Reviewed by Margaret James

What Is a Back Door Listing?

A back door listing provides a way for a private company to go public if it doesn’t meet the requirements to list on a stock exchange. The company gets on the exchange by going through a back door. This process is sometimes referred to as a reverse takeover, reverse merger, or reverse IPO.

Key Takeaways

• A back door listing is a way for a private company to go public if it doesn’t meet the requirements to list on a stock exchange.
• One company will acquire another or create a shell corporation that allows the two companies to continue operations independently of each other.
• A private company will sometimes engage in a back door listing simply to avoid the time and expense of engaging in an IPO.
• Shareholders in the target company may get some cash for the deal.
• A back door listing can hurt profits if the two companies don’t have a natural fit.

How Does a Back Door Listing Work?

A private company avoids the public offering process and gains automatic inclusion on a stock exchange by going through a back door listing. The buyer may merge both companies’ operations following the acquisition or create a shell corporation that allows the two companies to continue operations independently of each other.

A private company will sometimes engage in a back door listing simply to avoid the time and expense of engaging in an IPO although this isn’t as prevalent.

Benefits of Back Door Listings

One of the major upsides of going through a back door listing is that it’s a cost-effective way for a private firm to go public. It doesn’t have to go through the expense of regulatory filings or funding to go public because it can strike up a deal with an already public company.

Private firms may also inject life into a troubled company without the need to raise more money from the market. Not only does this bring a new set of people to the table but it may also bring new technology, products, and marketing ideas.

There’s also an upside for existing stock owners. Shareholders in the target company may also get some cash for the deal. It may mean added value for the new entity’s shareholders as well if the merger is successful and the two companies’ synergy is compatible.

Downsides of Back Door Listings

There are also disadvantages to undergoing a back door listing as with any other process. It doesn’t happen very often so it may be cumbersome to explain to shareholders, leaving them confused and upset.

The process can also lead to new shares being issued for the incoming private company. This leads to share dilution that can decrease existing shareholders’ ownership and value in the company.

A back door listing might help boost a failing public company’s bottom line but it can have the reverse effect as well. It may hurt profits in the end if the two companies don’t have a natural fit.

Important

Trading of the listed company can be halted or suspended until the merger is fully executed depending on which country the listing is located in.

Example of a Back Door Listing

Say a small private firm wants to go public but it just doesn’t have the resources to do so. It may decide to buy out an already publicly traded company to meet the requirements. The company would need a lot of cash on hand to make this possible.

Let’s take a hypothetical example of two companies, Company A and Company B. Company A, the private company, buys control of Company B through its shareholders. Company A’s shareholders will then control Company B’s Board of Directors. 

The merger is negotiated and executed when the transaction is complete. Company B will then issue a majority of its shares to Company A and Company A will then begin to do business under Company B’s name and merge the operations of both. Company A may open up a shell corporation and keep the two operations separate in some cases.

What Is a Real Life Example of a Back Door Listing?

One of the more significant examples of a back door listing occurred when the New York Stock Exchange (NYSE) acquired Archipelago Holdings. The two agreed to a nearly $10 billion deal and created the NYSE Group in 2006. Archipelago was one of the exchange’s main competitors even though it offered trading services electronically compared to the open outcry system of the NYSE.

What Is a Shell Corporation?

A shell corporation has no employees and it offers no products or services. It effectively exists in name only.

What’s the Effect of Share Dilution?

Share dilution occurs whenever a company issues additional shares of its stock. The result is that there are more shares outstanding but the overall value of all shares remains the same. Each share outstanding therefore becomes worth less as a result because more shares have a piece of the pie.

The Bottom Line

A back door listing is literally what the name implies: Someone or something is entering through other than the main entrance. It happens in trading when a private company can’t go public because it doesn’t meet stock exchange requirements or if it doesn’t want to go public. It often involves a merger between a public company and a private company.

Whether it provides a worthwhile investment for traders depends on several factors. Do some thorough research into the situation if you’re considering it.

Reviewed by Ebony Howard

The electronics and Nintendo game systems you have lying around the house could be worth major dollars. Why leave them in drawers when you could turn them into cold, hard cash? It’s easier than you think.

Here’s how to find out how much your used Nintendo might be worth.

Key Takeaways

• Your used Nintendo game systems and other electronics could be worth money by reselling them.
• You could go the store route, either brick-and-mortar or online, via retailers such as GameStop, Amazon, or Best Buy.
• You have other options with less well-known retailers, such as Decluttr and Swappa.
• You could also try Craigslist or a Facebook garage sale group, as well as community for-sale sites and old-fashioned newspaper classified advertising. There are safety concerns with meeting a stranger, as well as the risk of fraud, but you may be able to get a higher price.

Staggering Facts

Recycling statistics reveal that Americans throw away 8 million tons of electronic equipment each year, and 75 pounds of gold and 772 pounds of silver for every one million discarded cellphones. But we’re not talking about recycling; we’re talking about reselling. Even that old iPhone 4S that you bought new in 2010 could still land you around $10, and newer phones might get you $350 or more. The average home has about 24 electronic products; that represents a lot of money on the used goods market.

How Do I Sell My Used Nintendo?

There are plenty of ways to sell your used electronics. First, you could go the retail route. If you want to sell that old video game console, take it to your local GameStop (GME). Once you sell your console, it goes through a host of tests, and if anything is broken, it gets repaired. Next, it’s wiped clean of any identifying data and then sold as a used product.

Amazon Inc. (AMZN) has a trade-in program. Send your used items to the Amazon warehouse after settling on a price, and you’ll get a gift card for the agreed-upon amount. The drawback is that you don’t pocket the money; you have to spend it at Amazon. On the other hand, it’s easy and you don’t have to meet up with an unsavory character in a parking lot to sell locally.

Best Buy Co. Inc. (BBY) has a similar program in which it offers a gift card in exchange for the trade-in. You can take your eligible device to your local Best Buy or mail it.

Once you get outside of well-known retailers, you have more options in terms of how you collect your money.

Example of How Much Your Used Nintendo Is Worth

Where will you get the best deal? Let’s imagine that you have a used Nintendo Switch OLED Console in good condition. Here’s what the major players offer:

• Decluttr: $54
• Best Buy: Up to $90, for any of three varieties of the console
• GameStop: $143 to $154, depending on the console
• Swappa: $128 to $288

Go Direct

But what if you want to sell your used electronics without the help of one of these platforms? You could try Craigslist, but as we said above, you have to be careful when meeting a stranger. There are safety concerns, but if you’re OK with that, you may be able to get a higher price.

In most communities, there are Facebook garage sale groups where people put their goods up for sale. Much like Craigslist, it will probably involve face-to-face contact, but the prices are likely similar to Craigslist. Then there are all of the community for-sale sites, as well as the good old-fashioned newspaper.

Beware of fraud when you opt for Craigslist and other community classifieds; these things work best when you sell local and make a physical exchange or receive payment before shipping. If you want to open it up to a national market, it’s still best to go through one of the intermediaries. Many people have found ways to defraud sellers out of their products and money.

What Is Nintendo?

Nintendo is a Japanese company that develops, manufactures, and sells video game consoles and software, as well as other home entertainment products. It is one of the world’s largest video game companies.

What Kinds of Used Consumer Electronics Can I Sell?

You can sell many types of used consumer electronics, including:

• Cellphones
• Computers
• DVDs and Blu-rays
• Kindles and other e-readers
• Laptops
• Tablets
• Video games
• Video game consoles
• Wearable technology

What Is the Risk of Selling Your Old Phone?

The risk of selling your old cellphone is that it might be running on an outdated version of Android or iOS. This means that it often doesn’t have critical security updates to keep the buyer and their data safe, although the hardware is usually fine to keep using.

The Bottom Line

Today, the stigma associated with buying used electronics is gone for many consumers who are trying to save money. Plus, the overseas market is huge. This means that the prices people are willing to pay for your used electronics are higher than you think.

Go through your drawers, find that old stuff, and see what kind of market exists; even if your device is broken, you can get paid for it. And remember, the sooner you get it on the market, the better. The older the device, the less you get.

Whether it’s Tiffany or Costco, here’s what you need to know

Reviewed by Margaret James

Costco may not be the first store that comes to mind when you think about shopping for a diamond ring. But the sparkly jewelry case often positioned near the wholesale club store entrance is enough to make many shoppers curious about the wisdom of buying fine jewelry there.

Here are some things you should know before you buy a diamond ring from Costco (COST)—or anywhere else.

Key Takeaways

• Many big-box stores like Costo sell diamond jewelry.
• Costco does not offer cleaning or repair services for its jewelry.
• The most expensive ring as of February 2025 is $320,000, but there are much more affordable prices.
• Unlike a store like Tiffany & Co., you cannot have a ring sized to fit, as they are premade items.

Understanding the 4Cs

Most jewelry retailers use the Gemological Institute of America (GIA) color, clarity, cut, and carat weight standards, also known as the 4Cs, to set stones’ prices. The rating for these characteristics determines the quality of a diamond. The cut is a matter of personal taste, but the quality of the cut matters to its brilliance.

Clarity is a measure of the stone’s purity, with designations like VVS1, or very, very slightly included, and VS1, for very slightly included. Color is rated on a scale of D to Z, with D being the best, or colorless, quality.

Costco guarantees that the diamonds it sells are at least VS2 in clarity and grade I in color. Its diamond rings with a center stone that is 1.00-carat or larger come with a GIA Diamond Grading Report. Diamonds over one carat come with a gemological/jewelry report that can be used for an insurance appraisal of the fine jewelry investment.

Important

Shoppers who go to Tiffany & Co. don’t have to make sense of technical reports independently.

Tiffany & Co. offers consultations during the shopping process with diamond experts in-store, by phone, or by email.

Diamond Price Ranges

A one-carat or more diamond ring can sell for anywhere between $3,500 and $40,000, depending on those 4Cs, the setting’s quality, and the retailer.

As of February 2025, the Costco website lists rings starting at $599.97 for a double-row band in 14k white gold with a 0.70-carat VS2 diamond. The priciest offering at this writing is a $319,999.99 ring set in platinum with a 1.54-carat pink diamond rated with VVS1 clarity.

For comparison, a solitaire diamond ring at Tiffany & Co. starts at $15,800, with many customizable options for size, color, and setting. Many of the rings displayed on its website are embellished with diamonds, often clustered with other stones.

Online diamond retailer Blue Nile Inc. sells loose diamonds and preset diamond rings and lists one-carat stones starting at $3,050. Blue Nile shoppers can choose from several setting styles for the diamond that they select at an additional cost. It uses the GIA rating system.

Customization and Service

Old-fashioned jewelry stores allow customers to customize their purchases. If you like a stone in one ring but the setting of another, many jewelers will make a custom version for you. Some even allow you to design your own ring and will work with you to produce a one-of-a-kind ring based on your description.

When you purchase a ring from a traditional jeweler, you can generally take it back when it needs cleaning or repairs or even have a gemstone reset in a new piece of jewelry.

All Costco diamond rings are premade, and buyers don’t have the option to customize them. The specifications on the Costco website list ring sizes, but you will have to take your ring to a jeweler if you need to have it sized to fit.

Costco does not offer cleaning or repairs for its jewelry.

Tiffany vs. Costco

In August 2017, a federal judge ruled Costco owed Tiffany at least $19.4 million in damages, lost sales, and interest for selling rings falsely advertised as Tiffany jewelry. The trial followed a 2015 verdict against Costco in the U.S. District Court in Manhattan. A jury determined the company was guilty of trademark infringement for using Tiffany to describe rings in its jewelry cases. Costco had argued that Tiffany was a generic term used to describe a style of ring setting.

If nothing else, that notorious case suggests that a consumer considering fine jewelry should know the basics before buying fine jewelry.

What Is Costco?

Costco Wholesale Corp. is a big-box retailer and a wholesale warehouse club operating 897 locations in North America, Asia, and Europe. It also has a major ecommerce operation. The company’s warehouses offer low prices on a limited selection of both name-brand and private-label products, typically offered in bulk volumes.

What Is Tiffany & Co.?

Tiffany & Co. was founded by Charles Lewis Tiffany in New York City in 1837. It started as a stationery store and eventually expanded to a leading global design house with a reputation for innovative jewelry design and expert craftsmanship. The company offers necklaces, bracelets, earrings, rings, and watches, as well as a variety of home accessories and fragrances. It was acquired in 2021 by the French luxury conglomerate Moët Hennessy Louis Vuitton SE, referred to as LVMH or Louis Vuitton.

What Is Blue Nile?

Blue Nile is a prominent online retailer specializing in selling certified diamonds and fine jewelry. It allows customers to purchase engagement rings, wedding bands, and other jewelry pieces directly through its website, often at lower prices than traditional brick-and-mortar jewelers.

Is There a Best Time of Year to Buy Diamond Rings?

Most experts say the post-holiday season, particularly in January and February, is the best time of year to buy diamond rings. This is because demand is lower and retailers often offer sales to clear out leftover inventory from the busy holiday season. Other good times include around Presidents Day weekend in February, when further discounts may be available, and August, which is considered an off-peak month for engagement proposals.

The Bottom Line

Costco and many other big-box retailers sell diamond jewelry. Costco guarantees that the diamonds it sells are at least VS2 in clarity and grade I in color. While its most affordable diamond ring was about $600 as of February 2025, keep in mind that Costco does not offer cleaning or repair services for its jewelry and that you cannot have a ring sized to fit.

Fact checked by Kirsten Rohrs Schmitt
Reviewed by Margaret James

Most entrepreneurs are risk-takers by nature, or at minimum calculated visionaries with a clear plan of action to launch a new product or service to fill a gap in the industry. On a personal level, many entrepreneurs take big risks to leave stable jobs to throw their efforts (and sometimes their own money) into launching a business.

For entrepreneurs, there is no guaranteed monthly income, no guarantee of success, and spending time with family and friends can be a challenge in the early days of launching a company. Here are some of the most common risks that every entrepreneur and investor should evaluate and minimize before starting a business.

Key Takeaways

• Entrepreneurs face multiple risks such as bankruptcy risk, financial risk, competitive risks, environmental risks, reputational risks, and political and economic risks.
• Entrepreneurs must plan wisely in terms of budgeting and show investors that they are considering risks by creating a realistic business plan.
• Entrepreneurs should also consider technology changes as a risk factor.
• Market demand is unpredictable as consumer trends can change rapidly, creating problems for entrepreneurs.

Financial Risk

An entrepreneur will need funds to launch a business either in the form of loans from investors, their own savings, or funds from family. The founder will have to put their own “skin in the game.” Any new business should have a financial plan within the overall business plan showing income projections, how much cash will be required to break even, and the expected return for investors in the first five-year time frame. Failure to accurately plan could mean that the entrepreneur risks bankruptcy, and investors get nothing.

Important

Entrepreneurs face many risks when they launch a venture, and they should take measures to insure against those that are most likely to affect them.

Strategic Risk

An impressive business plan will appeal to investors. However, we live in a dynamic and fast-paced world where strategies can become outdated quickly. Changes in the market or the business environment can mean that a chosen strategy is the wrong one, and a company might struggle to reach its benchmarks and key performance indicators (KPIs). 

Technology Risk 

New technologies are constantly emerging, particularly in the era of the Fourth Industrial Revolution. Some of these changes are characterized as “paradigm shifts” or “disruptive” technologies. To be competitive, a new company may have to invest heavily in new systems and processes, which could drastically affect the bottom line.

Market Risk

Many factors can affect the market for a product or service. The ups and downs of the economy and new market trends pose a risk to new businesses, and a certain product might be popular one year but not the next. For example, if the economy slumps, people are less inclined to buy luxury products or nonessentials. If a competitor launches a similar product at a lower price, the competitor might steal market share. Entrepreneurs should perform a market analysis that assesses market factors, the demand for a product or service, and customer behavior.

Competitive Risk 

An entrepreneur should always be aware of its competitors. If there are no competitors at all, this could indicate that there is no demand for a product. If there are a few larger competitors, the market might be saturated, or the company might struggle to compete. Additionally, entrepreneurs with new ideas and innovations should protect intellectual property by seeking patents to protect themselves from competitors.

Reputational Risk

A business’s reputation is everything, and this can be particularly so when a new business is launched and customers have preconceived expectations. If a new company disappoints consumers in the initial stages, it may never gain traction. Social media plays a huge role in business reputation and word-of-mouth marketing. One tweet or negative post from a disgruntled customer can lead to huge losses in revenue. Reputational risk can be managed with a strategy that communicates product information and builds relationships with consumers and other stakeholders.

Environmental, Political, and Economic Risk 

Some things cannot be controlled by a good business plan or the right insurance. Earthquakes, tornadoes, hurricanes, wars, and recessions are all risks that companies and new entrepreneurs may face. There may be a strong market for a product in an underdeveloped country, but these countries can be unstable and unsafe, or logistics, tax rates, or tariffs might make trade difficult depending on the political climate at any point in time.

Also, some business sectors have historically high failure rates, and entrepreneurs in these sectors may find it difficult to find investors. These sectors include food service, retail, and consulting.

59.2%

The percentage of small businesses launched in March 2021 that made it to their third anniversary, the most recent three-year data available, according to the U.S. Bureau of Labor Statistics.

What Is an Entrepreneur?

An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The process of setting up a business is known as entrepreneurship.

What Role Do Entrepreneurs Play in an Economy?

Entrepreneurs play a key role in any economy, using the skills and initiative necessary to anticipate needs and bring new ideas to market. Entrepreneurship that proves to be successful in taking on the risks of creating a startup is rewarded with profits and growth opportunities.

What Is Risk?

For an entrepreneur, risk is the potential for financial loss or failure when starting a new business. For the entrepreneur’s investors, risk is the chance that their investment’s actual gains will differ from an expected return—including the possibility of losing some or all of the investment.

The Bottom Line

The U.S. Bureau of Labor Statistics found that of the small businesses that were started in March 2021, 79.1% made it to their first anniversary (2022), 67% made it to their second anniversary (2023), and 59.2% made it to their third anniversary (2024). Entrepreneurs should expect to make some mistakes, some of which will be costly. However, with the right planning, funding, and flexibility, businesses have a better chance of succeeding.

Fact checked by Pete Rathburn
Reviewed by JeFreda R. Brown

Buy-Side Analyst vs. Sell-Side Analyst: An Overview

The main differences between these two types of analysts are the kind of firm that employs them and the people for whom they make investment recommendations.

A buy-side analyst usually works for an institutional investor such as a hedge fund, pension fund, actively managed mutual fund, or some other type of asset management firm. They conduct investment research and analysis so that they can recommend securities that their own company can invest in.

A sell-side analyst works for an investment bank, a brokerage, a commercial bank, or other firm that promotes and sells securities, and manages individual accounts. The sell-side analyst makes investment recommendations to the clients of the firm.

Key Takeaways

• The main differences between buy-side and sell-side analysts are the type of firm that employs them and the people to whom they make recommendations.
• Investment banks, market makers, and broker-dealers are typical sell-side firms. They sell investment services to the rest of the market.
• Buy-side firms are asset managers such as hedge funds, actively managed mutual funds, and other firms that invest in securities that they manage for others.
• Buy-side analysts will determine how promising an investment seems and how well it coincides with their company’s investment strategy.
• Sell-side analysts issue the often-heard recommendations of “strong buy,” “outperform,” “neutral,” or “sell.”

Buy-Side Analyst

Recommends Investments for Their Own Firm

Buy-side analysts conduct research and analysis to determine how promising an investment seems and how well it coincides with the investment strategy of their firm.

To simplify the explanation, let’s say that this firm is an actively managed mutual fund.

The buy-side analyst’s recommendations, made exclusively for the benefit of the fund that employs them, are not available to anyone outside of the fund.

If a fund employs an analyst who makes successful recommendations, it does not want competing funds to have access to the same advice.

A buy-side analyst’s success or talent is determined by the number of profitable recommendations they make.

A buy-side analyst is much more concerned about being right than a sell-side analyst is. In fact, avoiding the negative is often a key part of the buy-side analyst’s job.

Many analysts pursue their job with the mindset of figuring out what can go wrong with an idea.

Broad Coverage

Buy-side analysts, in general, have broad coverage responsibilities. It is not uncommon for funds to have analysts covering the entire technology sector or industrials sector.

Many sell-side firms assign several analysts to cover particular industries within those sectors (like software, semiconductors, etc.).

Typically, there are more job opportunities for sell-side analysts because of the focus their firms place on sales.

Sell-Side Analyst

Recommends Investments for the Clients of Their Firm

Sell-side analysts are those who issue the often-heard recommendations of “strong buy,” “outperform,” “neutral,” or “sell” for the benefit of individual investors and other clients of the firms they work for.

These recommendations, and the research behind them, help clients of their firm make decisions to buy or sell securities, such as stocks or bonds.

A Focus on External Sales

For a brokerage, the sell-side analyst plays an important role because every time a client decides to place a trade, the brokerage gets a commission or charges some other transaction fee.

Another job of a sell-side analyst is to convince institutional accounts (e.g., buy-side firms) to direct their orders through the trading desk of the sell-side analyst’s firm.

To capture trading revenue, the sell-side analyst must be seen by the buy-side firm as providing valuable services, such as research. Some analysts will constantly hunt for new information or proprietary angles on the industry.

This is not to say that sell-side analysts recommend or change their opinion on a stock just to create transactions. However, it is important to realize that these analysts are paid by and ultimately answer to the brokerage, not the clients.

Furthermore, the recommendations of a sell-side analyst are called “blanket recommendations,” because they’re not directed at any one client, but rather at the general mass of the firm’s clients.

These recommendations are inherently broad and, as a result, they may be inappropriate for certain investment strategies. So if you consider a sell-side recommendation, make sure that it suits your individual investment style and goals.

Note

Buy-side firms can be the clients of sell-side firms. Sell-side analysts provide buy-side clients with the results of their research and analysis.

Key Differences

While buy-side and sell-side analysts are both responsible for performing investment research, the two positions have different, but important, roles in the financial markets.

Think of them as two sides of the financial markets coin. Buy-side analysts work for asset management firms that invest in large amounts of investments. Sell-side analysts work for firms that promote and sell investments to the public.

In addition, sell-side firms, such as brokerages and investment bankers, provide market services to other market participants. As registered members of the various stock exchanges, they act as market makers and provide trading services for their clients in exchange for a commission or spread on each trade.

Furthermore, sell-side firms can offer underwriting services, helping to launch IPOs and bond issuances for the rest of the market. And, they produce research for the consumption of buy-side firms.

It’s possible for one company, such as a large bank, to have both buy-side and sell-side aspects. To avoid potential conflicts of interest, these companies must enact Chinese wall policies to separate the two types of departments.

While sell-side analysts create investment research products for sale to other companies, buy-side analysts conduct in-house research intended only for their own firms.

Special Considerations

Sell-side analysts have a more public-facing role than those on the buy side. Because their work is consumed by outside companies, sell-side analysts must also form business relationships, attracting and advising new clients.

Buy-side analysts have more inward-facing duties. They suggest investments and help their firms manage client money. They do their best to help grow the value of their firm’s portfolio.

Buy-Side Analyst vs. Sell-Side Analyst Example

Imagine the interactions between two hypothetical firms. Asset Manager A is a buy-side firm that manages a portfolio of securities on behalf of its clients. Broker B is a sell-side firm that provides market services, such as access to the stock exchange.

Both firms employ analysts. But they have different roles. Broker B’s analysts generally produce market research for sale to buy-side firms, such as Manager A.

They evaluate different public companies, conduct technical and fundamental analysis, and deliver research to their clients with a “buy” or “sell” recommendation.

On the buy-side, Asset Manager A’s analysts will conduct their own research and compare their findings with paid research, such as that produced by Broker B.

Manager A’s buy-side analyst’s research is intended for internal consumption only, rather than for sale to other firms. Based on the buy-side analyst’s recommendations, the asset manager will buy, sell, or hold positions in various securities in anticipation of future profits.

Is Goldman Sachs Buy-Side or Sell-Side?

As one of the largest investment banks, Goldman Sachs is largely on the sell-side of the market, providing liquidity and execution for institutional investors. However, Goldman Sachs also has some buy-side arms, such as Goldman Sachs Asset Management. In order to prevent conflicts of interest between the buy-side and sell-side, the two bodies are separated by a Chinese wall policy.

Is Private Equity Buy-Side or Sell-Side?

Because private equity funds make money by buying and selling securities, they are considered to be buy-side. Like hedge funds, pension funds, and other asset managers, they invest on behalf of their clients and make profits when those assets deliver returns.

How Much Do Buy-Side Analysts Make?

According to ZipRecruiter, the average salary for a buy-side analyst is about $76,273 per year, as of February 2025. However, this figure does not account for bonuses or non-salary benefits, which can be considerable. Salary also varies by city, firm, and how many years of experience an analyst may have.

Is BlackRock Buy-Side or Sell-Side?

Because BlackRock’s business model consists largely of investing on behalf of its clients, it is considered a buy-side firm. It is the largest investment manager in the world, with $11.6 trillion in assets under management.

The Bottom Line

Buy-side analysts and sell-side analysts both handle research, analysis, and investment recommendation duties, but for companies on either side of the financial markets.

Buy-side analysts recommend investments to the managers of their own firms. These firms include hedge funds, pension funds, actively managed mutual funds, or other kind of asset manager that buys and manages large amounts of securities.

Sell-side analysts recommend investments to the clients of their firms, which typically are brokerages, investment banking firms, and large banks that promote and sell investments to the public.

Reviewed by Julius Mansa
Fact checked by Yarilet Perez

Those interested in ditching their cable TV service may wish to consider Sling TV, a service that streams live TV from the Internet without needing a television or clunky cable box. Rather, viewers can use practically any Internet-connected device, including iOS and Android devices, Xbox Ones, Roku boxes, and Windows-based devices.

Unlike other streaming services, such as Netflix or Hulu, Sling TV is strictly live, and users receive each channel as it’s playing in real-time—just as they would with traditional cable or satellite TV hookups. This article will explore Sling TV, how it works, and whether it’s worth the plunge.

Key Takeaways

• Sling TV is a service that live streams news, live sports, and other TV shows from the Internet, but without the clunky cable box.
• Viewers can use nearly any Internet-connected device, including iOS and Android devices, and Xbox Ones.
• Basic service starts at $45.99 per month and provides access to 35+ channels, and 80K+ shows and movies-on-demand.
• Extra channel bundles and DVR storage start at $6 extra per month.

How Much Does Sling TV Cost?

The basic service starts at $45.99 per month, with an option to choose Sling Blue and Sling Orange. Both basic plans have no contracts or set-up fees, 50 hours of free DVR storage, and easy cancellation. While Sling Blue has channels geared towards news and entertainment and allows three device streams, Sling Orange is better for sports and family-friendly networks and only allows one device stream.

However, both plans include favorites like CNN, Food Network, A&E, the History Channel, TNT, and HGTV. If these mainstays aren’t enough, you can get both for $60/month or sign up for additional channel bundles based on content type, starting at $6 per month each.

These extra packages center on themes such as sports, news, children’s programming, Hollywood, lifestyle, plus a host of Spanish offerings. Specifically, the sports package adds 10+ channels, the kids’ package adds five, and the news package adds 10+.

Users may also pay an extra $10 per month for Paramount+ and Showtime. Other channels are also available. All of the packages can be examined online, but they may not be purchased until subscribers first sign up for the basic channel lineup.

Sling Blue

• Stream on three devices

• Good for news and entertainment

• Includes NFL Network, Bravo, and Fox News

Sling Orange

• Stream on one device

• Good for sports and families

• Includes ESPN, Nick Jr., Disney Channel

Is Sling TV Cost-Effective?

Whether or not Sling TV is cost-effective largely depends on the perspective of each consumer. But by any measure, the $45.99 base package is affordable, compared to most basic cable packages.

However, the costs of adding extra packages can mount quickly. For example, adding the “Sports Extra” package of 10+ extra channels costs an extra $11, bringing the total monthly bill to $51. Meanwhile, cable bills range between $55 and $250 with an average of $83.

Both cable consumers and Sling TV consumers encounter the same frustration of invariably paying for packages containing channels they’ll never watch. Even Sling’s core line-up contains obscure channels such as Comet and IFC, which few consumers have even heard of.

What Do You Need for Sling TV?

All you need for Sling TV is an Internet-connected device such as an iOS or Android device, or you can connect it to your Samsung, Apple TV, Amazon Fire TV, or another device.

How Much Is Sling TV a Month?

The basic Sling TV packages cost $45.99 per month for 35+ channels, with upgrades starting at $6 per month.

What Channels Do You Get on Sling TV?

Sling TV includes channels such as CNN, Food Network, A&E, the History Channel, TNT, and HGTV on their basic packages, Sling Blue or Sling Orange. Sling Blue also includes the NFL Network and Fox News, while Sling Orange includes ESPN and Nick Jr.

What Are the Pros and Cons of Sling TV?

Sling TV is an affordable alternative to cable TV, which allows users to watch live channels on any Internet-connected device for just $45.99 a month. However, some users may find that the channels in the basic package don’t fit their needs, hiking up their monthly bills to include the customizations they want.

Is Sling TV Better Than Cable?

Sling TV is hailed by many as better than cable TV, as the common friction points with cable TV—such as the steep price, having to install a physical cable box, and often being locked into a contract—are relieved with a Sling TV subscription.

The Bottom Line

There’s no doubt that Sling TV is a great deal for those who can resist the temptation to add extra packages. Many Sling TV users pair this service with other streaming providers such as Hulu, CBS All Access, and Netflix to round out their viewing options.

Find out how much untapped cash you have in your home

Fact checked by Michael Logan
Reviewed by Doretha Clemon

Most homeowners understand the concept of home equity. But, some may be confused about the topic and what it entails. As a homeowner, you need to understand how home equity works. This is especially true if you want to refinance a mortgage or borrow against your residence. Knowing how to calculate the equity in your home can make you a more empowered borrower. To calculate it, subtract the balance owing on your mortgage from the total market value of your property.

Key Takeaways

• Home equity is the value of your ownership stake in your home, calculated by subtracting your mortgage balance from the property’s market value.
• Lenders may express your position as a loan-to-value, which represents the proportion of your home’s value that is debt.
• Few lenders will let you borrow against the full amount of your home equity.
• Under normal economic circumstances, you may borrow between 80% and 90% of your available equity.

How Much Home Equity Do You Have?

As noted above, your home equity value is the difference between the current market value of your home and the total sum of debts registered against it. In many cases, this is your primary mortgage. If you have a second mortgage, you’ll have to deduct this as well.

The credit available to you as a borrower through a home equity loan depends on how much equity you have. Suppose your home is worth $250,000 and you owe $150,000 on your mortgage. Simply subtract your remaining mortgage from the home’s value, and you’ll end up with $100,000 in home equity.

How Should You Appraise Your Home?

There are a few ways to appraise your property if you’re looking for a home equity loan and need to estimate the worth of your home for the loan. The most straightforward way is to hire an independent third party. This is a professional appraiser who may provide an accurate and unbiased assessment of the value of your home. Keep in mind that this can be expensive.

Numerous internet programs can estimate the value of your house based on available data, such as previous home sales in your region and local real estate trends. While these estimates may not be as precise as a professional appraisal, they can be a good place to start. Note that some forms of these loose estimates may not be accepted by a lender issuing a home equity loan.

Instead of regional data, you can also estimate your property value by tracing down specific recent house sales in your region. In some cases where regional data is not a suitable comparison, specific sale information can provide you with an indication of what comparable homes are selling for. Keep in mind that your home may have unique qualities that affect its value.

Be mindful that no matter which method you prefer, your lender may have loan requirements that dictate the method in which your property is appraised when you pursue a home equity loan.

How Much Can You Borrow?

Very few lenders will let you borrow against the full amount of your home equity. They generally allow you to borrow a maximum of 80% to 90% of available equity, depending on your lender, credit, and income. So, if you have $100,000 in home equity, as in the example above, you could get a home equity line of credit (HELOC) of $80,000 to $90,000. Race, national origin, and other non-financial considerations should never play a role in determining how much home equity you can borrow.

Warning

Mortgage lending discrimination is illegal. If you think you’ve been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau (CFPB) or the U.S. Department of Housing and Urban Development (HUD).

Here’s a second example that accounts for a few additional factors. Suppose you are five years into a 30-year mortgage on your home. A recent appraisal or assessment places the market value of your house at $250,000. You also still have $195,000 left on the original $200,000 loan. Remember, almost all of your early home mortgage payments go toward paying down interest.

If there are no other obligations tied to the house, you have $55,000 in home equity. That equals the $250,000 current market value minus the $195,000 in debt. You can also divide home equity by the market value to determine your home equity percentage. In this case, the home equity percentage is 22% ($55,000 ÷ $250,000 = 0.22).

Now, let’s suppose you also took out a $40,000 home equity loan in addition to your mortgage. The total indebtedness on the property is $235,000 instead of $195,000. That changes your total equity to just $15,000, dropping your home equity percentage to 6%.

How Should You Account for Transaction Fees?

Real estate is one of the most illiquid assets, so there is usually a cost associated with tapping into your home equity. If you sell the house, total closing costs are typically between 2% and 5% in the United States. Buyers usually pay many of these charges, but be aware that they could use these fees as an excuse to negotiate a lower sale price.

If you take out a home equity loan, you will probably have to pay some type of loan origination fee. Interest rates are also generally higher for second mortgages and HELOCs than for the original mortgage. After including these transaction costs, the amount of home equity you can use is lower than the amount you have in theory.

Home Equity and Loan-to-Value (LTV) Ratio

Another way to express equity in your home is through the loan-to-value (LTV) ratio. It is calculated by dividing the remaining loan balance by the current market value. Using the second example described above, your LTV is 78%. (Yes, it’s the flip side of your home equity percentage of 22%.) With your $40,000 home equity loan thrown in, it climbs to 94%.

Important

Potential lenders use the LTV to determine whether or not to approve your applications for additional loans.

Lenders don’t like a high LTV because it suggests you could have too much leverage and might be unable to pay back your loans. During times of economic upheaval, they can tighten their lending standards. That happened during the 2020 economic crisis. Especially for HELOCs, banks raised their credit score requirements from the 600s to the 700s. They also lowered the dollar amounts and the percentage of home equity that they were willing to lend.

Both LTV and home equity values are subject to fluctuations when the market value of a home changes. Millions of dollars in supposed home equity were wiped out during the subprime mortgage meltdown of 2007–2008. Prices don’t always go up. The long-term impact of 2020 on home equity remains uncertain.

Home prices saw global price increases through 2021 due to the stay-at-home policy and people looking for bigger homes to fit their work, schooling, and life. The growing work-from-home policies adopted by companies also incentivized many families to move to the suburbs from the city.

How Is Home Equity Calculated?

Home equity is calculated by subtracting how much you owe on all loans secured by your house from your home’s appraised value. It is the residual value of your home after all liabilities related to the home have been deducted.

Do I Need to Put 20% Equity as a Down Payment?

Many lenders and situations do not require a down payment of 20%. In order for a borrower to avoid private mortgage insurance, they must often have at least 20% equity in their home. However, this is not a requirement at acquisition as some lenders may approve loans with down payments with 5% down or less.

Is It a Good Idea to Take Equity Out of Your Home?

For some, it may be a good idea to take equity out of your own. A home equity line of credit allows a borrower to take capital from what they have already paid down on their mortgage. These funds can often be borrower at a lower rate of interest compared to other types of debt. In addition, a borrower may be in a more comfortable financial position having had minimized their mortgage by paying it down.

When Can I Get a HELOC After Buying a Home?

Many lenders offer a HELOC to borrowers within two months of the purchase of their home. There are conditions a borrower must meet to secure a HELOC such as a specific amount of equity in the home, a strong credit history, and other lender requirements.

The Bottom Line

To calculate your home equity, you’ll need to determine the current market value of your home. This can be obtained by getting a professional appraisal or using an online home value estimator. Then, subtract how much you owe on your mortgage; this residual value is your equity position.

Fact checked by Vikki Velasquez
Reviewed by Cierra Murry

As with any for-profit business enterprise, the mutual fund industry charges fees for the services it offers. Actively managed fund services consist of managing a pool of commingled assets with an investment strategy like outperforming an index over time.

Mutual funds have historically charged consumers 12b-1 fees for marketing and promoting their services to prospective investors.

Key Takeaways

• A 12b-1 fee is an annual marketing or distribution fee on a mutual fund charged to investors.
• The 12b-1 fee is an operational expense and is included in a fund’s expense ratio.
• It is generally between 0.25% and 0.75% (the maximum allowed) of a fund’s net assets and must be disclosed on the fund’s prospectus.

What Are 12b-1 Fees?

According to the Securities and Exchange Commission (SEC), 12b-1, “fees are deducted from a mutual fund to compensate securities professionals for sales efforts and services provided to the fund’s investors.”

Charging 12b-1 fees has grown controversial, and in 2025, mutual funds are commonplace,e which makes the original motivation for creating the fee much less meaningful. Funds are also much larger, with some managing over a trillion dollars in assets.

12b-1s also have a shareholder service fee, with an annual cap of 25 basis points or 0.25% of all the assets managed in a fund. With billions under management, it is difficult to see the need to charge investors to market the fund to other potential investors. Estimates of 12b-1 fees were at $10 billion annually in 2020. As of 2023, 92% of investments or sales of long-term mutual funds were funneled to no-load funds without 12b-1 fees, compared with 46% in 2000.

Note

The fee’s official name stems from a 1980 SEC rule implemented to authorize its use.

Expense Ratios

The 12b-1 fee is a component of a mutual fund’s total expense ratio. Websites, including Morningstar and Yahoo! Finance, generally list the total expense ratio by fund. It is also found on a mutual fund prospectus. The prospectus must list specific fees by each mutual fund class offered. Generally, the fund’s annual operating expenses will be broken down into components. The largest fee is usually the management fee, which is what the portfolio managers charge to run the fund.

The distribution fee, or 12b-1 fee, will also be listed. Other fees and expenses may include sales charges such as front-end and back-end sales loads that investors incur when they buy or sell a fund. There may also be other operating expenses, such as account administration fees, recordkeeping fees, and networking fees to wholesalers and other financial intermediaries that also help to sell the fund.

When Did 12b-1 Fees Begin?

According to the SEC, 12b-1 fees first emerged in the 1970s during a period when mutual funds were seeing significant redemptions and wanted an avenue to help attract new assets.

What Is a No-Load Fund?

A no-load fund is a mutual fund in which shares are sold without a commission or sales charge.

 

What Is the Average Total Expense Ratio for Mutual Funds?

According to data compiled by ICI Research, the average expense ratio for equity mutual funds was 0.42 percent in 2023.

The Bottom Line

Historically, 12b-1 fees helped firms market and sell mutual funds. These fees are part of a funds expense ratio. Since 1996, mutual fund expense ratios have dropped by 60% as investors have chosen no-load funds.

Reviewed by Margaret James
Fact checked by Vikki Velasquez

ROE and ROA Metrics

Investors use return on equity (ROE) and return on assets (ROA) ratios to gauge a company’s ability to generate earnings from its investments. Both measure a type of return, but these metrics don’t represent the same thing. Together, they provide a clearer representation of a company’s performance.

Key Takeaways

• Return on equity (ROE) and return on assets (ROA) are two financial ratios that measure how a company generates money from its investments.
• Return on equity is a company’s net income divided by shareholder’s equity.
• Return on assets is a company’s annual net income divided by total assets.
• Using the metrics together, investors get a full view of a company’s financial performance.

Return on Equity

ROE is a fundamental ratio that shows how effectively a company’s management uses investors’ money. It tells investors if the company’s value grows at an acceptable rate. This financial indicator divides the company’s net income by shareholders’ equity. Shareholders’ equity is found on the company’s balance sheet. Net income is on the income statement.

$begin{aligned} &text{ROE} = frac{ text{Annual Net Income} }{ text{Average Shareholders’ Equity} } \ end{aligned}$​ROE=Average Shareholders’ EquityAnnual Net Income​​

Let’s calculate ROE for the fictional company Ed’s Carpets. Ed’s 2024 income statement shows a net income of $3.822 billion. In 2024, stockholder equity was $25.268 billion. In 2023, it was $6.814 billion.

To calculate ROE, average shareholders’ equity for 2024 and 2023 ($25.268bn + $6.814bn ÷ 2 = $16.041 bn), and divide net income for 2024 ($3.822 billion) by that average. ROE equals 0.23, or 23%. In 2024, Ed’s Carpets generated a 23% profit on every dollar invested by shareholders. Professional investors consider an ROE of 15-20% as a positive sign. However, ROE comparisons depend on the industry.

15%-20%

Many professional investors consider an ROE of 15%-20% acceptable, but ROE comparison depends on the sector or industry. For example, as of Feb. 12, 2025, Apple’s ROE averaged 146.59% over 12 months.

Return on Assets

ROA reveals the profit a company posts for every dollar of its assets, including cash in the bank, accounts receivable, property, equipment, inventory, and furniture.

$begin{aligned} &text{ROA} = frac{ text{Annual Net Income} }{ text{Total Assets} } \ end{aligned}$​ROA=Total AssetsAnnual Net Income​​

Ed’s Carpets earned $3.822 billion in 2024. Total assets were $448.507 billion. Its net income divided by total assets gives a return on assets of 0.0085, or 0.85%. In 2024, Ed’s Carpets earned less than 1% return on its assets.

Ed’s balance sheet should reveal why the company’s return on equity and return on assets were so different. The carpet maker carried an enormous amount of debt, which kept its assets high while reducing the proportional amount of shareholders’ equity. In 2024, it had total liabilities that exceeded $422 billion—more than 16 times its total shareholders’ equity of $25.268 billion.

Important

ROAs should always be compared among firms in the same sector. In Feb. 2025, food industry giant McDonald’s posted an ROA of 14.68, while tech company NVIDIA posted an ROA of 77.99.

Comparing Liabilities

ROE shows performance based on shareholder equity. ROA shows company profitability based on its total assets. The return on debt (ROD) measures how much a company profits from borrowed or leveraged funds. Financial leverage or debt separates ROE and ROA. Because ROE weighs net income only against owners’ equity, it doesn’t say how well a company uses its financing from borrowing and issuing bonds. Such a company may deliver an impressive ROE without being effective at using the shareholders’ equity to grow the company. ROA, because its denominator includes both debt and equity, can help investors see how well a company puts financing to use.

The balance sheet’s fundamental equation shows how this is true: assets = liabilities + shareholders’ equity. This equation tells us that if a company carries no debt, its shareholders’ equity and its total assets will be the same. It follows then that their ROE and ROA would also be the same. If that company takes on financial leverage, ROE would rise above ROA. The balance sheet equation—if expressed differently—can help us see the reason for this: shareholders’ equity = assets – liabilities.

By taking on debt, a company increases its assets. Therefore, when looking at ROA, the numerator (return) would stay the same, but the denominator (assets) would increase. Therefore, the ratio of returns to assets would decrease. Alternatively, a company’s returns and equity remain unchanged. Taking on debt changes a company’s assets via the cash they accept and a company’s liabilities via the obligation. Therefore, ROE remains unchanged when a company takes on debt, while a company’s ROA likely decreases.

Is a High Return on Equity Good?

ROE comparisons should be made among companies in the same sector or industry. An ROE of 15 or higher is generally considered good since it reflects how well a company is generating earnings relative to its shareholder’s equity. In this way, it shows how effectively a company is managing its capital.

What Do Changes In ROA Mean for Investors?

A ROA that rises over time indicates that the company is increasing its profits with each investment dollar it spends. A falling ROA indicates that the company might have over-invested in assets that have failed to produce revenue. 

Can ROA Be Too High?

If a company’s ROA is considerably higher relative to its industry, it may indicate that it is not investing enough into the company to take advantage of growth opportunities.

The Bottom Line

Investors should look at ROA as well as ROE. They provide a clear picture of management’s effectiveness. If ROA is sound and debt levels are reasonable, a strong ROE is a solid signal that managers are doing a good job of generating returns from shareholders’ investments. ROE is a “hint” that management is giving shareholders more for their money. On the other hand, if the ROA is low or the company is carrying a lot of debt, a high ROE can give investors a false impression about the company’s fortunes.

Correction–Jan. 30, 2023: A previous version of this article incorrectly stated that equity decreases, which causes ROE to change when debt is incurred. In reality, taking on debt does not change equity in absolute dollars, so ROE would not change.

Fact checked by Amanda Jackson
Reviewed by Erika Rasure

Only a small number of industries outside the financial services industry offer the potential for relatively inexperienced professionals to make significant income within their first year of employment. And within the financial services industry, there are few careers that offer newcomers the opportunity to earn as much as a life insurance agent does right off the bat. In fact, a hardworking insurance agent can earn more than $134,000 in their first year of sales.

But success as an insurance agent doesn’t come without a cost. It’s a tough field, and most participants burn out sooner rather than later. Insurance agents hear the word “no” far more than they hear the word “yes.” And it’s not uncommon for the word “no” to be delivered with a fair amount of obscenities and the proverbial door in the face. Additionally, many people hold insurance agents in low regard—some people even equate them to glorified con artists.

But for those who can stomach the potential rejection, the paycheck and flexibility of being a life insurance agent can be worth the effort.

Key Takeaways

• The career of a life insurance agent is lucrative but involves constant hustling, networking, and many instances of rejection before a sale is ever made.
• Life insurance agents might be given a small salary to get started but are otherwise primarily dependent on commissions to make a living.
• Finding potential customers is difficult and time-consuming; getting those customers to make a purchase once you track them down is even harder.
• A strong background in sales can get you hired; once hired, you must take a 20- to 50-hour class and pass a state-administered licensing exam.
• When looking for a job, make sure that you only apply to companies that have received favorable reviews by rating agencies like Moody’s and Standard & Poor’s.

Overview of the Insurance Field

While there are many kinds of insurance (ranging from auto insurance to health insurance), the most lucrative career in the insurance field is for those selling life insurance. Agents focusing on this end of the insurance market help families, businesses, employers, and other parties protect against financial loss when someone dies.

Insurance agents selling this type of coverage are either “captive” agents, which means they only sell insurance from one company, or “non-captive” agents, meaning they represent multiple insurance carriers. Either way, the typical insurance agent is going to spend the majority of their time engaging in some type of marketing activity to identify people who might be in need of new or additional insurance coverage, providing them with quotes from the companies they represent, and persuading them to sign the new insurance contract.

Typically, a life insurance agent receives anywhere from 30% to 90% of the amount paid for a policy (also known as the premium) by the client in the first year. In later years, the agent may receive anywhere from 3% to 10% of each year’s premium, also known as “renewals” or “trailing commissions.”

Let’s look at an example of how a life insurance agent earns:

Insurance Sales Commission Example

Uni the insurance agent sells Ryan a whole life insurance policy that covers Ryan for the rest of their life (assuming they continue to make their premium payments). Uni’s insurance company pays a 90%/5% commission on whole life policies, which means the selling agent receives 90% of the first year’s premium and 5% of future renewals.

The policy costs Ryan $100 per month or $1,200 per year. Thus, in the first year, Uni will make a $1,080 commission on selling this life insurance policy ($1,200 × 90%). In all subsequent years, Uni will make $60 in renewals, as long as Ryan continues to pay the premiums ($1,200 × 5%). An agent selling one or two policies per week at this commission level could make $50,000 to $100,000 in their first year as an agent.

Life Insurance Agent Qualifications

As mentioned before, a life insurance agent is not a profession for the thin-skinned or faint of heart. In fact, more than any other factor, including education and experience, life insurance agents must possess a fighting spirit. They must be people who love the thrill of the hunt, the rush of a sale, and see rejection as a steppingstone to eventual success. A career in life insurance sales is not ideal for those who view themselves as introverted, soft-spoken, or afraid of conflict.

The vast majority of life insurance companies have no formal education requirements for becoming an agent. While many prefer college graduates, this general rule is constantly overlooked in favor of the “right” candidates. Previous experience in the insurance industry is not required because most medium and large insurance carriers have internal programs to train their salespeople about the products they’re going to sell.

While it may prove easy for a tenacious go-getter to get hired at a reputable insurance company, there is one nonnegotiable hurdle that stands between a potential insurance agent and their commissions: state licensing. Insurance agents are currently licensed by the individual state or states where they’ll sell insurance. This generally requires passing a state-administered licensing exam, as well as taking a licensing class that typically runs 20–50 hours.

100%

The sales commission that life insurance agents might earn in the first year if they are on a commission-only salary; that’s the highest commission for any type of insurance.

Getting Hired to Sell Insurance

If you feel like a career in life insurance sales is for you, there are a couple of steps to take in order to find your first job. First and foremost, you’ll need to put together a resume that highlights your entrepreneurial spirit. You’ll want to include anything that shows you taking initiative to make things happen, whether it was starting your own business or taking someone else’s business to the next level. Life insurance agents have to be driven and have the ability to be self-starters. Resumes that show a track record of that kind of behavior will help you get your foot in the door.

Once you have your resume polished, you’ll want to begin finding positions and applying. It’s imperative that you don’t feel pressured to take the first position that comes along, because working for the wrong company can burn you out and haunt you for the rest of your insurance career. Ideally, you want to work for a well-known company with a good reputation among consumers, other agents, and insurance rating agencies.

Perhaps the best place to start in deciding where to apply is to visit the insurance company rating websites for AM Best, Moody’s, or Standard & Poor’s. From there, you’ll be able to build a list of companies that have ratings of “A” or higher in your state. These companies will typically offer the most secure products at reasonable prices, with an emphasis on compensating and keeping quality agents.

Important

The work of a life insurance agent is grueling; many agents don’t last more than a year. On the upside, this means that there are constant vacancies and it can be relatively easy to get started as a new hire.

Be Sure to Follow Up

Once you’ve created this list, begin looking at each company. Due to the high turnover rate of insurance agents, most companies prominently post their job listings by geographical area, which makes them easily searchable for you. When you find a company in your area that seems to fit your personality, apply for the position and make sure you follow the company’s instructions on its site.

Follow up with phone calls on a weekly basis until you hear an answer either way. Many insurance company recruiters will decline to interview a potential agent who doesn’t first make a follow-up call; this is considered to be a strong indicator of a potential agent’s tenacity. During your interview, continue to communicate your entrepreneurial and “never-say-quit” personality; most managers will hire someone based on these factors over all the others combined.

If you’re lucky enough to land the job, you can expect your first 12 months to be spent handing out a lot of business cards and making a lot of phone calls. Your sales manager will be the first to remind you that your only “purpose” in life is to find potential clients. In fact, they’ll be far more interested in how many contacts you’re making each week than how well you know their product line.

You can expect to struggle financially for the first few months until your first sales commissions start rolling in. While some companies offer a salary to keep newbies from starving, this is becoming more rare. Many agents are now lucky to be compensated for one to two months of training before being put on a “commission-only” basis.

A Few Warnings

While the life insurance industry promises great rewards for those who are willing to work hard and put up with a good amount of rejection, there are two pitfalls you need to be aware of. First, you will most likely be expected to market to your friends and family. While that might be tempting and seem like a great idea to get you started, it can also burn a lot of bridges with people you care about.

Second, you should visit your state insurance commissioner’s website and check out the complaint history against companies that you’re considering working for. What you’ll typically find is insurance companies that maintain less than an “A” rating, as well as those that sell insurance using a multilevel marketing scheme, have a much higher incidence of complaints than the larger, more established companies.

Accepting a job with the wrong insurance company can potentially burn you out and ruin your dreams of a promising career. If a career in life insurance sales is something you truly desire, take your time and wait for the right opportunity at the right company. Doing so will maximize your chances of long-term success.

What Is Life Insurance?

Life insurance is a contract between an insurance company and a policy owner in which the insurer guarantees to pay a sum of money to one or more named beneficiaries when the insured person dies. In exchange, the policyholder pays premiums to the insurer during their lifetime.

What Is an Insurance Agent?

An insurance agent is a person who sells insurance policies for an insurance company. They can help individuals and businesses find the right coverage and policies, and are paid a commission for their services. They either work for an agency or as independent contractors.

What Is the Job Outlook for Insurance Sales Agents?

Employment of insurance sales agents is projected to grow 6% through 2033, faster than the average for all occupations. About 47,100 job openings for insurance sales agents are projected annually, on average, through 2033. There were 547,600 insurance sales agent jobs in the United States as of 2023, the most recent data available, according to the U.S. Bureau of Labor Statistics.

The Bottom Line

Being a life insurance agent is a tough field, with burnout, constant hustling, networking, and many instances of rejection before a sale is ever made. But for those who can stomach all of this, the paycheck and flexibility can be worth the effort.