Field marketing organizations (FMOs), also known as independent marketing organizations (IMOs), have always played an essential role with independent financial professionals by helping them build and grow their practices, acting as the expert intermediary between financial professionals and carriers.
Traditionally, FMOs have been seen as a place for independent financial professionals to sell fixed and fixed index annuities and life insurance products, while also benefitting from access to different marketing and sales techniques. While what each FMO offers can vary greatly – from marketing strategies to sales tools to lead-generation software – the ultimate goal is to proactively drive their financial professionals business and provide clients with much needed retirement solutions.
But the industry has come a long way in recent years, and as a whole, we’re now embracing a more holistic approach when it comes to creating financial strategies. Rather than using insurance products as an add-on, they are now viewed as an important tool to help manage risks to retirement within a comprehensive financial strategy. And many financial professionals now view “guaranteed retirement income” as an additional asset class within a portfolio.
With this ever-changing financial services landscape, traditional IMOs and FMOs are finding a focus on just marketing services is no longer enough to meet the needs of their financial professionals. Today’s independent financial professions seek a much wider variety of financial products and services, including digital marketing and technological platforms. As a result, many traditional IMOs and FMOs have evolved into full-service financial services organizations (FSOs), offering a wide range of products, services and platforms to their financial professionals. In addition to fixed insurance solutions, many also offer variable products to independent registered reps and broker/dealers, investment advisory services, and much more. This, in turn, allows the financial professionals to help meet the demands and expectations of the consumers they serve today.
The Start of the Evolution
There were two major forces that drove this evolution: the initial introduction of the U.S. Department of Labor (DOL) fiduciary rule and the convergence of technology platforms. At that time, FMOs began thinking about new ways to approach the market from a holistic financial strategy perspective. While some were already serving the broker/dealer and registered investment advisor (RIA) space, the changes pushed many to start to think about new ways to approach the market, driven by the numerous interpretations of the anticipated forthcoming rule. And by the time the rule was vacated in mid-2018, many FMOs and carriers had already invested significant time and money to transition to newer business models and marketing platforms.
The DOL fiduciary standards also raised awareness with consumers around differences in financial professional offerings. Because of this, many professionals, advisors, and reps began to incorporate a much more holistic view of a client’s finances, including how insurance might fit in. Their focus went from asset accumulation and growth potential to now also consider guaranteed income and increasing income opportunities in retirement – solutions often found in insurance products and provided through built in or optional riders at an additional cost. This provided a gateway for traditional FMOs to evolve, embracing the shift in the industry and expanding their offerings to better meet financial professionals practice management needs.
At the same time, technology was evolving rapidly, changing the way business was done in every sense. New tools and technologies made it easier for financial professionals to see where insurance products could fit within a client’s portfolio.
A Step Forward
After the industry changes, forward-thinking FMOs knew they had to evolve. Even though the fiduciary rule hadn’t gone into effect, it created a whole new business opportunity for them. Some FMOs approached this by affiliating with a financial institution, but others decided to diversify from annuities or life insurance to become full-service financial services organizations (FSOs) themselves. Many took this opportunity to form or acquire their own broker/dealer firms and/or RIAs to better serve their financial professionals.
Now, these FSOs offer much more than fixed insurance and marketing solutions. They boast expanded offerings, including additional life/health, long-term care, medical supplement and property/casualty products. Those who now own a broker/dealer are positioning variable products and services to their reps and on the investment advisory side, are offering new advisory solutions.
Additionally, the explosion of digital tools and platforms allow these FSOs to offer innovative, industry leading marketing and client management tools and programs to their financial professionals, including in-house practice management and marketing support.
Independent financial professionals have an array of FSOs to choose from, each offering unique solutions. This allows these professionals the ability to align with an organization that can best augment their financial service business. The relationship between the FSO and the financial professionals becomes one of mutual benefit, matching the needs of the financial profession with the solutions the FSO can offer. And there is hardly doubt that the services and capabilities offered will continue to expand to meet to the ever-changing needs of financial professionals and ultimately the consumers they serve.
In this new era, FSO/FMOs look to their carrier partners for consultation, education and collaboration on everything from thought leadership to culture and technology. For example, at Allianz Life, we’ve partnered with a number of different software and tech platforms to integrate real-time annuity data into various portfolio management systems. This can help financial professionals see how these financial products might fit into a client’s holistic portfolio. These various data feeds and integrations are an effort to help FMO/FSOs understand how annuities may fit in the broader landscape that they are operating in. We also look for solutions to help demonstrate the value of increasing income opportunities in retirement. These are solutions, beyond just product, that FSOs can integrate into their platforms. This collaboration between FSOs and carrier can drive innovation and meaningful transformation.
The strength of an FSO/FMO has always been their entrepreneurial spirit. They have the ability to think and innovate quickly, bringing forth a constant flow of improved solutions that help financial professionals better help clients. As the industry continues evolving we can look to FSOs as they forge the path forward, helping us all learn, innovate and grow together.
Sherri Du Mond, CFP, RHU, is senior vice president of field marketing organization distribution sales at Allianz life Insurance Company of North America. She has also been the president and chief executive officer of Questar Capital Corp. and Questar Asset Management Inc.