cancellation was early October where it was raining particularly every evening. And you know with the massive jams, it can take you sometimes 20 minutes to get to your client’s location (especially in places like Midvalley).
I also got feedback from an agent who is serving a leading mutual fund company for more than 20 years. When the company introduced the online platform, it provided the customers the option to buy new funds and select the commissions to be under the company directly instead of the agent. And the option for the company is the top option. If the customer selects that, the agent gets zero commission. This practice has reduced the agents’ commission (and livelihood) directly.
Banks that offer financial services are also enabling a totally self service option to take up financial products such as balance transfers and personal loans. Sometimes incentives are offered to customers to sign up online. Once more and more customers get used to this method, there would be less need for the sales agent anymore.
These are all the realities that are happening and going to happen for more companies. This is because the bottom line for all companies (especially those that have been taken public) is to make a profit to satisfy their shareholders and board of directors. One of the quickest way to increase profit is to cut down the operation costs- and that would mean investing in automation….and slashing commissions and bonuses.
What to do if you find yourself affected by this?
In this article, I would write from the perspective of an insurance or mutual fund agent who are affected by cost cutting measures from the very company that they serve. Or those who already saw the writing on the wall (knowing that the change will come soon).
1. Become responsible and knowledgeable at what you are doing
I always believe that a true competent and responsible agent would always be sought after. No amount of automation or online platform is going to be able to replace the service of a reliable agent. There are still many customers who will not throw in money each month to buy a certain policy without their thousand and one questions being answered by an agent.
If the agent is dishonest and give wrong information, eventually the agent will not be able survive because he/she will find it hard to earn new customers. Yes, an aggressive agents may hustle and land on new customers- but this model is not sustainable.
In the long run, most agents sustain themselves through word-of-mouth and referrals. Most potential customers are most likely to buy from an agent that their friend recommended in glowing terms than from a stranger who approached them in a mall or through cold calling.
2. Consider taking up higher qualification to be a certified financial advisor
I have a friend who started as an insurance agent from a well known insurance company. She realized later that her company may not be offering the best policies in the market. Insurance companies compete and innovate their products offerings all the time. And you do not want to be lying to your potential clients that your company is offering the best product when you know there is another product from the competitor that is way better.
As someone who genuinely want to offer the best products to her customers…. she studied part time to pursue the Financial Advisor certification that enables her to sell all insurance, banking and unit trust products in the country. It was not easy- she was juggling the role of a full time agent, wife, mother of 3 children and taking care of her parents and in-laws. It took her a few years to earn that full qualification and it was worth it.
With that qualification, she said it meant that she will no longer qualify for any incentive trips – for example, she may be the top seller for Prudential policies but she will not qualify for any trips or bonuses that they have. But she told me that the trips does not matter to her because what is most important is she is able to study the needs of her customers and offer the best product that she knows of.
If I want to buy any financial products, I would call her because of her integrity as well as I have the assurance of knowing she would do her best to offer me the products that suits my requirements instead of hard selling the products from only one company.
3. Create multiple income streams
If you solely rely on earning commissions as your main source of income, then you are putting yourself at a lot of risks from things that can happen beyond your control that will affect your income stream.
You would need to create more sources of income stream in order to be able to sustain yourself. It can be either to pay the bills or within something that you are passionate about. Here are some suggestions that I have:
a. Start a blog or YouTube channel
If you have a knack for writing, you can consider starting a blog. If you like to talk and be in front of the camera, then start a YouTube channel (you can also do YouTube videos that are based on screenshots and slides in which you narrate over and need not show your face if you are shy).
I must be honest with you- making money from blogging or a YouTube channel is hard. You’ll make some but probably peanuts. If you work hard, you may be able to make money from a specific niche… such as offering financial literacy or teaching people how to save their money or plan for their retirement….. all in your country if you want to niche down.
You should not treat your blog or YouTube channel as a source of income. Use it as a marketing tool or your personal portfolio. It is the exposure you get from the YouTube channel and the persona you have build up that can help you to further land in potential clients, or write a book or start an online course that can earn you some income.
But again, be prepared for the hard work. It is an area that is hard to succeed in if you do not have passion because it takes time to see results.
b. Getting another job to help pays the bill
The most common one that comes to mind is being a Grab driver. Else, you can also consider going back into the employment market to work full time. One thing that having a full time job can give you is predictability- you know when are your off days, you can schedule your vacations and have a fixed income each month. You do not need to innovate or figure out things for yourself where your livelihood may hang by a thread of one wrong move.
10 years ago when I wanted to see if I am able to earn my living as a full time blogger, I took a paycut job to have more time and mental energy to work on my blogs. It was something that I felt I owed it to myself to prove and also to silence the inner voice that keeps asking me to take a paycut for better life quality.
Alternatively if you want nothing to do with office work… you may also consider starting side hustles such as baking to supplement your income or offering services such as freelance writing or building websites to supplement your income.
You can give this a try if you are determined to try to realize your dream but at the same time need to pay the bills.
It is indeed a bitter pill to swallow especially if the company that you have been loyal to suddenly start to undermine you by reducing your commissions and earnings. However, this can be a push not to stay complacent and have only one income stream that may dry up. It is better to start realizing now that later because this will be the future realities of all other companies too.
In the video below, Pat Flynn from Smart Passive Income did a video that he was let go from his dream job 10 years ago. And it was the best thing that has happened to him because he enabled him to search for other ways to make a living. Today, he earns passive income through selling his own digital products, affiliate sales, courses and making YouTube videos.
And he is s smart guy because at the end of the video, he used it to promote his book.