Agent of Record Within FMO

[NewHealthGuy]

Hello, to any who reads this! I have recently ventured into the Medicare market, and I am finding the whole FMO Hierarchy to be a bit convoluted. I started off as an independent broker within my Hierarchy, where I am Agent of Record on the business I produce. I am now building a local agency. Secured office space, 2 team members who are fully licensed, & agency contracts from my FMO that appoint my agency to conduct biz.

Any biz I write, I will maintain AOR on, however my FMO has let me know they want to contractually tie my LOA's (Downline) (Sales Agents) directly to them. Is this common? Why would my FMO tie my downlines directly to them, and not to my agency? If my FMO is agent of record on the biz my office produces, does that impact resale value of my agency in the future?

 

[Jim Wright]

That's not right. They should be put under your hierarchy. If they can't be put under you because of how the carrier is set up, they should be the AOR on the policies and the commissions should be paid to the agency.

If this is not how this FMO normally operates, I'm worried that this is a tactic to get commissions to flow through them so if the CMS rule passes, they can control the revenue once they lose out on the marketing money and overrides.

At minimum, you can just tell them no and see what happens. If they push back, I would start looking to transfer your appointments away from them.

To answer your last question about the value of your business, absolutely it will because the policies wont belong to the agency so you can't sell them

 

[NewHealthGuy]

That's not right. They should be put under your hierarchy. If they can't be put under you because of how the carrier is set up, they should be the AOR on the policies and the commissions should be paid to the agency.

If this is not how this FMO normally operates, I'm worried that this is a tactic to get commissions to flow through them so if the CMS rule passes, they can control the revenue once they lose out on the marketing money and overrides.

At minimum, you can just tell them no and see what happens. If they push back, I would start looking to transfer your appointments away from them.

To answer your last question about the value of your business, absolutely it will because the policies wont belong to the agency so you can't sell them

They certainly want the money to flow through them. I have had conversations with other Principal agents in the Hierarchy, and all of their checks are signed from the Upline.

They offer extremely high overrides on the policies submitted & marketing dollars. If CMS rules passes I will no longer receive these benefits, and will be SOL on the BIZ.

It's probably time to consider a new FMO. Thank you for the Advice!

 

[TaylorG]

Yea that's weird. I work for an FMO and I can tell you that's not right. They shouldn't need to LOA the agents to them when they can be under you.

 

[DonP]

They certainly want the money to flow through them. I have had conversations with other Principal agents in the Hierarchy, and all of their checks are signed from the Upline.

They offer extremely high overrides on the policies submitted & marketing dollars. If CMS rules passes I will no longer receive these benefits, and will be SOL on the BIZ.

It's probably time to consider a new FMO. Thank you for the Advice!

It depends on the carrier. Humana and Anthem will only pay the fmo directly on overrides . I’m curious what you idea of extremely high overrides and marketing $’s is ? With 2 agents hard for me to see over $125 an app override and possibly $100 an app marketing money . We’ll know in about 2-3 weeks if that goes away . 90% of business is non t-65. That’s $310 an app total . Any good loa needs a salary and $50-$75 an app . That leaves about $150 an app override . Minus min $100 an app for leads and that leaves zero profit the first yr . Really a loss after office exp’s . That means you’ll have to back on making most of the $25 a month overrides . With the way people jump yr to yr that’s risky . Plus unless loa agebt gets some backend override it’s just a job and not career