Hot Sports Opinion on FMO's/IMO's

[DFW]

"Annuity of Life Insurance it really doesnt matter. Non-Direct companies (generally speaking) pay a higher comp to agents. The upline structure is the reason why."

Are you affiliated with an FMO? I just don't believe that statement but perhaps thats the case.

Look, I know its a generalization and experienced agents use and find value in FMO's. However, for me there is not one ounce of value from an FMO and I despise the fact that they get an override on my business. I am probably in the minority but I would think a few other advisors feel the same way I do...but maybe not.

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Let me simplify the debate and my point. Hypothetically, let's say that I am an annuity agent with 20 years experience selling annuities. All I sell is American Equity. I get emails and postcards with product updates and don't need any hand holding. Occasionally, I will get a call from the home office with updates. I write only $3 million a year in AE. I don't know the exact numbers but lets say street level commission is 7% and the FMO gets 2%. (I know AE is paying out over 3 years...just go with the upfront 7) Again, I don't know exactly what an FMO is getting but I suspect my numbers are pretty close. I could call around and shop to maybe get an extra 1% from an FMO. Either way, I suspect I am leaving $30k-$60k in commissions on the table in this example because I have to contract through an FMO. For me...its a terrible waste and I desperately wish I could cut out the FMO.

 

[Norwayguy]

I want direct with the carrier from $1. I don't want to shop a bunch of whores to see who will give me the best deal.

As an agent myself I would prefer the direct contracts approach if only to cut down on the BS and extra emails. But the fact is the carriers want the middleman. They don't want any inkling that they are supervising our business. And not every ten year veteran producer is the same many would be calling the carriers repeatedly will stupid questions. Finally the FMOs in essence become extra carrier employees in the essence that AOR of what they do would have to be taken over by the carriers meaning they would need to pay employees and the only pay fmos when a case is produced.

 

[scagnt83]

Are you affiliated with an FMO? I just don't believe that statement but perhaps thats the case.

Not at all. Im an indy agent. I dont work for an IMO/FMO/etc.

I have 3 direct annuity contracts (just got the AIL contract and am about to take my Anico contract direct to make it 4). I have probably about 6 or 7 annuity contracts through IMOs.

Look at the comp numbers, its a fact. The non-direct contracts pay more.

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Look, I know its a generalization and experienced agents use and find value in FMO's. However, for me there is not one ounce of value from an FMO and I despise the fact that they get an override on my business. I am probably in the minority but I would think a few other advisors feel the same way I do...but maybe not.

I agree that most IMOs provide very little value. And as I said before I prefer direct contracts.

But the numbers do not lie. The IMO relationship provides value for the carrier, which in turn allows them to pay more in comp.

I used to feel as strongly as you about IMOs.
But if you shop around you might find that not all IMOs are terrible. It sometimes takes a while, but most of my IMOs are basically "hands off" of my business. They only act as a facilitator for my contracting.

You see it as them taking a cut of your business. But if they did not exist the carrier would take an even larger cut of your comp...

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Let me simplify the debate and my point. Hypothetically, let's say that I am an annuity agent with 20 years experience selling annuities. All I sell is American Equity. I get emails and postcards with product updates and don't need any hand holding. Occasionally, I will get a call from the home office with updates. I write only $3 million a year in AE. I don't know the exact numbers but lets say street level commission is 7% and the FMO gets 2%. (I know AE is paying out over 3 years...just go with the upfront 7) Again, I don't know exactly what an FMO is getting but I suspect my numbers are pretty close. I could call around and shop to maybe get an extra 1% from an FMO. Either way, I suspect I am leaving $30k-$60k in commissions on the table in this example because I have to contract through an FMO. For me...its a terrible waste and I desperately wish I could cut out the FMO.

I understand your point. You feel the IMO is taking an unnecessary cut of your comp which you could retain by going direct.

My point is that the actual comp from direct annuity contracts contradicts your assumption.

 

[DFW]

scgant83- all good points above assuming they are correct and I will take your word for it. As a matter of principle, I still have a problem with a person profiting off of my hard work when they do nothing for me. I view them as leeches and will probably not change my mind. Its less about the comp and more about the principle. Nonetheless, it is what it is....

 

[scagnt83]

scgant83- all good points above assuming they are correct and I will take your word for it. As a matter of principle, I still have a problem with a person profiting off of my hard work when they do nothing for me. I view them as leeches and will probably not change my mind. Its less about the comp and more about the principle. Nonetheless, it is what it is....

Dont take my word for it. Go get direct contracts and look at the numbers yourself.

Annuity Investors Life, ING, Midland, and Anico all offer direct contracting.

I also would take another look at Midlands annuities. Their caps/spreads are basically within the same lines as Allianz. But Midland can be very state specific in what products are open for you. The problem I have with Midland is that they have too many products, they need to consolidate and cut out the crap. Only a handful are what I would consider competitive... but I could say the same about AE... only 1 of their products is currently competitive, and its the lowest comp product.

 

[Rearden]

scgant83- all good points above assuming they are correct and I will take your word for it. As a matter of principle, I still have a problem with a person profiting off of my hard work when they do nothing for me. I view them as leeches and will probably not change my mind. Its less about the comp and more about the principle. Nonetheless, it is what it is....

FE FMO/Working Agent's Opinion:

The market has decided that it's best to distribute risk across middlemen than to take the risk and potential higher return.

Like someone said earlier, if the market decided direct contracts were most suitable, most likely your commission rates would be lower than where your at now.

Plus, who cares what the other guy's making, especially if you have verifiable proof your current comp is better than the going market average? Isn't that all that matters?

Would you be complaining about getting paid 6%, knowing the independent distribution model allowed 7%, but the carrier requires the lower comp to make up for the added risk?

 

[TwiLight]

DFW.........one thing about an annuity's pay structure is that you would be shocked to learn what FMO's really get paid on annuity business. Overrides are huge and so are production bonuses.

Your favorite company Allianz owns one of the largest FMO companies and gets a cut of every other company's commission their agents sell.

If your 10 years plus experience agent can sell a minimum of $10 million they will get a chair at the kiddie table at Thanksgiving. It takes an individual to produce $25m+ to be taken seriously by a carrier.

I love a good rant...we all need to blow off steam. Truth is, companies pay FMOs the bucks because the bring in Billions not a few Million

 

[DFW]

DFW.........one thing about an annuity's pay structure is that you would be shocked to learn what FMO's really get paid on annuity business. Overrides are huge and so are production bonuses.

Your favorite company Allianz owns one of the largest FMO companies and gets a cut of every other company's commission their agents sell.

If your 10 years plus experience agent can sell a minimum of $10 million they will get a chair at the kiddie table at Thanksgiving. It takes an individual to produce $25m+ to be taken seriously by a carrier.

I love a good rant...we all need to blow off steam. Truth is, companies pay FMOs the bucks because the bring in Billions not a few Million

A rant it is and it feels good! I use to write Allianz but not so much anymore. I disagree with your last sentence. FMO's don't bring in a dime...the agents do. That money would still flow to the carrier without the FMO.

 

[TwiLight]

A rant it is and it feels good! I use to write Allianz but not so much anymore. I disagree with your last sentence. FMO's don't bring in a dime...the agents do. That money would still flow to the carrier without the FMO.

Carriers tried that once before for a hundred years that is why the FMO system was born in the 1990's.... It worked well beyond their expectations. I am talking Annuity production not Life insurance.

FMO's are able to work with mediocre producers and bring in large volume off of them... One guy sending them 10 million with all their issues trying to squeeze comp is not what they are looking for..

They look to the $500k to $1m producer that the will need some guidance for that override. Because there are more agents in this category than $10m producers they make an overall impact on the carriers bottom line.

 

[WinoBlues]

A rant it is and it feels good! I use to write Allianz but not so much anymore. I disagree with your last sentence. FMO's don't bring in a dime...the agents do. That money would still flow to the carrier without the FMO.

I have to agree with a business still coming in. At least in my case.

I like most of my uplines, changing some, or I would not have them. That said I do not get a lot from them, Could be because I do not ask for much. I would rather have the extra 10 - 20 percent. One exception is Pinney, but that is a unique system.

If I owe an override, it would be this forum.

Edit : Life Insurance, did know which forum this was in.