I recently attended a conference with about 40 other investment advisor representatives. As successful business entrepreneurs, they hold themselves to a high standard and are passionate about their profession. Oh, and did I mention that they toss around the acronym "IMO" like it's a swear word?
As an investment advisor representative myself, I relate to the passion and the desire to act in my clients' best interest. I think it is the best way to operate a successful financial practice. I’m also a representative of an independent marketing organization (IMO). We make our living from overrides earned on the distribution of fixed and indexed life and annuity products. As such, I made it known to the rest of the group of IARs to avoid misleading any of them...as a wolf in sheep's clothing.
What I experienced with that group of advisors both disturbs me, and gives me hope for the future. For nearly two days, anytime an IMO was mentioned, what followed was negative responses. To those advisors, "IMO" was a dirty word. They had a poor impression of what an IMO can do to help advisors and clients based on past experiences.
An Earned Reputation
IMOs have a bad reputation to some advisors, but do all IMOs deserve that label? Of course not. Some IMOs have earned a bad reputation due to empty promises and "shiny object" sales pitches. But there are a few IMOs out there that provide real value to their advisors. These companies are worth the override they receive. Their advisor partners are very happy with the impact that they have had on their overall business. They focus the conversation and attention on the advisor’s business: where it is today, and where they would like it to be in the future. There is an opportunity for an independent marketing organization to have a lasting positive impact on the overall business of the advisor.
Value to Advisors and Clients
Why have other IMOs earned such a negative reputation? First, most lack any added value. One of my mentors, the late Jim Rohn, used to teach that the economy is reality. In the economy, you get paid for the value that you bring to the marketplace. If you're not very valuable to the marketplace, the economic reality is that you don't deserve much money or business.
Access to Product Isn't Unique
In our industry, an IMO that has access to product and compensation isn’t very unique, but it has become a commodity. This is why many marketing companies give away so much of their override. The annuity wholesaler working for the IMO offers another quarter of a percent in order to entice an agent to change IMOs. The life wholesaler offers another five points on target premium to entice the agent away from a competitor. They don't offer any value other than access to product and compensation, therefore they are not worth much to their partners.
Focusing on Commissions Instead of Clients
From an advisor or agent’s perspective this could look very cutthroat. Offering slightly more compensation, with no additional value, to win business from one of your competitors may appear trite and even backstabbing. Marketers start chasing dollar signs rather than really looking for ways to add value for their advisors and their clients. It's not a very sustainable business model in the long run. Continuously discounting your company, repeatedly decreasing your spread in order to compete with one another, and for what? Any agent or advisor who partners with an IMO only for compensation will ultimately leave for increased compensation elsewhere, because the relationship was built on that value proposition.
My friend, who is also an advisor, forwarded me a message he received from a marketer at another IMO. His text message that accompanied the recording said, "Thank God you did not leave a message like this the first time you called me." According to him, had I approached him like this, we wouldn't currently be working together. The following is this transcription of the marketer’s message.
Hey Advisor, it's Marketer with Company ABC, and I hope all is well. I was giving you a shout because I wanted to get a couple minutes of your time and take a look at the exclusive index annuity with you, as we are seeing returns come back between 10 and 14% as well as having the most attractive income rider on the market today. Give me a call when you get this. Thanks. Talk to you soon.
This marketer doesn't know it, but to a highly skilled financial professional, his approach is unattractive. The type of advisor who responds to these types of messages, probably isn't one of the top in their community. By partnering with this company, they won't gain any value other than product access and compensation. That won't help the advisor take their business from where it is today to where they want it to be in 12 months, 5 years, or 10 years from now.
How do you know if you found a good IMO?
If the marketing organization representative is asking questions about your business, with the intention of helping you find the cracks that are holding you back from making progress, that's a good sign. If they're willing to tell you things that you may not want to hear about your business, but need to hear in order to make real progress, that's another indication that they're looking to actually help you grow your business. If they have a clearly defined process to identify the right fit advisors who would truly benefit from their programs, that is another great indicator you're on the right track.
Understand that the relationship between an IMO and an advisor is a two-way street. You must also be a good fit for the marketing company. Any IMO that is willing to invest the time and energy to transform your business and help get you to the next level must be able to trust that you are serious about a long term relationship with them. If you're only willing to give them a small portion of your business, and spread your contracts around among many different IMOs, you can't expect any one of them to invest the time or energy necessary to make a lasting impact on your business.
Imagine a prospect telling your firm, “I'll buy a cheap term insurance policy from you, but only if you put together a comprehensive retirement income plan for me so my other advisors can implement it.” How would you respond? Don’t expect a great IMO partner to act any differently to a silly request like that.
Look for a marketing partner who is a good fit for you. Then engage with them, and realize that in order for real change to occur in your business you must be willing to change. No one can do it for you, but a great marketing partner may be able to guide you to self-discovery and assist with implementation of the appropriate changes.
Too many financial professionals waste an enormous amount of money on marketing, websites, and printed materials that just don't work. We can help you clarify your message and marketing so that prospects listen and convert into clients.