About 13 years ago, we started getting emails from one of our FMO clients that read something like this: This asshat can’t close the backside of a barn. Turn off his territory and shut down his leads. He’s done.
There was no warning to the agent and no conversation. We just got an email, and an agent who had been paying for his own leads was out.
I’ve supplied annuity leads to the industry since 2010. Since 2011, about 75 FMOs and IMOs have referred agents to us, bought leads from us, or endorsed our program to their groups. I’ve seen FMO lead programs from the vendor side, where most agents never get to look.
I want to be fair about this. It isn’t a burning issue for most agents. Most FMOs today still refer their agents to outside lead companies rather than running their own programs. And some groups do it very well. They put their own money and their own people on the line to help their agents succeed. We’ve worked with one of them for several years.
But when an FMO lead program goes wrong, it goes wrong in ways most agents don’t see coming. Here’s what I’ve seen, and what you should know before you sign up for one.
When the FMO Controls Both Sides
That FMO from 13 years ago bought leads from us for 50 to 60 of its agents. We billed the FMO, and the FMO charged each agent per lead. Because the FMO was our client, we notified it on every lead that came in, along with the agent working it.
That notification changed everything. The FMO’s marketers followed up with the agents several times a week. Where’s the progress? Have you gotten them on the phone? Why haven’t you closed the deal? Agents were criticized on every single lead. The marketers were condescending, and from what I remember, they talked down to agents on the phone. I wouldn’t have wanted to be part of that organization.
If an agent didn’t close business right away, the FMO gave his leads to other producers. If they felt an agent wasn’t carrying his weight, they fired him, and we’d get the email to turn off his territory.
We were the vendor, so it wasn’t my place to tell them how to run their business. But we took a lot of phone calls from stressed-out agents. It was an example of what not to do.
Think about the position those agents were in. Their contracts were with the FMO. Their leads came through the FMO. They had no control over anything. That’s exactly what most people who work for themselves are trying to avoid.
Here’s the part I’m not proud of. When an agent got turned off, he couldn’t come work with us directly. Our agreement with that FMO didn’t allow it. I was newer to the business, they were a much bigger organization, and I agreed to it. I wouldn’t make that agreement today. But those agents were on their own. They had to go make it rain without us.
When the FMO controls the program, you’re not the customer. The FMO is. If you’re unhappy, they can swap you out and put another agent in. When an FMO has that kind of control, it also tends to have favorites, and the bigger leads go to them. When you work with a lead company directly, you’re the customer, and you have more leverage.
“When the FMO controls the program, you’re not the customer. The FMO is.”
The Bait and Switch: Leads or Appointments
The biggest thing you need to know is that a lot of the time, the FMO didn’t create the lead.
Here’s how it usually works. The FMO partners with a marketing company and promotes a program, then requires you to switch your contracts to join. For the last several years, the big pitch hasn’t really been leads. It’s been appointments. But the principle is the same. Once you’re contracted, the FMO gives you the name and phone number of the company actually providing the leads or appointments.
There’s nothing wrong with an FMO referring you to an outside lead company. We’ve benefited from those referrals for years. The problem is requiring you to move your contracts first, without telling you who actually makes the leads. That’s the bait and switch. FMOs want to grow and attract agents, and they know marketing is great bait. So they use it to get your contracts, then hand you off.
Is it worth moving your contracts for a phone number you could probably find online yourself? No. You don’t need to switch contracts to join a lead program. You can find one on your own.
“Is it worth moving your contracts for a phone number you could find online yourself?”
Some FMOs do produce leads themselves. In my experience, most aren’t very good at it. They don’t have the staff to scrub the leads, so they pass along whatever comes in. That means you’re calling other agents and advisors, disconnected numbers, pay phones, hotel numbers, 92-year-olds, and people with $10,000. Those are exactly the leads you want to stay away from.
One FMO in the Midwest referred agents to us for years, then started its own program. It’s well known that they pass through whatever comes in, with no scrubbing at all. Their price is lower, but you get what you pay for. There’s a reason we throw out a large percentage of our leads before you ever see them.
After they launched it, the owner kept calling me to find out what we were testing and working on. I finally told him to stop calling. They were competing with us now, and I wasn’t going to tell him anything. They never sent us another referral.
Follow the Money
I tell people this all the time. Insurance companies have big buildings. FMOs have small buildings. Most lead companies have no building at all.
There’s a reason for that. It’s where the margins are.
“Insurance companies have big buildings. FMOs have small buildings. Most lead companies have no building at all.”
In my experience, FMOs don’t usually mark up the leads. Most of the time, the agent paid us directly with a card on file, even inside an FMO program. The FMO makes its money on your production.
That used to drive me crazy. Many of the FMOs whose agents we worked with did nothing to support our business. They knew their agents were making money from our leads, and they still wouldn’t do a thing to help us stay in business.
Here’s what that looked like. An agent selling index annuities might do $1 million in production from our leads and make $60,000 or $70,000 in commissions. That’s great. It’s what we want. But the FMO could easily make $15,000 or $20,000 in commissions and other incentives on that same business without doing anything. We made about $40 on the lead.
Some of the FMO marketers were also very arrogant. We were driving major production for their agents, they were being well paid for it, and they still didn’t help us at all. Some even criticized our program. That was infuriating.
That’s also why I’d rather you pay a lead company’s regular price than get a special FMO discount. Early on, we gave some FMOs slightly lower prices when they sent us a group of agents. I regret it. We’ve always been priced in the middle, never the most expensive and never the cheapest. When you push a lead company to cut its price, you force it to choose between cutting its margin and cutting the quality of your leads. There often isn’t much margin to cut. You want to be in a position to get the lead company’s best.
Don’t Be the Guinea Pig
Eight to 10 years ago, an FMO partnered with a media company on a national TV lead program. Agents paid about $5,000 to $6,000 to lock down their territories and were promised leads. At least five of my clients signed up. They were doing well in the industry, and the FMO had vetted the program.
From what I remember, none of them got more than a single lead.
The media company knew media. It didn’t know this business. And annuities are one of the hardest markets to advertise. A friend of mine runs digital campaigns for roofers, air conditioning companies and a few health companies. I told him financial campaigns are a different animal. Almost everyone with a car and a home needs home and auto insurance. With annuities, you’re going after a much smaller group, roughly the top 20%: people who can write a check for $300,000, $500,000 or $1 million. Those people are harder to impress.
I’ve spent more than eight figures of my own money advertising annuities, and we’ve worked with more than 3,000 clients. Our way isn’t the only way. But it’s been proven with agents in the field. Any company that’s been doing this for more than 10 years has learned things a new program hasn’t.
You might succeed with any program, or you might not. The question is whether the company will give you a fair chance, or rip you off before you get one.
This matters most if you’re not a big producer. A top producer can try three programs that fail and barely notice. If you’re still building your business and get burned two or three times, you might never want to market again. That can do real long-term damage to your career.
A good program will tell you exactly how it works. On our site, you can read thousands of words about what we do and why, who succeeds with our leads, who fails, and why. If a program can’t tell you that much, you’re the experiment.
Questions to Ask Before You Sign
Think through the whole arrangement, and everything that could go wrong, before you spend a dollar. Get answers to these first:
- Who actually runs the program, and what is their process?
- How long has the program been running?
- Does the FMO create the leads, or will it hand you off to another company?
- Do you have to switch your contracts to join?
- What production requirements will you have to meet?
- Can you stop whenever you want?
- Can the FMO fire you and turn off your leads whenever it wants?
- If you leave the FMO, can you keep working with the lead company?
- Is the FMO notified on your leads, and who turns that off if you leave?
- Who owns the lead data, and can the FMO keep marketing to your leads after you leave?
If You’re Already in One
If you’re unhappy with your FMO’s program, find out whether you can get out of it. Then do thorough research before you jump into something else. Sometimes the grass really is greener. Weigh what you get by staying against what’s available elsewhere.
The Agent Who Left His FMO, but His Leads Didn’t
We once had a client accuse us of selling his leads to other agents. Every time he called a new lead, the person said they’d just talked to someone an hour ago. This was a different FMO, not the one from 13 years ago. When I looked in our system, I found the problem. He had left his FMO, but his old marketer was still getting notified on every lead and was calling them before he could.
It isn’t only FMO marketers. A lot of agents have an assistant, or someone they’ve hired to make calls, copied on their leads. People change. If they’re still getting your notifications after they’re gone, someone can act on those leads, and it can cost you.
So whenever you leave an FMO, or someone leaves your team, check who’s being notified on your leads and turn it off that day.
There’s also the question of who owns the data. If the FMO is the one signed up for the program, it’s the customer, even if you’re the one paying for the leads. That means the FMO may own those leads. In theory, it could give them to other agents to market to later. Find that out before you join.
What Is Everyone Bringing to the Table?
None of this means every FMO lead program is bad. I’ve seen it work very well when the FMO puts its own money and its own people on the line to help agents succeed.
The question to ask is simple: what is everyone bringing to the table, and what value do they add? If the answer is your contracts in exchange for a phone number, keep looking.
“What is everyone bringing to the table, and what value do they add?”
I’ve gotten calls from agents who were burned by every kind of marketing program in this industry, not just FMO programs. This business is hard. Getting strangers to trust you with their money takes a lot: they have to trust you, they have to qualify, and they have to believe in what you’re offering. A bad program makes it even harder. But it doesn’t have to be the end of your marketing. Over the years, dozens of agents came to us after bad experiences and went on to earn back what they’d lost. So before you join the next program, ask the questions above, and make sure you know who’s really in control.
More Resources
About Our Lead Program
- Common Questions About Our Annuity Leads: pricing, territories, billing, refunds and how the program works.
- How We Scrub Our Leads: what our team checks before a lead ever reaches you, and why more than half never do.
- Working Our Annuity Leads: the opening script, the overnight package and the follow-up process our best clients use.
- Testimonials From Our Clients: audio testimonials from agents and advisors who use our leads.
- Free Training Video: how top producers work high-quality annuity leads.
- About Us: who we are and how we’ve run the business since 2010.
Articles
- Why Good Annuity Leads Look Bad: the five signs that fool agents into giving up on good prospects too soon.
- Why Some Agents Make Money With Annuity Leads and Others Don’t: what our most successful clients do differently.
- The 12 Biggest Mistakes Agents Make When Buying Annuity Leads: what to avoid before you spend a dollar.
- Will Annuity Leads Work in My Area? Rural vs. Big City Markets: how your market changes lead flow, case size and close rates.
- What I’ve Learned Spending Eight Figures Advertising Annuities: 16 years of lessons from the advertising side.
- Founder Interview: The Story Behind TheAnnuityLeads.com: how the company started and why it works the way it does.
- My Clients Were My Greatest Teachers: what 3,000 financial professionals taught me about business, people and myself.
Scott Brooks, MBA, CFP®, is the founder of TheAnnuityLeads.com, which has created leads for insurance agents and financial advisors since 2010.
