The distribution of independent life and health is set up in a system that is baffling to the point of absurdity. When it comes to establishing their own distribution network, each insurance company is free to be as creative as they want.
As a result of constant one-upmanship, a variety of adjectives are used to express the same thing: top of the channel, largest distribution partner, s/he with the closest link to the insurance business, and most downline agents. This is often referred to as a Field Marketing Office (FMO).
Each insurance firm selects five to twenty FMO partners. Our firm has top-tier national contracts in Medicare, ACA, Life, Annuity, Dental, Short-Term Medical, and Travel insurance. Some FMOs specialize in life insurance, while others specialize in dental insurance. THE CRAZY THING IS THAT ANYONE CAN CALL THEMSELVES AN FMO! With 10–50 agents, many “FMO” offices are essentially just General Agents. They use the moniker FMO to attract unwary agents who are unfamiliar with the industry. There’s no easy way to tell if you’re dealing with the CEO of a large firm or a tiny one with big branding. Many people use the letters FMO in their names, yet they are merely an agency. Does it make a difference? Not at all. If you like them and want to collaborate with them, go ahead and do it. However, I would deduct points for their false name.
Ranks of Distribution
The agent does not lose pay if he or she identifies with any level above him or her. The override is distributed by the FMO to all levels below him, and the carrier pays the agent directly. Agents choose to work with different agencies because they can get training, leads, marketing assistance, office space, administrative assistance, referrals, and other perks. Agents can also work directly with the carrier and earn the same commission while receiving no additional benefits. The services provided by FMOs justify their position in the food chain. Everyone in the distribution chain (GA, MGA, SGA) must deliver services in order to earn their override commission, or agents will leave.
If an agent isn’t getting the care and support he/she requires, he’ll/she’ll move to an FMO where he/she can get more assistance in growing his business. The majority of independent insurance agents work with 5–20 different insurance companies. FMO agents are 1099 independent contractors who sell what they want, for whom they want (a few or many companies), and when they want, as opposed to captive or career agents who are employed by a carrier and told what to market and when to work. They may only sell Medicare Advantage plans, or they may sell life insurance, ACA insurance, annuities, and other products as well. They choose which products to market, and the FMO encourages them to do so.