A selective non-qualified deferred compensation plan, paired with a company-funded supplemental benefit that vests over time. It can include 1099 independent contractors, which is the detail that changes everything for brokerages and agencies. The producer gets a real retirement vehicle. The company gets a reason for them to stay that a competitor cannot match by writing a bigger check.
Most of the value in a first call is telling you quickly whether this applies to you. Here is the short version.
Ask what your firm is worth without its top five producers, and you have the problem. Their book is the company's revenue, and every recruiter in your market is offering them a higher split, a signing bonus or a marketing budget to move it. You can match those offers, but matching them compresses your margin permanently and buys no loyalty, because the next offer is a phone call away.
Qualified plans can't help. A 401(k) can't selectively reward your best people, and it can't touch 1099 independent contractors at all. So your top producers sit with high income, a big tax bill, no employer retirement plan and no golden handcuffs. That is the gap this plan fills.
The structure is one that corporate America has used for decades for its key executives and that is rare in residential real estate, insurance and independent medicine. Two parts. The producer defers part of their own compensation pre-tax into the plan. The company adds a supplemental benefit on top, on a custom vesting schedule. Unvested benefits are what make leaving expensive, and the vested ones are what make staying feel like ownership.
The plan's design team models it on your actual roster before you decide anything. Tailored to company size, ownership goals and participant mix.
You choose who the plan is for. Usually the producers you can't afford to lose, and the ones you want to recruit.
The design team projects each participant's deferral, the company's supplemental benefit and the vesting schedule, and shows what it does to retention economics and the balance sheet.
Legal agreements, funding design and plan documents are finalized with the plan's ERISA counsel. You review everything with your own advisors.
Enrollment meetings with each participant, so the people the plan is meant to keep understand exactly what they are building by staying.
The plan is informally funded with company-owned life insurance policies, with the company as owner and beneficiary, so the assets stay on the company's books rather than leaving as an expense. That is what allows the retention spend to show up in enterprise value instead of the P&L. The funding design, the vesting schedule and the cost are all modeled for your roster before you sign anything.
The plan is designed to include them, which is the reason it works for brokerages and agencies at all. The permissible structure is confirmed by the plan's legal team for each firm during design.
Pre-tax deferral of a portion of their compensation, credited on an indexed basis with a floor and a cap set by the policy terms, paid out over a set period. Plus the company-funded supplemental benefit as it vests, and a death benefit to their beneficiaries.
The insurance is the funding vehicle, not the benefit. The benefit is the deferral and the vesting schedule. Company-owned, high-cash-value policies are the standard way corporate plans of this kind are funded, because they keep the assets on the company's books.
Unvested company contributions are forfeited under the vesting schedule you set. That forfeiture is the retention mechanism.
No one should tell you that. The honest words are tax-deferred and potentially tax-advantaged, depending on plan structure and individual circumstances. The plan's counsel models the treatment for your firm and I'd want your CPA in that conversation.
Tell me who you can't afford to lose and what you're competing against. I'll tell you whether the plan fits and what a model on your roster would show.