You have probably done this calculation already.
Not on paper. In your head, on a Tuesday afternoon when the diary is quiet. You know what income your book generates for the business. You know what you earn. You have done the rough maths and thought: that gap is significant.
You are right that it is significant. But the calculation is worth doing properly, because both the upside and the practical complications need to be properly understood. Let me walk through it.
The starting point: what you actually earn as an employed broker.
Let me be direct about something first. The published average salary data for insurance brokers in the UK is not relevant to the people who read this article. Those figures reflect the whole market, including handlers, juniors and administrators. They are not the numbers that describe an experienced account executive or account director at a regional or corporate broker who has spent ten or fifteen years building a book.
The people this article is written for are typically earning a base salary somewhere between £60,000 and £120,000, depending on their seniority, the size of their book and their employer. On top of that, most will have a performance element tied to income growth, a car allowance and pension contributions.
But here is the number that matters more than the salary. The income their book of clients generates for their employer is typically three to four times their base salary. Sometimes more. An account director on £80,000 managing a book that generates £280,000 in annual income for the firm is a common picture in commercial broking at this level.
That ratio is the starting point for the real calculation.
The income your book generates for your employer is typically three to four times what you take home. The question worth asking is: what happens to that ratio when you own the business?
How income works when you own your business.
In commercial broking, income is earned as a percentage of the premium placed on behalf of clients. Across the commercial lines classes that most experienced brokers manage, income rates generally sit in the range of 18 to 20 per cent of gross written premium.
On a book generating £300,000 in annual income, that figure can move in either direction. In a softening market, as the UK has been experiencing, income can compress as premiums fall even where client numbers are stable. This is worth factoring into any realistic projection. On the other side, income grows as new business is added. Referrals from existing clients, introductions from professional contacts and reputation built within a sector can all generate new income that sits on top of the renewal base. The brokers who build fastest are typically the ones who treat new business development as a discipline from day one rather than something that happens after the renewal book is settled.
When you run your own brokerage, that income belongs to your business. From it, you meet the costs of running the business: the support your network provides, any staff you employ, and your own drawings.
The most useful calculation to do is the one specific to your situation. What does your book generate in income? What would you retain after operating costs? That is a conversation we are very happy to have.
Year one: the “warts and all” picture.
Year one is the hardest year. I want to be clear about this rather than glossing over it, because the reality is more useful than an optimistic view.
The reason year one is hard has nothing to do with capability or client relationships. It is structural. Almost every broker at this level will have a covenant in place, and it will typically contain both a non-solicitation clause and a non-dealing clause. This distinction matters more than people sometimes appreciate.
Non-solicitation means you cannot proactively contact former clients and invite them to move their business to you. Most people know this part.
Non-dealing means that even if a former client proactively contacts you and asks to move, you cannot accept their business during the covenant period. This is the part that surprises people. A client who wants to follow you, and makes contact to say so, still cannot formally place their business with you until the covenant has expired.
One point worth knowing: most employment contracts include a gardening leave provision, and where gardening leave is served it typically runs concurrently with and reduces the covenant period rather than extending it. If your contract includes three months of gardening leave and a twelve month covenant, you may effectively be looking at nine months of restricted trading rather than fifteen. Check your contract carefully and take legal advice on this point, as it can meaningfully change the year one picture.
The practical implication is that year one income is built primarily from genuinely new clients won through referrals, networking and professional reputation, not from your former book. This is why modelling year one conservatively, and having a clear funding plan in place before you start, is so important. Momentum offers funding specifically designed to bridge this period for brokers who need it.
Think about the new business you win each year in your current role. Business you found, nurtured and closed yourself. That income is yours in year one. It has always been yours. You have just never had the opportunity to keep it.
Year two: the one that changes everything.
Year two is the picture that matters most, and it is the one that most financial comparisons leave out.
By the time your covenant has expired, two things have happened. Your former clients are now genuinely free to make their own choices about where they place their business. And you have spent twelve months building relationships, establishing your reputation and winning new clients.
The brokers we work with consistently describe year two as the moment the business starts to feel like what they imagined when they made the decision. Income from the former book begins to arrive as clients renew and choose to move. The new clients won in year one renew for the first time. The pipeline built during the covenant period starts converting.
The income picture in year two for an experienced broker with a solid book looks materially different from year one. We will not put a specific number on it, because it depends too heavily on the individual situation. What we will say is the pattern we see repeatedly: year one is harder than employment, year two is comparable, and by year three most of our broker partners are earning more than they were in employment, often significantly more.
More importantly: they own something. The book they are building has a value that their salary never did.
The asset question.
The comparison between employment and owning your own business is not only an income comparison. It is a wealth comparison.
A book of commercial insurance clients, properly built and documented, is a valuable business asset. When the time comes to step back, sell or transition, whether that is in five years or twenty, that book has a realisable value. Transactions in the broker market happen at multiples of recurring income. The business you are building today is the financial asset that salary never was.
This is not a distant consideration. The decisions you make about how you structure your book from day one, which clients you prioritise, how you document relationships and how you build your team, all affect the value of the asset you eventually realise. Getting those things right from the beginning is worth more than any short-term income calculation.
The business you build has a value that can be realised on your terms, at a time of your choosing.
What the calculation actually looks like for you.
There is no generic version of this calculation that is going to right for you. The right numbers depend on your specific book, your income level, your covenant, your personal financial position and what you want year three to look like.
What I can tell you is that the brokers who feel most confident going into this decision are the ones who have done the maths properly beforehand. Not in their head but on paper, with someone who knows the model and can give them a realistic picture rather than an optimistic one.
If you want to do that exercise, I am very happy to work through it with you. No assumptions, no pressure, just an open and transparent conversation about what the numbers actually look like for your situation.
Drop me a message on LinkedIn or email startmeup@momentumsolutions.co.uk. The conversation is confidential and there is no obligation attached to it.
