Are you truly independent? 5 questions to ask

It may be difficult to put a price on your independence, but you should at least know some of the costs.

My friend Brian was with the same independent marketing organization for 15 years. All his contracts and assets under management were with this IMO. He rarely needed support and consistently produced $8 million to $12 million a year. He was an IMO’s dream advisor.

In 2018, Brian paid his IMO $3,000 for a website that they told him he would own. In 2026, Brian moved one contract to another IMO to access a niche product. Within a week, his IMO sent him an email telling him that he had 30 days to replace his website before it was shut down. At the same time, his new IMO offered a $20,000 forgivable loan, a free website and an extra half percent in commission if he moved everything over to them. When we spoke, Brian felt stuck. I asked him to send me the agreements.

The forgivable loan was straightforward: $20,000 if he wrote $5 million over three years. But there was a second agreement tied to additional commission restricting him from offering any products outside the IMO, with penalties of up to $10,000 per sale. I asked him, “If you sign this, are you really independent, or just another captive agent?” Brian chose a different path.

What does independence mean?

In my 15-plus years as the chief marketing officer of an IMO, consultant and financial advisor, I’ve seen dozens of advisors leave captive agencies to become independent so they could offer their clients the best service and products available, not only those their firms allowed. These newly independent advisors join an IMO that provides every service the advisor needs to be successful. Everything’s great until the advisors decide to leave and join another IMO and are surprised by how little of their businesses they actually own. They lose their customer relationship management system, website, branding and other intellectual property. If they were on radio or TV, they lose their media, and in some cases, their spots are replaced overnight with another advisor.

If the IMO is paying for the website, branding and media, it’s fair that they keep those assets. The problem isn’t what the IMO keeps; it’s whether advisors know about this upon contracting.

Answer these questions

The good news is that many of these obstacles can be avoided. Here are five questions that you should ask an IMO when deciding to partner with them. These questions can help prevent you from experiencing any unnecessary problems in your journey toward independence.

1. Do I have permanent access to my CRM?
   Your client database is one of your most valuable assets. You should never use your IMO’s CRM unless you are certain you own the data and you can take it with you if you leave.
2. Do I own my website?
   Too many advisors learn only upon parting ways with an IMO that they really didn’t own their website, its domain, URL, artwork or logos. Make sure you understand the terms before you sign anything.
3. Do I possess the rights to my radio, TV and ad spots?
   It takes years to build a reputation through traditional media. Before you sign a contract with your IMO, find out the terms and conditions so you know what you could be walking away from if you ever leave.
4. Who owns my brand?
   Imagine working to find the perfect color schemes, logo, taglines and graphic design art for your business, only to discover you own none of it? Be persistent in confirming exactly what marketing materials you will and won’t own before you sign any contract with an IMO.
5. Can I write with other carriers and contract with other IMOs?

There is nothing wrong with partnering with multiple IMOs if that’s what’s best for your business and clients. Make sure you know the terms behind that forgivable loan or extra 50 basis points in commission.

Trend toward independence

A few years ago, a study by Cerulli Associates found that 71% of financial advisors prefer independence to the captive carrier business model, valuing access to products their firms did not offer and the opportunity to increase sales revenue. This trend of advisors leaving captive scenarios to establish independent businesses is likely to continue, but there is no reason to make these transitions more difficult than necessary.

With proper planning and attention to details, you can save yourself time, money and headaches on your road to independence. You will do well to forget the employment benefits and circumstances that existed within your captive carrier’s firm. Assume nothing, confirm everything and you will go far in limiting unpleasant surprises.

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Justin Woodbury has been a CMO, consultant and financial advisor in the financial industry for more than 15 years. Contact him at [email protected].