I have written many articles in the last 15 years regarding trust ratios, commingling funds and trust money. Based on the conversations and experiences I am seeing today, though, I believe there is a need for even more education.

The trust ratio is the most important financial ratio for all ethical and well-managed agencies and brokerages. Simply put, it reveals if an agency or broker is wrongly spending money. It shows whether the firm is spending cash it should to be holding in trust, in a fiduciary capacity.

When holding money in a fiduciary capacity, the firm is charged with holding money on someone else's behalf. Lawyers hold escrow money. Real estate agents hold good faith money. Insurance agencies and brokers hold money for clients, which is supposed to be used to pay that client's premium. Insurance agencies and brokers also hold money from audit returns and other credits. These monies are supposed to be forwarded to the client, barring extenuating circumstances (that do not include producer prerogative), to the client quickly.