Income vs Wealth


This post is part of a series sponsored by InsurBanc.

Career aspirations are often directed by maximizing one’s income. Successful and effective employees earn ever-increasing wages and increase their income as they continue to be successful.

But if the employee stops working, he stops earning. If an employee changes occupation or is distracted in the short term, his income can change dramatically. On the other hand, wealth generates assets that generate income over a longer period of time and are not directly related to business.

In the traditional sense, building wealth means transferring a portion of the income into a 401(k) or similar retirement vehicle to accumulate assets that will earn income and hopefully compound those earnings over time.

For independent insurance agents, the best and best wealth-building option is to invest in the company. Buying an agency, buying a book, or becoming a partner in equity at an agency has proven to be the greatest source of wealth I’ve seen in my 25 years in banking.

Insurance agencies continue to be strong, consistent generators of repeatable cash flows with minimal additional capital investment to grow the business. We just need to look at the pace and volume of private equity to make sure the agencies are solid investments.

Producers who understand the value of ownership and are looking for opportunities to buy, buy, invest or partner in an agency, will move their personal financial resources from income generation to wealth, to generating wealth that can transcend generations.

Monetization of agency ownership at the end of a career will separate those who stayed the traditional path of income and retirement savings, and those who made the leap into the realm of agency ownership.

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