Making More Money with EIA/FIA Sales
(FREE Webinar on December 6, 2007)
I beta tested this e-mail last week by sending it only to those who have signed up for the CWPP™, CAPP™ and/or MMB™ course to see how many people think it is helpful or interesting. Not surprisingly the feedback and responses were terrific. Therefore, I decided to send the same newsletter out to those who normally recieve my newsletters as I'm sure many will find it interesting and hopefully beneficially.
If you do not sell annuities or life insurance you should still find this newsletter intresting as it will give you insight into the sometimes seedy and greedy insurance industry.
For those of you who don’t know what an IMO/FMO is, they are “independent” or “field” marketing organizations. What’s that? They are marketing firms put together with the specific purpose of working with independent insurance agents so business can be pooled and better overall commissions can be negotiated with the insurance companies.
Most IMOs tout their value by helping agents “market” through sales platforms. Most of you have seen or been pitched “senior selling seminars” to get in front of potential clients. Working with an IMO to help with your marketing used to be very important for many. When these senior selling seminars came into being several years ago, only a handful of advisors knew how to make them profitable.
Today, the "secret" of sending post cards out to get seniors in a room to give them a specific presentation on Equity Indexed Annuities or Fixed Indexed Annuities (EIAs or FIAs) is "out of the bag" and many agents have been doing them for months or years and know how to do them themselves.
But yet these same agents continue to send business through the same IMO which is taking a large haircut on the commission through an override.
Let’s talk about commissions specifically with EIAs/FIAs.
-When an agent sells a FIA, an insurance commission is paid. Generally speaking, the longer the surrender period of the annuity the larger the commission.
-There is street level commission that is typically paid to an insurance agent and then there is an “override” commission that typically stays with the IMO.
-The larger a book of business an IMO can bring to an insurance company, the larger the total commission paid to the IMO. This means that the override commission is larger while “street” commission stays the same for the agent. (The ironic thing about an IMO is that most are not independent by function as they place most of their business with a select few carriers so their overrides can be larger).
-Street level compensation—This is a term I hear all the time and despise. I learned to despise street level commissions very quickly when entering the business. Why? Because when I sold product it was usually in an “advanced” case where I knew more about the structure than any IMO. Therefore, I could not understand why an IMO would put me at street level. It’s mainly because they all do it and for this reason, I started getting contracted directly with one particular IMO who “gets it” and paid me well above street level on my cases.
Bonuses—Sometimes IMOs will give agents bonuses at the end of the year on production. Usually the bonus is 1/4, 1/2% or 1% of additional commission.
Let’s look at a typical payment of commission on the sale of a FIA.
Company A provides an equity linked indexed annuity with a standard 10 year surrender period. Pays these commissions (assume a $100,000 annuity payment):
Street— 8% to the agent
Override— 2% to the marketing company/IMO
Bonus ½% paid at end of year to marketing company based on their total production (they keep it)
On your sale of $100,000 you make $8,000 and they make $2,500.
You, the agent— 76.2% of the compensation
They, the marketing company— 23.8% of the compensation
What’s the first thing that comes to your mind when you see these numbers?
What did they do to earn this money?
Many times the answer is NOTHING. They simply watched paper fly and waited for their override commission.
Let me step back a minute and say that IMOs/FMOs are not “evil.” If they are providing you with marketing support and really helping you get in front of clients, they deserve to get paid something. However, many advisors know how to market on their own and place millions of dollars of business and are stuck at street or something slightly above street with the bonus an IMO chooses to throw their way at the end of the year.
Lower producing agents
If you are an agent and only produce $100,000 or less or even $500,000 or less in annuity premium, you will not qualify for a bonus or to get more than street level commission.
Is there a better way?
I wonder how many of you saw The Candidate with Robert Redford (1972)? What I remember about it was his catch phrase when running “there’s got to be a better way” (at least I think that’s what it was).
Is there a better way? Isn’t that one reason why I tell advisors to look to the WPI for help?
How about if you had the ability to place $10,000, $100,000, $1,000,000 or more in premium into FIAs/EIAs and make street +++?
I found an IMO that will pass through the majority of the commission to the agents and look how it could increase your compensation.
Company A provides an equity linked indexed annuity with a standard 10 year surrender period. Pays these commissions:
Street— 9.5% to the agent
Override— .5% to “Advisor Friendly” IMO
Bonus ½% paid at end of year to you, the agent. (you keep it)
On your sale of $100,000 you make $10,000 an Advisor Friendly IMO makes $500.
You, the agent— 95.3% of the compensation
Advisor Friendly IMO— 4.7% of the compensation
If you are a full-time agent working in the annuity business and produced $2,000,0000 a year in premium using our example you would earn:
Using your current marketing company you would earn annually $180,000 (not bad but..)
By contracting with an Advisor Friendly IMO your income on the same premium production would be $220,000.
How can an Advisor Friendly IMO do this?
Simple, they provide very little support. This model is for an agent who doesn’t need hands on help. If you need that, go to an IMO that takes a significant amount of the override.
Now having said that, the Advisor Friendly IMO does have many free marketing tools (scripts, post card mailers, and other things you can use), but because they don’t have a huge staffed sales force that costs big bucks, the Advisor Friendly IMO can pass additional compensation to the agents.
What should you do now?
If you want more information on this intereting IMO model that pays advisors more for their work done in the sale of an EIA/FIA, please e-mail firstname.lastname@example.org and you will be forwarded directly to the IMO for further discussions. _______________________________________________________________________
Learn How to Make More Money
With Your EIA/FIA Sales
To attend a FREE webinar on December 6, 2007 at 3:00 pm, EST., where you can learn to increase your commissions simply by working with an IMO/FMO that is designed for little support and maximum payouts to advisors, please click here.
The Home Equity Management Guidebook
Christmas is right around the corner and as we all struggle with what to get our best clients and/or friends or family members, I thought I would get into the holiday spirit myself by helping you making the decision to give knowledge as a gift.
What is a great tool to help clients grow their wealth? “Equity Harvesting” (As explained in my new book The Home Equity Management Guidebook). What is a great way for advisors to grow their wealth? Give a client a gift that will motivate them to act on a topic that makes the advisor money (such as Equity Harvesting).
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Roccy DeFrancesco, JD, CWPP™, CAPP™, MMB™
Founder, The Wealth Preservation Institute
Co-Founder, The Asset Protection Society
3260 S. Lakeshore Dr.St. Joseph, MI 49085