How Not To Fall Into The FMO Trap
Wealth Financial Planner Brent Meyer offers financial advisors the benefit of his 13 years of experience with Insurance Field Marketing Organizations (FMOs) with the goal of helping advisors avoid falling into the traps set by many unethical FMOs.
Helping financial advisors navigate through the FMO maze and maintain their ethical standards is the goal of Safe Money Resource, an Independent Marketing Organization (IMO) founded in 2006 and the parent company of Safemoney.com
Wealth Financial Planner Brent Meyer, co-founder of Safe Money Resource and Safemoney.com, spent 13 years working with FMOs before determining that they often cannot be trusted to provide adequate training and information to their advisors. To help other wealth planners avoid the pitfalls he discovered, Meyer filled Safemoney.com with articles and information to help educate others in the field to the perils they need to look out for.
“Just like any small business, when you start out, you begin with a business plan,” Meyer explained. “Over the years that business plan is modified about 20 to 30 times before your business runs as smoothly and as effectively as you first anticipated. You have high hopes and aspirations, not only to make a good living, but to eventually live the life you had always dreamed of, as long as you work hard and stick to the plan.
“In March of 2001, I found myself learning what an annuity was and focusing on helping a small company become a large company. It was fresh, exciting and new for me and it was nothing like I had ever done before. I was given a phone, a computer, a list of phone numbers and a script, and told to ‘start dialing, smiling, and just say this.’ I had no idea what I was talking about, but I didn’t need to - at the time annuities were hot and every agent needed to sell them. As far as I knew that was true, so the less I knew, the better. Over time I became the top internal wholesaler in that office. The company I was working for had positioned themselves to sell and that’s what they did. They sold to a much larger company.
“Turns out, the company I was working for already had their business plan perfected and knew exactly what they were doing and what their end goal was. Not knowing their plan, I spent five years creating relationships with my clients – financial advisors - that would last many years, and in some cases, a lifetime. I didn’t think about the wake of disappointment that would be left behind when the company sold. They weren’t only hurting my clients; they had misled thousands of consumers into situations that were never explained to them,” said Meyer.
It is important for financial advisors to be aware of the true goals of the FMO they are working with, Meyer explained.
“There are many FMOs to choose from, some great, some good, and some not-so-good. The one thing that truly separates these FMOs is their business models, and in some cases, their hidden agendas. Many independent advisors do not understand how the FMO side of the industry works, and how the independent advisors are being manipulated into selling the wrong product, exposing them to future litigation. I want to share my experiences in hopes of enlightening other advisors and empowering them with the truth that may just save the hard-earned future of their practice,” Meyer continued.
”I have been on the wholesale side of the business for over 13 years and I have seen how the large, well-known marketing organizations manipulate their networks of advisors - it’s all planned out from the inception of their business plan. With the right amount of seed money, an unscrupulous FMO can and will offer most - and in some cases all - of the overrides they are receiving from the solicited products’ backing insurance company to the advisor they are in the process of recruiting; this is frowned upon by all insurance carriers but still occurs. This allows them to recruit more advisors based solely on the fact that the advisor can make more money working with that FMO; this also helps the FMO reach a bonus tier with the backing insurance company they are soliciting product for, based on premium paid in that year. Once the FMO has gained a large advisor following and has the proof of such volume, they are then free to go to an insurance company, perhaps with a product design already I mind. This product will look great on the outside but smell real funny once you take a sniff. The product design will be more favored towards the profitability of the FMO and the backing insurance company. The only way you can tell is by reading a specimen contract and knowing what you are looking for.
“But at this point the FMO is huge and they have a very large distribution channel of advisors in the field. These advisors believe in what the FMO has to say and trust the FMO enough to just go on their word, therefore making it very simple for the FMO to get their advisor network to solicit this new ‘amazing product’ to the consumer. This chain of events is just the beginning of what advisors need to know,” Meyer said. “The FMO in this scenario had planned this from the start. They did not think about the repercussions this would have on the future of the industry or the people – both advisors and clients - they were hurting in the process, because ethics was never part of their plan. Their real plan was to sell off to a large insurance company for millions, and be out of the future liability loop, leaving all the liability on the advisors they recruited, the people who sold the products the FMO recommended. These advisors didn’t know what they were selling because the FMO never truly told them.”
Meyer envisions a possible scenario as follows:
Agent: “My FMO said it was great for my clients!”
Beneficiary and attorney: “Can we contact your FMO?”
Agent: “No, they are out of the business.”
In 2005 many of these FMOs sold, and in the process, were bound by a non-compete agreement for five to seven years.
“Now that the non-compete agreement has ended, these new FMOs have plenty of seed money to do it all over again. And that is exactly what they are doing,” Meyer explained. “I am not sharing this information in hopes of recruiting advisors to my IMO; I am merely supplying this information because financial advisors deserve to know. I have built my business plan on ethics, integrity and karma. I can proudly say that I have not swayed in any fashion and will continue to serve both the right independent advisor community and the consumer with full disclosure and the pursuit of doing the right thing always!”
Ask yourself one question – Are you really doing the right thing for your clients, or do you just think you are?
For more information click here or to contact Meyer, visit www.Safemoney.com