Let's talk releases!

Aug 23, 2008

  1. Joe Moore
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    Seems releases are a big topic on this forum.

    So let's get down to the nitty gritty and start a real discussion. I know I will be attacked, so bring it on and shoot your best shots. This is called a "discussion board", not a board where I think someone should be called "dishonest, a crook, or other various names" that I have seen myself being called on this board.

    What I am asking for here is a civil discussion about what I view as misconceptions and greed by a lot of agents.

    We have granted many, many releases for agents that have a reason to be released. Finding somebody that would give 5 points more in my estimation, is not a valid reason.

    Let me tell you how I think wholesale releases from any IMO, FMO or any type of Marketing Organization are a potentially disasterous idea, even for insurance agents.

    Does anyone ever remember learning in school about Standard Oil Company in the mid 1800's, which brought about the Sherman Antitrust Act of 1890. I remember my American History Teacher telling about in the 1920's-30's where Standard Oil would have gas stations on 3 corners at a major intersection, and would sell their products at well below cost to drive their competition on the 4th corner out of business. Once competition was broke, Standard either bought the 4th corner at pennies on the dollar, or simply let the 4th corner close. Once their is no competition at this intersection, Standard Oil would double their price.

    I think most of us on here would agree, there has to be stability in the insurance industry. I also think most would agree that IMOs and FMOs can more economically and faster call attention to insurance products than an insurance company can. We (as an IMO, FMO or Marketing Organization) are a very important part of the distribution effort of an insurance company.

    We probably save insurance companies at least 80-90% of the marketing costs they would have to pay to reach the agents if we were not in the picture. Why do you think insurance companies go to this outside method of distribution? The answer is they have no outside marketing costs until something is sold. They collect money before they have to pay out. In other words, it is more profitable than if they tried to do it themselves.

    The companies can spend their time on running the home office, and developing the products without having to deal with actual selling of the products or attracting agents to their company.

    We also are much closer to the agents than any home office ever could be. When an agent has a problem that they cannot get solved, we usually know where to go to get the problem addressed and hopefully solved. A lot of us have come from the sales field and understand sales problems that a home office does not have a clue about. By the way, I still work in the field after 21 years in this business so I personally can relate with most any field problem an agent may have.

    In other words, in my opinion Marketing Organizations serve a vital purpose to insurance agents, and insurance companies.

    I do not feel we make profits "off the back of insurance agents". If you think this way, every insurance company, company officer, company employee, state insurance commission and their employees make their living "off of the back of insurance agents". To the contrary, I feel we bring many new opportunities to the insurance sales community. Naturally, we are here to make a profit and living if we can; just as any insurance agent is in the business to make a living and profit.

    IMOs, etc. do compete with each other to recruit agents under the present structures. This is one reason high commission contracts are readily available. You simply can compare what captive companies are paying to determine the difference. We spend many dollars to attract agents and contrary to popular belief by some insurance agents, our income is not all profit. It is also very hard to recruit good insurance agents. If you saw debit balances we have eaten, you would understand some of the problems of running a Marketing Company. We have been bitten by agents we were trying to help; sometimes when nobody else would help. We co-sign all our agents debit balances.

    OK, you have heard me preaching about the value of Marketing Organizations, let's get back to my Standard Oil comparison. Let's say I am an IMO sitting on a bunch of cash and I find an IMO structure who will give releases for any reason. I have a great living already made, and will continue to have a great income without any new recruiting or new agents. But, I have found this easy target (a very soft hearted, good old boy IMO) that will give an agent a release for any reason.

    This IMO just lost all of his agents to me. I can give this new-found block of business 100% of their normal commissions and all my overrides for a year or so (or even more than 100% of my income from this block of business), just to get the agents, and drive this IMO out of business very fast. If I could do this with every IMO for this company, I would be in complete control--of all agents of this company, and all sales of this company. At that time I could pay the agents what I wanted. A 100% contract could suddenly become a 70% contract, or whatever I wanted agents to have. I would be in control. It could be a scary thing for the company and all it's agents.

    Also, what would prevent an insurance company home office to simply offer each agent 5% more, and cut out its IMO marketing structure? If the IMO had pre-agreed to release for any reason, then this would be a reason for a release.

    OK, I have presented my thoughts on releases. This is coming from an IMO who works in the field and has been in direct selling of insurance products for over 21 years (mostly senior market). I have sold for 21 years, sat on National Advisory Boards for home offices, been involved with developing insurance products, and am not even close to being a rookie in this business.

    Not all our contracts are direct IMO company contracts. We feel it is sometimes to our advantage to go under someone who knows the company or industry better than we do. We have even actually asked to be placed under a more experienced IMO in some instances. I do not mind someone making money off of my efforts, as long as I get paid the agreed upon amount. However, I feel we are close enough to some of our uplines, if we needed a release (for a good reason) we would get it. A nickel more commissions is not a good reason.

    All I am asking is that the hot-heads on this forum, please try your best to present your best case for releases without name calling and screaming. I am not trying to blow smoke up your..., just asking for a civil discussion on what seems to be a problem with a lot of folks on this board.

    Joe Moore [email protected]
    National Senior Benefits
    Asurco Insurance Marketing
    www.asurco.com
    PO Box 1954
    Morristown, TN 37816
    1-800-226-1004
    1-423-581-1004
     
    Last edited: Aug 23, 2008
  2. GreenSky
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    The bottom line here is that I am an independent agent. No marketer has a right to my business.

    The release issue is one of honesty. Show me one contract that discusses the fact that I am bound to a FMO/IMO. It does not exist. This information is NEVER given to a prospective agent. It is a totally dishonest system and any marketer that does not disclose this information is dishonest.

    Everyone has a right to make a profit. But if an agent (who rarely needs the help from an IMO) can make more money, how dare the marketer stand in his way.

    It's a dishonest system. Disclose the indentured servitude clause upon signing a contract and I would have no reason to bitch about it. Instead of 6-12 months of inactivity, change the system to 3-6 month notice while still being able to write business.

    The current system screws the agent. Plain and simple.

    And yes Joe, you are dishonest.

    Rick
     
    GreenSky, Aug 23, 2008
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  3. Crabcake Johnny
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    Crabcake Johnny Guru

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    What system would you suggest to protect agents against unethical FMO's.

    Use this example:

    ABC FMO recruits a new agent - offers a commission reduction in exchange for free leads. Agent signs up, gets a few leads here and there, then the leads dry up.

    Again complains - where's all those leads you promised? FMO - no returned calls or emails - finally gets back to the agent with "sorry, the lead system has changed. Leads are $25 a pop now."

    Agent says that wasn't the deal, wants out. FMO says "talk to the hand."

    And that's game, set and match for the agent. The FMO will not release, the carriers don't want to hear about it, it doesn't even matter if the promise of leads were included in writing since the FMO knows the agent doesn't have the time or money to sue.

    Broken system - 100% protection for FMO's - absolutely 0% protection for agents.

    Simply not a fair system.

    Another example - promise of training and support. Agent signs up - zero training, zero support. Agent wants out....talk to the hand - no release.

    So again, as an adult conversation - which system can be put in place to offer some protection to agents.
     
  4. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    Joe, I think your expectations are a little off...

    To come onto a public forum and expect that you are going to be able to dictate the tenor of the discourse is naive at best, and controlling at worst.

    You're gonna get what you're gonna get. If you don't like it, don't post.
     
  5. jdeasy
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    jdeasy Guru

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    It's not up to you decide if 5% is a good reason to leave. It's the agent's decision. Of course, that's just a bs response anyway. I would doubt than very agents, if any, would leave a good service FMO/IMO over 5%. If they did, there is more to it than the 5%.

    In your 5th grade analogy, if you did gain control of all the agents and cut their contracts, they would leave you as well.

    Fact is, you are being dishonest if you refuse to realease an agent over any reason other than a debit balance. Even with a debit balance, you should release the agent if he clears up the debit.

    I've been trying to get realeased from Parker and Asses for a;; of this year. Not because of a higher contract somewhere else, but, because they are crooked. I can get higher contracts elsewhere, but, I would happy to work with them if they were honest. Their basic dishonesty is borne out by their refusal to release.

    The good IMO/FMO/GA folks that I work for will grant an unconditional release. It's not an issue because I don't want to be released from them. I just had a guy offer me a 20% higher contract on a life contract than I have through anexcellent GA. I'm not taking it because I have a great relationship and support from where I'm contracted now.

    You can try and justify your selfishness all you want, it won't fly with agents that have learned the hard way about FMO/IMO people like you.

    I don't know you from Adam except from this board. That's enough for me. I would not contract with you under any circumstance and for any level of contract. You may believe that you own the agents, you do not. You have a temporary hold on them until they learn the real deal.
     
    jdeasy, Aug 23, 2008
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  6. salpro22
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    salpro22 Guru

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    Did consumers have the ability to go to other gas stations that were not twice as expensive in a different area? If so, Standard Oil would have had to reduce prices to remain competitive or offer value added services, such as cleaning windows and fluids.

    Yes, and most of the insurance carriers REQUIRE IMO-FMO's to co-sign debit balances. Some even charge the IMO/FMO's interest on advances, so what's your point. It's not like any sane person would want to co-sign if they didn't have to!
    Pardon me if this offends anybody, but if an IMO/FMO will release an agents for ANY reason and hasn't put protective measures in place that person deserves to go out of business because he is an idiot!

    What's your point???? You'are talking about a monopoly and there is PLENTY of business to go around. In your scenario that would only last long enough until somebody else found a way to beat your system. This is friendly competition.

    If I open up a gas station directly across from my competitor (has anybody seen this before???) it's my mission to make an honest living and I'll either find a way to help each other to increase profits or I will put the other guy out of business and take his business.

    There is nothing wrong with that as long as you have a set of fair ethics. An example of something unethical would be resorting to behaviors like [SIZE=-1]siphoning [/SIZE]gas from the other guys gas station, while offering a gift card for every fill up to a local ice cream shop in exchange for profits would be something value added I could use to steal business without compromising my ethics.

    I see what you're trying to get, but it sounds like you're against competition. Rick already talked about his thoughts regarding the lack of transparency amongst IMO/FMO's/Insurance Carriers and agents and I agree with him, but the way around that is to be upfront with agents and reach an agreement about what happens should they decide to part ways. I'm not saying that agents should know how much commission the IMO is receiving, but they better be bringing something to the table besides commissions.

    Most IMO/FMO's don't operate this way because they have a need to protect their interests. There is nothing wrong with that, but you want to have your cake and eat it....

    -J.R.
     
    salpro22, Aug 23, 2008
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  7. retread
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    I am a firm believer that competition is good for business.

    I also believe in full disclosure. I have been snake-bit by a marketing organization when I first became an agent. Some papers were thrust in front of me to sign (including work history, w-4s, etc.) and when I asked for copies, got only the first page... ostensibly that was all I needed. I expected to get copies of the counter-signed agreement after being processed. I did not. Furthermore, with all the hustle and bustle of learning product information, regulations, etc., I shelved this issue until later. When the time seemed appropriate to resolve this open issue, the upline broker took an affront.

    I find a lot of new agents are suckered into signing a contract when they don't even know it is a contract. It was presented to me as a request for appointment that I had to have to sell their product. No discussion about it, no other signatures or counter-signs, no process disclosed for terminating the contract or provision for book of business. A paper just slipped into the stack of others to sign and get on with it.... and don't be late for the sales meeting!

    I approached this marketing organization with the promise of training, leads, and mentoring. I got a verbal response that this is indeed what they intended to provide, complete with a schedule of training sessions. The training petered out by the end of the first month, leads dried up by the third month, and the mentoring consisted on how to "sneak up on seniors". Sales method was essentially door to door (selling MA plans) which I determined was illegal. I quit in disgust, and it took most of the following year to extricate myself from the contractual commitments I did not know I had made. This broker, when asked, claimed to not even know what an FMO was, nevermind who he was. Yet the overrides and next year commissions went to him "somehow".

    Does this say enough?
     
    retread, Aug 23, 2008
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  8. Winter_123
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  9. retread
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    Joe...

    You talked about Marketing costs in another thread, and you did not respond adequately (in my opinion) to the challenge to justify your "marketing" expenses.

    Sales Aids: You did not provide a typical cost of developing, printing, and distributing brochures and other sales aids, etc. I assume it is because you don't do this. I find that product sales aids are produced at the carrier's expense. General sales aids are scarce, with most printed matter being sales promos or recruitment ads.

    Sales meetings are only held for agents local to the FMO's corporate office. Independents scattered throughout the region are on their own.

    To bridge this gap, some FMOs are providing online broker portals. Some are minimal, giving only one page contact info, others are fairly rich with links to carrier product info. Not all FMOs are equal in this respect, so the cost would vary appreciably. A website is certainly a lot less expensive to maintain than distributing hardcopy of sales aids. The burden of printing costs is therefore shifted to the agent.

    Sales Promotional material: Rare as hen's teeth! Luckily one carrier I am appointed with provides some really cool stuff. All the rest dole out a few pens or notepads at recruitment seminars. Most agents who get any of this stuff are captives since it comes from the carrier. FMOs just don't put this into their budget.

    Training: All the training I get is available online, (and is required for CMS certification in the MA market) and is provided at the carrier's expense. The only intervention I am aware of is the FMO providing email alerts that the training is available and where to go to log in. (The FMO usually sets up the line of products he authorizes those agents for certification, but that is a minor administrative task.)

    Leads: Leads are almost always purchased by the agent from a third party. The only privelege is the extension of discounts to their favored lead companies who may or may not sell good leads, but this is hardly a cost to the FMO. Most likely the FMO gets a kickback.

    Mentoring: There is hardly any personal contact with an FMO. The most is perhaps at an annual or semi-annual recruitment seminar. (A phone line is provided for contact to field administrative problems, and is probably one of the FMO's biggest expenses. I expect it is in the neighborhood of a couple hundred dollars a month.) I know of no FMO that provides mentors in the field. A downline broker may or may not provide this service, but this is obviously going to be the entry point of the heirarchy and he will have to subsidize this expense, not the FMO.

    This leaves the FMO with the expense of recruitment. This is the FMO's business expense and a direct cost of doing business. It is not the responsibility of the agents in the FMO's downline to subsidize this expense, but this is what is happening. Why should an agent pay an FMO to recruit agents who will compete with him?

    So Joe... what expense do you actually incur on behalf of your downline?
     
    retread, Aug 23, 2008
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  10. jdeasy
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    jdeasy Guru

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    Retread is not being fair here, those questions are tooo haaaard!!:D
     
    jdeasy, Aug 23, 2008
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