FMO: Does an independent insurance agent need one?

Field marketing organizations are a vital piece of the puzzle for all types of insurance. Their role as an intermediary between the agent and the carrier has provided benefits in both directions.

Here are some insights to help agents determine whether an FMO relationship is right for them.

What is an FMO?

FMOs do a lot of the heavy lifting for agents, allowing them to focus on prospecting, closing and serving their clients. FMOs provide services that significantly ease the operational and business development burdens that drag down many agents.

These services often include access to multiple carriers, product training, quoting engines, sales and marketing resources, lead generation support, compliance support and sometimes even back-office assistance.

It is a compelling business model for a single-shingle agent, but is the model right for you?

Finding the right FMO

Not all FMOs are created equal, so it is incumbent on the agent to do their due diligence. Here is what you should expect:

1. Strong carrier relationships. FMOs partner with a variety of carriers both large and small. Make sure these carriers are of the quality you want to represent.
2. Comprehensive training. All FMOs will have some form of product training. Agents should explore the breadth of training in other areas, such as strategic planning, marketing, regulatory and other core operational functions.
3. Marketing and lead generation support. This is an area where the best FMOs shine. They have invested beyond the basics into areas such as customer relationship management systems, online quoting, social media marketing and other growing electronic strategies.
4. Back-office support. Strong FMOs provide support across the operational needs of an agent, from application processing to compliance and other administrative functions necessary to get deals closed.
5. Competitive commission structures. Competitive is the operative word and, unfortunately, there is no rulebook for this. Nothing is free and FMOs that are heavily invested in their agents often exact a higher slice of the commission pie. You get what you pay for.

 Let’s talk about you and your career

FMOs tell compelling stories of how their programs will get agents to success faster. And they have.

For the right agents.

Let’s take a quick look at the three areas I tell agents to think long and hard about before signing an agreement with an FMO.

• Who are you? Are you methodical and risk averse? Or are you creative and entrepreneurial? Maybe you value work-life balance. FMOs are often large organizations with goals of getting larger. They want to scale with agents who fit their model. Is this you?
• Work ethic. Successful FMO agents come in all shapes and sizes and have one thing in common: They are seriously hard workers. They are relentless and they maximize the FMOs benefits. Successfully working under an FMO is not for someone looking to leave the office early.
• Financial goals. It’s not just about making money. The issue is whether an FMO relationship will help you achieve the pace and trajectory of your financial goals. An FMOs success is built on individuals with ambition and a strong work ethic and their benefits are typically flexible enough to meet a wide range of agent financial goals.

Let’s now look at some potential speedbumps.

The potential drawbacks of partnering 

You made the big decision to become an independent agent. You will likely bump up against one or more of the following situations with an FMO that may run counter to your long-term goals:

• Less independence. An FMO’s success comes from processes and procedures that are profitably repeatable. Agents looking for autonomy might find this frustrating.
• Lower commission rates. This is a fact. All the valuable FMO benefits and support come at a cost. I’ll say it again, you get what you pay for.
• Production quotas. Most FMOs have production requirements for agents and will push you to hit the goals. Make sure this is pressure you can stand up to.
• Lack of customization. Remember, FMOs are focused on scaling their business model. It could hinder agents trying to build a personal brand or a unique competitive spot in the market for themselves.
• Vesting. Some FMOs require you to sell for several years until you own your book of business. Read the fine print before signing the agreement
• Exit strategy. Sometimes things go sideways in relationships. It happens. Make sure you understand the FMOs policies if you decide to end the relationship. In most cases, you will have to get a release.

An FMO isn’t for everyone, but it is a compelling model for a wide swath of the agent community that doesn’t want to be bothered by back office and administrative headaches.

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Drew Gurley is a licensed life insurance expert with nearly 15 years of experience. During his career as both a licensed life insurance agent and industry executive he has helped thousands of clients with their life insurance needs through his work at Redbird Advisors and Senior Market Advisors.