What is the advantage of being paid directly from the carrier vs. through the FMO?

[mmike160]

I've written through Ritter for 16+ years. Some carriers are direct and some Ritter cuts the commissions. Ritter has always done right by me. Usually, when there's a commission issue, it's on the carrier's side.

 

[InsuranceGuy29]

The only advantage of being paid by the FMO is that it gives the FMO complete control over your commissions. Meaning if you have a falling out with them, they can screw you over royally and very commonly that’s exactly how it ends.
You do not want to ever assign commissions to your up line and especially on something like Medicare, where it’s renewal based. You will live to regret that if you do that.

Little short story. The person that helped get me into the business is a lifelong family friend. They were an in-house agent for an insurance company, and then bought the FMO their father owned and did a re-brand. They then brought in a partner who then became the Principal of his FMO. My friend was very naive to how things in the FMO are run, but the Principal was not. The Principal had it set up that ALL business belonged to them, regardless of who the writing agent is/was. They had a falling out, and my friend wanted the Principal gone. My friend had to call his ENTIRE book of business and try to get them to switch over to him. This was like 800 people. Many did, but a good chunk did not. The unbelievable stress he went through was unbearable to watch. His income literally went to $0, overnight.

 

[Newby]

Little short story. The person that helped get me into the business is a lifelong family friend. They were an in-house agent for an insurance company, and then bought the FMO their father owned and did a re-brand. They then brought in a partner who then became the Principal of his FMO. My friend was very naive to how things in the FMO are run, but the Principal was not. The Principal had it set up that ALL business belonged to them, regardless of who the writing agent is/was. They had a falling out, and my friend wanted the Principal gone. My friend had to call his ENTIRE book of business and try to get them to switch over to him. This was like 800 people. Many did, but a good chunk did not. The unbelievable stress he went through was unbearable to watch. His income literally went to $0, overnight.

You just have to consider that you paid for an education any time you find out why someone wants YOUR commissions assigned to them. Otherwise you will feel like going to the top of a tall building with a sniper rifle.
But everyone learns. No one makes that mistake twice.

 

[DonP]

The first thing every agent should ask in their mind . Do you really believe when you assign commissions your up line is going to cut a check month in month out yr after yr when you leave ? Lol hell it was probably like pulling teeth to get them to pay you when you were writing . Even if it’s in your contract he knows you’re not going to sue for $500 to $3k a yr of residuals . No lawyer on the planet will take the case on contingency . Even if 1 out of 20 agents sue so what . Before going to court he starts paying you .

 

[Newby]

Yrs ago a very well known fmo that all would know tried to screw me on override commissions . I threatened to smear him on the net . He paid me fast . That said I’d never in a million yrs ever let any fmo pay me direct . I’d simply find another carrier . I’m getting commissions 1 time a yr from a carrier I wrote business with 33 yrs ago . Let that sink through your head the importance of getting paid direct from carrier .

I can't believe that you fell for that in the 1st place. There was absolutely no advantage to anyone that he didn't set you up properly on those over rides except he wanted control over whether to pay them or not when the bill came due.

 

[Newby]

The first thing every agent should ask in their mind . Do you really believe when you assign commissions your up line is going to cut a check month in month out yr after yr when you leave ? Lol hell it was probably like pulling teeth to get them to pay you when you were writing . Even if it’s in your contract he knows you’re not going to sue for $500 to $3k a yr of residuals . No lawyer on the planet will take the case on contingency . Even if 1 out of 20 agents sue so what . Before going to court he starts paying you .

Also, how many agents really feel like they can keep track of what insurance companies owe them each month? Once you are selling 8 or 9 companies and have a bunch of sales and a few fall off the books and all the back and forth do you REALLY know to the penny what they owe you? And you are highly motovated to keep on top of it.
Now think about that upline you are trusting to pay you. He has to keep track of your and 100 other agents too. And he's less motovated to get you every penny he owes you because every dollar he "forgets" to pay you, he gets to keep. Do you really think he lays awake at night worrying whether he got you paid right? I don't.
It's so much easier as an upline of multiple agents to just have your commissions paid directly from the carriers. Let them keep it straight for me. The only way I would take on all that extra accounting work is if I planned to really make that pay off financially for me. And that's exactly why they do it.

 

[Tahoe Ray]

The only way I would take on all that extra accounting work is if I planned to really make that pay off financially for me. And that's exactly why they do it.

That's the biggest point.

It's actually harder to have to do all of the accounting so why would you intentionally do that unless you had another motivation.

Only loa arrangements that make sense to me are employees. The rest have little merit.

 

[axeman462]

i can't believe this hasn't been said yet, the advantage is obvious:

When you assign your commissions to someone else, you don't own the business.

When commissions are not assigned to your upline, you own the business.