Warning: Why FMOs will be extinct soon

By Joe Simonds

Advisor Internet Marketing


Be prepared to see an entire new wave of digital distribution advocates proudly donning the fresh and exciting new acronym, “DMO." Just as all agents, all agencies, all broker-dealers and all insurance carriers have had to quickly adapt to the Internet revolution, expect the insurance distribution to have to follow similar suit.

Kind of a harsh title coming from someone who has worked with, helped grow and promote, formed countless relationships from, and made a decent living from FMOs over the past 10 years. However, I really do have an urgent warning for all of the annuity and life insurance distribution out there that could render you extinct in due time if you choose to ignore it. Let me explain.

For the agents, advisors, wholesalers, distributors, broker-dealers and carriers involved in the fixed and fixed indexed annuity and life insurance independent channel, the terms field marketing organization (FMO), independent marketing organization (IMO), and national marketing organization (NMO) are common and recognizable terms. For those of you not familiar with these acronyms, they are fairly interchangeable terms for groups that market, sell and distribute insurance products, such as annuities and life insurance.

Think of them as the middleman distribution system for the insurance marketplace, similar to any distribution center for cars, alcohol, furniture, etc. Simply put, the insurance carrier creates, registers and underwrites the insurance product while the FMO distributes and wholesales the products. It is a distribution system that has worked, and it is one that has been around for the last couple of decades. So, just what is a DMO, you might ask?

A DMO refers to a digital marketing organization. This is a relatively new description, and it began as a way to refer to the small handful of insurance distribution groups who truly understand, accept and promote digital marketing and branding. Although no one seems to argue with the fact that everything (including annuity distribution) is going digital, not many in the insurance industry seem to be doing much about it or even understand the implications for the industry as a whole.

However, it appears as if a small few are leading the charge while others stay complacent and hold on to their archaic model that hasn’t changed in nearly two decades. The digital marketing organizations are those which strive to teach their advisors how to brand themselves, how to educate and how to be found online.
Teaching simple things like how to use LinkedIn to attract new prospects and how to publish a blog all the way to advanced social media and search engine optimization(SEO) tactics that speed up how quickly you are found online form the core of the DMO’s value proposition. Sadly, too many financial professionals and FMOs believe that the job has ended once you actually make it online with your first website, when in reality, that is merely the beginning.

A website where your current friends and clients can find you is what DMOs call minimum requirements to staying in business, whereas a website that attracts new prospects who don't know you until they find your website is called growing your business. Which side do you want to be on as your prospect base goes digital? Some of the most well-known and large annuity and life insurance producers in the country are using the Internet not only to brand themselves, but to attract new clients and even close a significant amount of business. As 10,000 baby boomers hit age 65 every day for the next 10 years and inherit trillions of dollars from their parents, it seems like business suicide not to be taking full advantage of technology. These same baby boomers are the fastest growing segment online in terms of overall spending, social media adoption and research. If you need more information to back this up, contact Amy McIlwain.

Moreover, this digital revolution spills over into the securities side of the business as well. A recent broker-dealer conference in Chicago revealed that automated transactions, electronic capabilities and the ease of doing business were among the most important aspects of choosing with whom they choose to do business. Two of the aforementioned factors are influenced by and a result of technology. Automated transactions and electronic capabilities are direct results of digital technology that eliminate paper, waste reporting flows and inefficiencies such as overnight mailing costs.

To summarize, be prepared to see an entire new wave of digital distribution advocates proudly donning the fresh and exciting new acronym, DMO. Just as all agents, all agencies, all broker-dealers and all insurance carriers have had to quickly adapt to the Internet revolution, expect the insurance distribution to have to follow similar suit. And just like those who made it to the digital dance first have had an extreme advantage, so will the first DMOs that learn to adapt and capitalize in the new digital world.