Updated: Aug 25
Who is most susceptible to being conned? Several studies, summarized in "The Confidence Game," make the point that people who are more optimistic, smarter, especially relative to strong verbal skills, going through significant life changes, think they can read people better than normal, and willing to take significant risk are the most likely people to be conned.
To run an independent insurance agency is to take significant risks. Just working on a commission basis is taking a significant risk. I've never heard an agent say they were not a good judge of people. Agents talk a lot and most have strong verbal skills. To take risks and work on commission requires lots of optimism and a sunny disposition seems correlated to better sales than a dour face. The industry is forcing life changes. With the average agency owner usually around 55-58 years old, they are beginning to see retirement on the horizon which is obviously a life changing experience.
Add to these characteristics the saying, "Who is the person most likely to fall for a sales con job? Another salesperson." The data now more or less confirms that saying. The question then is, "Now that you know you are a quality target for a con job, what are you going to do to avoid being duped?"
I have always wondered why so many agency owners hire advisors where the results, when I test the return on investment, are negligible to negative, but the owners continue to pay those advisors. I've always wondered why agents stick with certain carriers that obviously, to everyone else, are not looking after the agency. Now I understand. The new con is investing in certain InsurTech's that are just shells, vaper ware is the term to which these firms are referred. Now I know.
Independent agency owners have characteristics that make them prime targets and now it all makes sense to me. As outlined in the book and as I have seen in my experience, the most fascinating aspect of being conned is how many people actually return to play the con again and again. The aspect of the human mind that causes a person to not only be conned, but to go back to the same con again is fascinating to me.
The solution to avoid being conned as an agency owner is to conduct tough due diligence and measure success with tangible criteria. Inhibit your trusting instincts. It is especially important to inhibit your competitive instincts because a great con to play on competitive people is to cause them to compete against ghosts. What I mean is setting up untested or even straight phony benchmarks that seem like they should matter, but that the con artist never actually tests. However, by buying into the system, paying money to buy into the system, you chase metrics that don't matter at best and damage the agency at worst. This is called "chasing the ghost" because what one is chasing can't be caught because it does not matter.
Chasing the ghost applies to investing in untested vapor ware too. There is some really good Insurtech available and soon, some improved technology will be available to agents. However, some of the Insurtech is nothing more than really pretty PowerPoint slide decks. Beauty always sells but be sure you're not buying a pretty pig.
A different study, and I can't remember the citation, showed that humans cannot really judge other humans any better than 50/50 -- unless the person was the child of an alcoholic. Keeping your ego relative to judging people in line with reality is potentially your best edge to avoid being conned in any part of your life.
NOTE: The information provided herein is intended for educational and informational purposes only and it represents only the views of the authors. It is not a recommendation that a particular course of action be followed. Burand & Associates, LLC and Chris Burand assume, and will have, no responsibility for liability or damage which may result from the use of any of this information.