Matt Sapaula, chief distribution officer of the PHP Agency, tells InsuranceNewsNet Publisher Paul Feldman about his success in the insurance industry, first working in a traditional insurance business model, and later at the PHP Agency, which uses a multilevel marketing model. He also discusses what it takes to attract new agents into the business and what is required to keep them.
While the MLM model has taken some criticism, Sapaula describes what he believes are its advantages, including building a profit stream that is not as dependent on an agent’s personal sales output, and the ability to work part time while an agent’s network is initially built up. While the model is strictly commission, Sapaula points to training that helps an agent become entrepreneurial and a defined set of procedures that helps the company operate uniformly, creating “speed” and “massive growth.”
Sapaula served as a United States Marine, eventually coming home after eight years of service to learn about financial services. After joining the PHP Agency, it only took him three years to establish himself as a million-dollar earner and become one of its first Board Council members. Founded in 2009, the PHP Agency is a tech-enabled national field marketing organization. PHP partners with leading insurance and annuity carriers and provides a part-time or full-time opportunity to those seeking careers as life insurance agents. PHP, with more than 20,000 agents, is headquartered in Addison, Texas.
PAUL FELDMAN: Matt, we’re here today to talk about recruiting new agents into the business. I would say that bringing new blood into this industry has never been more critical than it is now. The population is growing and yet the number of agents in this industry is declining. There is a call to arms for the industry to address this.
At PHP, you are doing that. PHP is an MLM organization in structure, where participants receive commissions on their sales as well as on any sales of the participants they recruit. Some people think MLM has a bad reputation, but at the end of the day, that model is bringing in new people to the industry, arguably much more than the major career carriers. Why?
MATT SAPAULA: The model obviously works. The model attracts people into the industry from neighborhoods that sadly have been overlooked and underserved for multiple generations. When you’re looking at the network marketing style of recruitment, a lot of people think it’s only about recruitment. But a guy like me spent 12 years in the insurance industry.
I was the No. 1 personal producer out of our 25,000 licensed agents. I was selling a ton of indexed universal life; 80% of my business was indexed universal life and 20% was annuities. However, I’m only one guy, and I realized that I was burning out. I was the guy who was recruited in the bathroom of a Best Buy in Southern California and had also served in the Marines. I respected the boldness of that recruiter who prospected me, even though I didn’t stick with an MLM at that time.
Instead, I went into the traditional industry, but I went back to multilevel marketing because I studied the model. Even though in the short term, I made a lot of money in the traditional industry — I made six figures short term — I was not happy. I wasn’t burning up until I made it about other people, which is what a network marketing model is all about.
I looked at this model where, long term, the agency builder and agency manager didn’t have to fully depend upon personal production to keep the lights on. I took what I learned from the insurance industry to be a top producer and incorporated it through our agents who are willing to listen.
FELDMAN: What is MLM doing differently from the largest career carriers? What are you doing better?
SAPAULA: I believe that we are doing the best in leadership development and mentorship inside the insurance industry. The MLM model has a few things going for it: The top thing is that we’re built on one system. Everybody inside the entire company is speaking the same language about how to advance within a company, how to increase your commission level, etc.
We market and sell within the company. That centralizes training, that centralizes mentorship. Within the entirety of the agency, we have a little more than 23,000 licensed agents. And we started with only 66 agents in 2009. So everybody in the company is talking the same language.
FELDMAN: How are you getting your leads? What products are you offering?
SAPAULA: Everybody has a different way of doing business. At the PHP Agency, we have one way of asking the same financial questions of a client. We have one way to set up a first appointment. We have one way to set a follow-up appointment. When you have a network marketing model with a systematized process that’s simple for everybody to duplicate, you create speed and you create massive growth.
Quite frankly, the reason why a lot of our competitors love to talk to our agents is because they’re well trained and well versed. We know that there are some people we’ll keep and some people we’ll lose. That’s part of the business.
We hope to engender loyalty. We hope to engender friendship. I know this from just an economic standpoint when I was at 140% contracts with other carriers, I never made more than $350,000, and I had to spend a lot of money on leads. And today, with a 75% commission contract and the way PHP splits up a dollar to pay all the agents up and down the line, I made more than $1.8 million during the recording of this interview.
Yet 2% to 3% of our income is based on our personal efforts. That’s the benefit of a network marketing model with leadership development, a system and a forward-thinking CEO at the top. I can’t tell you how much Patrick Bet-David, the PHP Agency founder, has done to stretch our vision and get us thinking. Patrick says, “Hang around with us long enough, because then you’ll start thinking for yourself.”
FELDMAN: You know, other than a few big industry producers of the old days, most of the large carrier companies don’t seem to feature “personality.” But your founder and company seem to excel in that arena.
SAPAULA: Yes, he does. He is out there doing interviews with Joe Rogan, interviews with Jordan Peterson. He’s doing thought leadership. When you’re the CEO of the company, you have to be a powerful leader. That’s helpful, because most of the FMOs are looking for some lead generation — some way to get business. Using a network marketing model, which is what the insurance industry has done for eons, means being very good at building local, warm friendships in your local community, around friends and family.
Another way to do business is to buy leads. With our way of doing business, none of our agents — none of my 3,500 licensed agents, none of PHP’s 23,000 licensed agents — ever have to spend money on marketing and lead generation. We teach them by providing scripts, mentoring and coaching on how to build friendships and how to engage and how to use social media to build up their brand.
FELDMAN: How important is personal sales versus recruiting in your business? Do you have successful people who do only personal sales? Is that the driving force?
SAPAULA: Sure, we do. We have a lot of people who early on will wrap their minds around the financial products and services very quickly. And they’ll make their first $100,000, $200,000. I had a guy get to a half-million dollars in income. But the moment he stopped selling, his income dropped. So what we say in our system is when you are recruiting, that drives the profitability of your company. You help people build their business — in other words, go deep and build their organization and help them build their infrastructure.
That creates consistency and security. In this model, you don’t have these big fluctuations of high income, low income, high income, low income, etc., because you can’t always market, market, market. A network marketing business is able to streamline and smooth out those spikes and income.
People can use this model for whatever their goals and dreams are. We have people in our company who are happy making $60,000, $80,000 a year because we generate so much business from the top down, and we are able to take advantage of our natural leads. Social media is another thing that connects us. My agents who are trained are confident based on that training. We have a curriculum and certified field trainers. They take care of our newbies when they first come on board the business, as well.
FELDMAN: When you bring somebody new into the business, do you pay them anything or is their compensation strictly commission?
SAPAULA: All 100% commission. They have to pay for their insurance license. They have to pay for coming to our big events — plane ticket, hotel — because we’re coaching people on how to have their own business, to have the habits and behaviors of an entrepreneur. We’re creating entrepreneurial agents in a marketplace. They’re not waiting on anybody else to tell them to do something. They want to take initiative.
Often we think that paying a salary will get a new trainee much more rooted in the business. What we found, though, is that people don’t value what they don’t work hard for. If they work hard for something and they earn something, they value it more. It deepens their conviction in what they’re doing.
That’s why we allow people to start with us on a part-time basis, and that’s 80% of our field force. You don’t have to quit your full-time job. Let’s find a way for you to meet — and exceed — your full-time income on a part-time basis. Then you have options. This allows you to double your savings, pay down some debt, double the money you pay into your mutual funds or whatever savings and investments you’ve got going. If you really want to be your own boss, now you can make the smooth transition.
We’re teaching entrepreneurial habits as well as educating our people about their finances. Many people may not know the difference between personal finance and business finance, personal credit and business credit, a personal checking account and a business account, business tax deductions and no business tax deductions. Those are the things that a lot of people aren’t learning. When they come into our mix, we give them a broad base of financial awareness and education.
I can’t tell you how many people I know in this industry who are making seven, eight figures a year and who originally thought they were going to fail. And they were told they were going to fail. Somebody told them they’re not good enough. That’s what drove them.
I have an engineer. He made $230,000 a year with us before he went full time in the business.
He was a high-income-earning engineer here in Chicago. I have a doctor and he just made $430,000 with us and decided to go full time in the business.
That’s the benefit of a network marketing model. We have leadership willing to provide overlapping support. So while you’re at your day job, we’ll call your top leads on your behalf. And while they’re at their job, they have a manager who’s helping them grow the equity in their business. This is exciting. They’re learning how to monetize their network. One of the most gratifying things is when we can show people how this industry works and how they can help clients.
FELDMAN: I know you consider this a noble profession, as do I, and you have a lot of passion for what you do. How important is that to bringing new people into the business?
SAPAULA: I’m always thinking about me coming out of the Marine Corps. I was married, got divorced, became a single father and filed for bankruptcy — all in one year. Had it not been for an insurance agent wanting to recruit me into this industry, well, that conversation changed my life.
I just moved my parents here because of the insurance industry, because of that guy who was bold enough to recruit me out of a bathroom in Best Buy. I bought a long-term care policy for both my parents never thinking in a million years I’d ever need it, but now I have them in a senior living community — not a retirement home funded by the state, but a dignified retirement community with activities every day, food every day.. And they’re having a blast. That’s roughly $6,500 a month that I don’t have to pay because somebody educated me about long-term care.
So these products have already affected my life. The only way we make money is that dignified approach, improving somebody else’s life first. If I don’t improve your financial life first, I don’t make any money. If I didn’t have the desire to improve your life and have an in-depth conversation about it, I would not have a long-term career.
That is what I love about the business. Maybe in the initial years of my career, I was thinking about just surviving, transitioning out of the military, paying the bills, because I had three jobs. I started my insurance business part time, and then I eventually was able to make more money in insurance than I was in my other three jobs. There was a progression of me growing as an individual and then having an environment for me to develop. I’m going to pay that forward for the rest of my life. I hope my children do as well.
FELDMAN: You talked about a couple of people who are highly successful. A lot of people think that MLM is aimed at going after lower-income people, versus bringing in somebody who’s an engineer. What’s the difference, and is there a misconception?
SAPAULA: I hope it’s a misconception, because guess who was at the bottom? Me. I was making less than $20,000 a year. A lot of people see who I am today, but they don’t see the guy who was making only $20,000 a year. They don’t see the guy who was a statistic. They don’t see the guy who had immigrant family here from the Philippines. They don’t see the guy who could barely rub two nickels together. In my opinion, that’s an arrogant way to look at people. You can never determine the burning desire of a man or a woman until you at least start having a conversation with them.
I never thought a guy like me would be inside this industry, living the life I’m living, having the conversations I’m having. I spent time during the NFL draft hanging out with the Dallas Cowboys, while Jerry Jones is in the other room drafting players. Never in a million years did I think I would associate with football players and celebrities, hip-hop artists, and all the people I looked up to when I was growing up. If it hadn’t been for somebody who thought enough of me to say: “This kid, he might have a shot.”
FELDMAN: Take me through the a normal process for you getting a new agent. What does that look like?
SAPAULA: Here are some behaviors I look for regardless of what’s on a resume.
1. Do you have time to invest into learning this craft?
2. Are you willing to invest money to obtain your own insurance license?
3. Are you a decision-maker in this process; will you call a shot, make a decision and stick with it?
4. You need to show a desire and ambition to want to change your life.
FELDMAN: How do you decide on who’s right for this business? Is it by gut? Do you conduct in-depth personality assessments or multiple interviews?
SAPAULA: We do it by asking people to make a decision and follow up with some action. For example, I’ll say, “Call me back at 10:30” or “Show up at five o’clock.” If they don’t call me back at 10:30, if they don’t show up at five o’clock, then they don’t want it. They’re not showing the burning desire. I don’t get hung up on people who don’t want to change their lives. I don’t want to be more excited about your financial future than you should be about your financial future. Please be active in your own rescue.
“The only way we make money is that dignified approach, improving somebody else’s life first. If I don’t improve your financial life first, I don’t make any money.” — Matt Sapaula
We have a development process because not all the people we recruit are going to be in your starting lineup right away. The insurance industry, for the most part, is only looking for a starting lineup type of person. I wasn’t a starting lineup type of person, but thankfully somebody had patience with me.
Early in my career, I didn’t have a network to train me, so I had to come to these insurance industry conferences by myself in order to get some coaching. Every time an insurance company would put together a lunch-and-learn at a local restaurant, I’d show up. I was the youngest kid, the only multicultural kid in the room. For a large part of my early career — for the first 12 years of my career — I always felt that way. I just wanted to prove I was good enough to earn a seat at the table.
Once we have a prospect and they come on board, we have a fast-start process, which has eight steps. When they go through these eight steps, that’s another filtering process for us to see if somebody is a good fit. These aren’t hard steps. Can we talk to your spouse? Can you fill out a one-page business plan? Can we look at your financial analysis, see what life insurance product is appropriate or suitable for your situation?
If you’re coming from the military, for example, don’t you think it’s smart to have your own insurance policy, have your own financial structure squared away and to address that before you try talking about this to other people?
Those are some of the steps that are part of the eight-step process. And then we have a once-a-month school called the Fast Start School. They get to see the other people who were just like them: former Apple executives, former UPS drivers and pastors who are in financial services now on a part-time or a full-time basis.
FELDMAN: Again, going back to that perception of MLM. Some people see multilevel marketing as being a type of pyramid marketing. What’s your response to those who say that?
SAPAULA: Early on, we coach, mentor and guide somebody who has zero experience with MLM, and has zero experience with life insurance as a business. There’s a large amount of work that a manager will have to invest in time, money and emotion to coach somebody from scratch. For the most part, a lot of people in the insurance industry are without a system, they don’t have any patience for that, which makes more room for us.
Then we split up a dollar to benefit those who develop people more long term. When we educate our people, the first question is: Long term, what do you want to be? Do you want to be selling policies for the rest of your life? Because eventually you’re going to burn out. Or do you want to create an agency and build a business where this thing starts taking on a life of its own?
Even though through most of the insurance industry, you’re going to have a model where you get high commission, there’s really no incentive for you to build and develop. Everybody starts going their own way.
With our model, we start people off a little lower, but in the long term they make more money. When we split up our dollar, it’s designed to benefit those who build. If people realize they don’t want to build, then that’s OK. But we’re confident knowing that we’re going to attract the right people that want to build for the long term.