When agency leaders talk about growth, the conversation often turns to acquisitions, carrier relationships, technology investments, or market opportunities. While those areas certainly matter, there is another investment that can have the best impact on an agency’s future value creation: developing a strong producer pipeline.
A conversation between Mike Wagar and Melissa Hama-Wardle from Peoples Bank, Jarod Steed from IA Valuations, and Brian Lawrence from the Ohio Insurance Agents Association, gave some insights about this topic. They shared that agencies that consistently invest in recruiting, developing, and supporting producers position themselves for stronger organic growth, enhanced agency value, and greater perpetuation opportunities.
The question agency owners should be asking isn’t simply, “Do we need another producer?” Instead, it may be, “Is improving our production talent part of our long-term growth strategy?”
Why Producers Matter More Than Ever
For many independent agencies, growth through acquisition has become increasingly expensive and competitive. While acquisitions can be an effective strategy, they are not always sustainable as the sole growth engine of an organization. Oftentimes low organic growth books of business are being acquired, especially if the principal is retiring.
Organic growth is one of the strongest drivers of agency value. Agencies that consistently generate new business through talented producers create stronger revenue streams, reduce dependence on acquisitions, and build more resilient organizations. Investing in producers also strengthens the agency’s talent bench, creating future leaders, key employees, and potential shareholders.
Producer development is also closely tied to perpetuation planning. Agencies that fail to cultivate the next generation of producers often find themselves facing difficult succession challenges later. By contrast, agencies that intentionally develop talent create more options for ownership transitions and long-term independence.
A useful exercise for agency leaders is evaluating their demographics through metrics such as Weighted Average Shareholder Age (WASA) and Weighted Average Producer Age (WAPA). It is important to have a balance between veteran, mid-career, and rookie producers at an agency. These measurements help agencies understand whether they are building a healthy talent pipeline or allowing critical positions to age without a succession plan.
Finding the Right Talent
One of the biggest misconceptions in producer recruiting is that successful producers must come from another agency or inside the broader insurance industry. In reality, successful producers enter the industry from a variety of backgrounds. Reagan and the Big I’s Young Producer Study shows that many top-performing young producers originate from other industries, college recruiting and internship programs, or non-insurance sales positions. “Successful producers are not often logging onto the job boards to move to a different agency. You likely will have to think outside the box to fill these positions,” shared Lawrence.
That reality creates an opportunity for agencies. Rather than limiting searches to experienced insurance professionals, agencies can broaden their talent pool by focusing on skills, work ethic, relationship-building, and cultural fit.
This idea often comes down to an age-old question: build or buy?
Building talent means hiring less-experienced individuals and developing them internally, whereas buying talent means recruiting experienced producers who bring an existing track record. Neither approach is universally right or wrong. The best strategy depends on the agency’s size, growth objectives, resources, and tolerance for risk.
Mike Wagar outlined three common producer profiles:
- Rookies typically represent a lower upfront investment but often require more training and carry higher risk.
- Mid-level producers offer a balance of experience and growth potential.
- Veteran producers generally command higher compensation but may generate results more quickly because of their experience and existing relationships.
Ideally, an agency can have at least two of the three above at their agency to create a strong talent profile. Many agencies today are missing rookies. Rookies can be time-intense and costly; are they worth the investment?
The Reality of Producer Development
Perhaps the most important takeaway for agency leaders is that producer success rarely happens overnight.
Many agencies enter the hiring process with unrealistic expectations about the timeline required for a producer to become profitable. The reality is that most producers require a significant ramp-up period. Estimates shared by Lawrence say that producers may need a period of 3-5 years to validate. During the early stages, agencies should expect substantial investment before meaningful returns emerge.
This reality highlights why producer hiring should be viewed as an investment strategy rather than purely a staffing decision.
Like any investment, producers require resources to succeed. Agencies that simply hire producers and expect them to thrive independently often experience disappointing results. Agencies that achieve stronger outcomes typically provide meaningful support in several areas, including:
- Dedicated service teams
- Marketing support and lead generation
- Carrier access
- CRM and data resources
- Ongoing coaching and accountability
The message is clear: producers do not fail in isolation. In many cases, support systems play a major role in determining long-term success. If you look to grow organically and need to hire a producer, treat the process as a skill it needs to improve on. There are good ways and bad ways to hire and train producers, and each agency will find a different approach that suits them.
Measuring Success Beyond Production
When agencies evaluate producer performance, new business volume is only part of the equation. Several performance measures are more complete indicators of producer success, including revenue per producer, new business velocity, retention quality, and payback period. These metrics help agency leaders understand not only how much business is being written, but also whether growth is occurring profitably and sustainably.
Don’t just measure the results, otherwise known as lagging indicators. An agency should measure the habits that typically contribute to new business, known as leading indicators. Examples of leading indicators include a number of meetings scheduled per week, calls made per day, or quotes generated per week. What are successful producer habits at your agency? Try to build a structure to measure those habits for new hires, so you see the habits that lead to sales.
Building Compensation Plans That Encourage Growth
Compensation remains one of the most challenging aspects of producer development. The panel emphasized that compensation should align with growth objectives while maintaining agency profitability. Rather than focusing solely on attracting talent, agencies should design compensation structures that reinforce the behaviors they want to encourage.
Many agencies begin with a base salary plus commission model, particularly for newer producers. As producers establish themselves and develop a book of business, compensation gradually goes to commission-only structure. Most agencies differentiate commission rates between new and renewal business to further align incentives with growth goals. Ultimately, your compensation structure should incentivize the right things for the agency. Do you just need a producer to write new business? Do you want them to think about the profitability of the business they write? Define your new business goals and build a compensation structure for producers that match those goals.
When incentives are not aligned, agencies may inadvertently encourage behavior that works against long-term profitability.
Common Hiring Mistakes to Avoid
Even agencies with good intentions can undermine producer success through avoidable mistakes. Among the most common challenges identified were overpaying guarantees, failing to establish performance milestones, providing insufficient support, and creating compensation plans with misaligned incentives.
Strong hiring processes can help reduce these risks. People hiring producers should conduct a behavioral assessment on their candidates to understand how the prospective producer is hardwired. Look for things like call reluctance, competitiveness, and motivation. There are innate personality types that make it easier for some to produce than others.
Another best practice would be coming up with a cashflow model for a salary and commission schedule. Anyone hiring a producer should be able to answer these two questions easily before hiring someone: How much new business does the producer need to write before they are ‘validated’? How long are you willing to wait?
A validated producer is one who generates enough agency commission to cover their payroll cost.
The Connection Between Producers and Agency Value
No matter the rate environment, soft or hard market, producer investment and agency value are directly connected. Agencies with healthy producer pipelines typically demonstrate stronger organic growth, deeper leadership benches, and more diverse perpetuation options. Those characteristics contribute positively to agency valuation and long-term independence.
From a financing perspective, Wagar noted that growth investments can sometimes be supported through banking solutions that help agencies conserve capital while funding strategic initiatives. The broader point, however, was not about financing alone; it was about recognizing that well-structured producer development programs are investments in the future value of the agency.
Final Thoughts
Healthy agencies do not leave producer recruiting to chance. They recruit intentionally, invest patiently, provide meaningful support, and align compensation with long-term goals. They understand that producer development takes time, but they also recognize that the payoff extends far behind new business production.
A disciplined producer strategy can drive organic growth, strengthen agency value, support perpetuation planning, and create future leaders within the organization. In today’s competitive environment, producer recruitment may be the most important investment an agency can make.
By: Colleen Elliott
Colleen Elliott is the Marketing & Communications Manager on the IA Valuations team. A graduate of The Ohio State University’s Fisher College of Business, she has a background in sales, marketing, and communication. Colleen manages marketing campaigns, communications with agents and state partners, and helps the IA Valuations team from an operational perspective.
About IA Valuations and Agency Link – Founded in 2017, the IA Valuations team has performed over 400 valuations to independent insurance agencies across the U.S. Our advisors have 30+ years of experience guiding agency owners on maximizing their agency value, planning, and legal needs for ownership transition. In addition, IA Valuations has provided perpetuation planning, financial modeling and business planning for independent insurance agencies. Finally, IA Valuations has advised dozens of agency owners on selling their agencies through our Agency Link process. Agency Link is a platform that connects buyers and sellers together to further the growth and strength of the IA system. To learn more about IA Valuations, please visit IAValuations.com or contact@iavaluations.com.
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