The Future for FMO’s, IMO’s, NMO’s, and MGA’s
If you are in the annuity, life insurance, long term care, or disability business, you have certainly heard of an FMO (field marketing organization), IMO (independent marketing organization), NMO (national marketing organization), or MGA (managing general agency). No matter what you call them, their ultimate roles have been pretty identical over the years – To generate as much premium for the insurance carriers that they represent as possible. For those of you not familiar with FMO’s, the big picture is that the insurance carriers use them as distribution centers to recruit, educate, and to promote and sell their products (annuity, life, LTC, etc). In return, the FMO will receive a small override from the insurance carrier for any agent that they have appointed and writes business. Fifteen years ago, there were just a dozen or so large FMO’s that mostly had just a few carriers each (in some instances only represented one or two carriers), and today there are hundreds of FMO’s representing upwards of 35 carriers per FMO. To say that the field has become competitive would be a huge understatement.
Today, with the increases in “Preferred” and “Proprietary” insurance products ,along with increased suitability and regulatory pressure, the FMO’s are quickly having to evolve with the times. In the old days, the FMO was more of a recruiting platform followed by some product support and very little marketing or sales value add. Today, the FMO is such an integral part of the insurance sales process (from sales systems, closing techniques, processing and scrubbing the paperwork, and making product recommendations) that it was inevitable that the FMO come under similar scrutiny as the advisor or agent selling the product (in regards to compliance, suitability, and insurance regulations). The wild wild West FMO mentality of the old days is gone, and any FMO that doesn’t adhere to the rules in place will not be around for long.
Moreover, with the increased dependence and affliction that our country has with technology, the old school FMO’s that don’t adjust and take advantage of digital marketing for financial professionals, will find themselves left in the dust. Both financial professionals and their clients are doing business via Ipad’s, Iphone’s, Smartphones. Similarly, a huge amount of their research and correspondence is done via a computer. If you are an FMO that isn’t easily found online (or even worse, have no online presence at all), don’t expect to keep growing. In fact, a new trend is starting to evolve called the DMO, Digital Marketing Organization, which enables their agents to do everything from contracting, app scrubbing, commissions, and even taking advantage of marketing programs, all online. The old school FMO model of only providing product information isn’t dead yet, but it is quickly dying. Just like any business, if you aren’t adapting and staying ahead of what is going on around you, you just might find that you are out of business.
More to follow on this topic.