How They Earn Their Daily Bread - stock brokers, real estate agents, and other sales professionals - Statistical Data Included

Kiplinger's Personal Finance Magazine, June, 2001

The most successful salespeople focus on customer satisfaction and make their money selling or leasing cars to repeat or referral customers. "After two or three years in the business, you should have enough customers to survive without depending on new floor traffic," says Peacock.

Over her 13-year career with Stu Evans, Sabatini has learned that lesson well. She spends a lot of time after business hours picking up and delivering vehicles for her customers. In the winter, she will plow deep into the dealership's snow-covered lot to dig out a car she thinks she can sell. She teams up with her brother, also a sales rep at Stu Evans, to give her customers extra attention.

Sabatini's income has peaked over the past few years as car sales have surged. In addition to her salary, which comes strictly from commissions, Sabatini's perks include medical coverage, a 401(k) plan to which her employer also contributes, and a company car--a 2001 Lincoln Continental. --ED HENRY

Reputation is everything

BRAD ELMAN, 37, IS A life-insurance agent you can love. Even though Elman could get paid as much as 55% of the first-year premium when he sells a policy, he typically structures the policy so he earns about 20%. Instead of loading up clients with high-commission cash-value life insurance, he frequently sells them term insurance, on which he earns 35% of a much smaller premium. He almost never recommends that a client replace an existing policy with a new one--a move that can generate big bucks for agents but is usually a bad deal for customers.

Taking the high road hasn't hurt Elman's business one whit. On the contrary, it's a strategy designed to enhance his reputation and attract future business. And it works. Elman sells more group disability insurance than any other agent representing Northwestern Mutual, a large, well-respected company. He qualifies for the Million Dollar Round Table, an organization of the top-selling life-insurance agents worldwide. It's extremely rare that one of his clients in San Jose, Cal., drops a policy, and his customer-satisfaction rate is nearly 100%.

Unlike brokerage commissions, which are taken off the top when you invest, insurance commissions are embedded in the policy, making it difficult to figure out how much the agent actually gets. Most big insurance companies are licensed in all 50 states, but New York--which has strict regulations that apply to all policies a company sells anywhere in the country--sets the industry standard. Companies licensed in New York can't pay agents more than 55% of the first-year premium for selling cash-value policies. After that, agents generally receive 3% to 5% renewal commissions in each of the next five to ten years.

Many clients aren't aware that agents can often lower their compensation to help generate business. "It's been a long time since I sold a policy with a 55% commission," says Elman. Instead, he can structure the policy so he receives a lower commission on part of the premium and more of the money goes into building the cash value. Other companies have different methods of lowering commissions, but may not offer to do so unless faced with a competing offer, or unless you make a point of telling them you want to increase your cash value.