Value of an FMO

Apr 19, 2007

  1. GreenSky
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    GreenSky Guru

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    I have had more grief than benefit by having an FMO. It seems that this system primarily is designed to keep an agent from earning as much money as they can.

    Case in point. I had a contract for Secure Horizons Direct through an FMO is Anaheim, CA. I then had an offer of an MGA contract through another FMO. The current (and how proven to be dishonest) FMO would not release me. I then gave my 30 days notice and was informed that I could not move my contract for 6 months.

    Six months went by and I wrote zero business. When the new FMO sent in my appointment paperwork, I was told by the carrier that I was not able to have my commission level increased - apparently forever.

    Since I'm NOT an indentured servant, why is this system set up to restrict the amount of commission someone is willing to pay me?

    This is not the 1st time I've been faced with having to remain in a contract that I neither knew about, nor would have signed. I'm trying to remember now to get a promise of a release for any reason up front.

    I'm not saying that some FMO's actually provide additional value. Even the good ones tend to restrict your ability to earn based upon how they feel about you. A good relationship can sour very quickly.

    FMO's promise you the world but one they have you, they have you by the short hairs!

    I understand the marketing aspect of the FMO system. But how can an agent be held in a contract for 6-18 months after giving notice without agreeing to that contract initially?

    Rick
     
    GreenSky, Apr 19, 2007
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  2. Sam
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    Sam Founder Administrator

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    Rick,
    You make a very good point about any FMO, MGA or other type of wholesaler, who takes an override off of their agents.

    However, surely you see why it is necessary to have lock-ins in your contracts. If I were to run a marketing organization, and I knew that I would train someone, help them get off the ground, and dedicate some resources to them, but as soon as they knew enough, they would leave for a higher contract, and we would make nothing on them, then I have no chance of profit.

    There is a fine line that needs to be balanced, and there is abuse on both sides. You see FMO's who DON'T train, or otherwise dedicate resources, to help their agents, and yet they keep them locked up. You also see agents who take full advantage of a good FMO's resources, and then try to run as soon as they can.

    In many markets, there is such a concept as continuing to give your trainer an override, because without them you wouldn't have the same opportunities and you wouldn't be in the same position.

    I think that the important things are:

    1. Make sure that you have personal recommendations of what kind of service and help the organization will bring you.

    2. Make sure that you have a clear understanding of what the rules are when you leave.

    3. Have a clear knowledge of what they are getting paid, for the service they provide.

    With this information, you should be able to do well with an FMO.
     
    Sam, Apr 19, 2007
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  3. GreenSky
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    So then if I get a job with Microsoft, they train me and I jump to a better job in another company, I would be doing Microsoft a disservice?

    There is not one FMO that did anything to train me on any product. I have learned about that product directly from the carrier. In addition, not one FMO has recruited me - I sought out a product and had to find an FMO.

    Now if I were to run a marketing organization, I would make damn sure that my agents would not FIND a better deal elsewhere. There is a cost to doing business.

    The real issue is the dishonesty in this entire system. Not once have I seen a contract that stipulates any requirement to be released or waiting period to re-contract. Perhaps if insurance carriers and the FMO's would be a little more honest with those of us the recruit, I wouldn't be bitching about it now.

    Does anyone include this type of information in their contracts? Why am I subject to an agreement between a carrier and an FMO if I don't know nor agree to it when I sign my contract.

    It's dishonest and probably an illegal restraint of trade. You can't defend any other position until the system "comes clean."

    Rick
     
    GreenSky, Apr 19, 2007
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  4. Sam
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    Sam Founder Administrator

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    Rick,

    I agree wholeheartedly with you, that there has to be a give and take. If an FMO wants to make money off of you, then they NEED to be giving service and training. In this aspect, there is quite a difference between you, and your experience, and a green agent off the street.

    No every industry has non-circumvents, but some do. Commercial mortgage brokers, for example, are usually not allowed to do mortgages for a few years, if they leave their company.

    From the perspective of the insurance company, it is much more lucrative to just pay someone to access their distribution channel, then to do their own product marketing. Therefore, the system exists the way it does.

    What we should really have is, as you say, full disclosure of what signing with a company means, including lock-ins, and commission structure, along with override information. That way, a green agent can choose to have training, with their eyes open, of what the cost is, and an experienced agent won't have to suffer the same fate.
     
    Sam, Apr 19, 2007
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  5. senior-advisor-indiana
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    senior-advisor-indiana Guru

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    None of my FMO's offer me anything, well I shouldn't say anything. The annuity FMO is good cuz I need thier case design. They all offer a "discount" on lead vendors. BIG DEAL! I get the same price myself. Other than that they do nothing!!!

    So why do I give up my commission and why do the companies require me to go through one? The companies should make the FMO's provide more things. They are getting the overides for doing nothing. Maybe I should start a FMO.
     
  6. indaville
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    indaville Super Genius

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    My relationship with Asset Marketing Systems (AMS) has been great. They have helped me dramatically increase my business. They have a reputation of letting you go if you want out for some reason.
     
  7. senior-advisor-indiana
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    senior-advisor-indiana Guru

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    What have they done for you?
     
  8. indaville
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    indaville Super Genius

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    They have helped me re-brand my business and with marketing support. I used to see 5-10 people in my office each week, now I see 15-25 people each week. My production has more than doubled as well.
     
  9. Bob_The_Insurance_Guy
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    Bob_The_Insurance_Guy Guru

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    My FMO is The Palmer Agency, in Decatur, Ga. They are my back office. I work out of my house, and whenever I've needed product brochures, quotes, marketing materials, or a conference room to hold a client meeting, they have been there for me.

    While they don't hold training meetings anymore, they do e-mail me about product launches, and webinars from the insurance companies themselves.

    They have let me out of contracts before, with no questions asked. They have been upfront in letting me know what my percentages are, and they have always made me aware of any updates.

    I am just a one-man operation, and my contribution to their bottom line is probably less than a grain of sand; yet they make me feel like a king everytime I walk in there.

    I've put my full praise for them on another thread, so I won't beat the proverbial dead horse.

    Be careful what you wish for; you just may get it. I am direct with Blue Cross Blue Shield of Georgia, and have just received a notice that my renewals will be shredded. Wouldn't it be nice if I had someone to call them, on my behalf, and threaten to walk away with business, if they don't change their stance?

    I can't, because it's just me against BCBSGA.

    An FMO does more for the agent than I think the average agent realizes. You just need to shop around for one that shares your philosophy and your passions. You have to find someone who has the same sense of humor you do. Someone who won't blow sunshine up your skirt.
     
  10. Bob_The_Insurance_Guy
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    Bob_The_Insurance_Guy Guru

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    Oh, and by the way, they never charge me a licensing fee to get licensed with a company. I know it's only $10, but it's still a nice service, that shows me they want my business.

    Now, if you'll excuse me, I'm off to Palmer to get some quotes done.
    (did I mention they are only 2 miles away from me)

    HOW CONVEEEEENIENT!
     
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