How being independent increased one agent’s income in Japan by 700%

Yasuhiro Koba, of Kagoshima Prefecture, Japan, took a different career path from many other agents in his country. For him, this path led to more income and responsibilities as well as more risks. He’s an independent, or general, agent in Japan, where the majority of financial advisors or agents are tied to one company.

“As an independent agent, my peak income reached about 700 percent of what I made when I first started selling life insurance,” said Koba, who has been an MDRT member for 18 years. He was able to qualify for Top of the Table within three years after becoming independent, and he has since qualified 13 times.

Yasuhiro Koba

The advantages of being independent

As an independent agent, Koba can do what many tied agents in his market can’t. He offers a diversity of products through the 10 different insurance and financial services companies he’s registered with.

Clients today research online financial products and see the variety of financial products available, Koba said. Clients tell him they trust him because they know he’s independent and can offer them products based on their needs, not because of who he works for. “When you’re tied to a single company, your perspective may be limited,” he said, and thus the solutions you can offer may be limited, too, Koba added.

For example, being an independent agent registered with multiple companies allows Koba to offer comprehensive solutions for high-net-worth clients, such as large life insurance policies. “If the client is requesting a large life insurance policy, you can’t cover that with a single insurance company. You can, however, combine products from different insurance companies,” Koba said.

For example, in one of Koba’s biggest cases, the client realized his estate would generate a ¥5 billion ($44.3 million) inheritance tax bill for his heirs. The client wanted ¥3 billion ($26.6 million) of life insurance to help cover the inheritance tax. That, however, is too large an amount for one company to cover because there’s too much risk, he said.

“Since I’m registered with 10 companies, I can reduce the risk,” Koba said. “If the coverage is ¥3 billion, the screening process is very strict. When you can diversify ¥200 million ($1.8 million) here and ¥300 million ($2.6 million) there, it becomes easier. This is an advantage.”

The expense of being independent

The disadvantage is “being independent requires a lot of money,” Koba said.

To control his expenses, he leases land in a rural area for his office, which is more cost effective than renting an office in an urban area. Other business expenses included purchasing office equipment and hiring a staff and paying their wages. In all, his monthly company expenses are about ¥10 million ($89,000).

Finding and keeping competent and engaged staff is sometimes difficult and time consuming. It’s a continual challenge in running a business, Koba said. The effort has been worth the result, though. He now has a staff in place who manages his office, which frees up his time.

To succeed as an independent agent, you need a strong sense of autonomy and be able to take care of other people well. “I truly think people who take action decisively will become more successful than those who rely on other people,” Koba said.

Watch more from Yasuhiro Koba (in Japanese only) 

• Read “Transitioning from tied to independent advisor”
• Read “Economics in Japan creates challenge” 
• Watch “Providing value to clients” to learn about how advisors in Japan, Singapore and Korea create value for clients despite competition from banks and online.