Assigning Commissions

[midwestbroker]

Let me start be realizing I am opening Pandora's box...

I understand it is not advised to assign commissions to a FMO, but I also realize there are times when an agent wants to sell a product through a FMO and they will be asked to assign their commissions.

So, rather then have a thread bashing the idea of assigning commissions, what would you do? What documentation would you be looking for before you sign the proverbial dotted line?

I put together this form (a draft at this time). I realize that FMO's will have their own version of this, but as a producer for them, I would want to make sure I am protected and have an exit strategy. Please feel free to look, comment, correct, etc. Again, this is only a draft. We will be adding the final product on SIMA, and I will also post on this forum.

I figure there are enough of us on this forum to come up with a form that we can pass on to newer agents.

Thanks in advance for you help!

 

[Mark from WI]

Let me start be realizing I am opening Pandora's box...
I understand it is not advised to assign commissions to a FMO, but I also realize there are times when an agent wants to sell a product through a FMO and they will be asked to assign their commissions.
I figure there are enough of us on this forum to come up with a form that we can pass on to newer agents.
Thanks in advance for you help!

Good question, Mike. Some agents say "never assign your commission," but other agents have enjoyed their relationships with certain FMOs who use this practice.
What are the components of that decision, and when can it be a good decision? Good preface to our webinar tomorrow.

 

[billyg]

I guess I'm not understanding the purpose of the form. Any new agent that is being asked to assign commissions will be given the assignment in the contracting paperwork for each carrier. They don't need a seperate form of their own. So what is the purpose of this form?

 

[midwestbroker]

The purpose would be for the FMO side. While carriers have their own versions which are usually pretty straight forward, some FMO's use their own version in lieu of the carriers. This would be intended to be used in such a case.

Even if the FMO says use our own, this could be a reference for agents as to what verbiage to look for before they sign.

 

[SportsNut]

Do you think that you would find an FMO who has developed their own form, with the benefit of Counsel most likely, to agree to use your form. I think you might look a long time expecting to find one.

It seems that by your Draft Doc you are attempting to do two things... 1) Limit liability to the Agent, 2) Make the Assignment Revocable. Well maybe a 3rd, being instruct or school a new agent on assignment of comm in advance, which is admirable. But again, I can't imagine an FMO agreeing to the terms of your drafted doc. Wonder what Todd King, et al might have to say about this... even though he/they do not generally have assignments to my knowledge.

 

[jdeasy]

I simply will no \t assign commissions. If that means I can't write a particular company then so be it. I won't write that company.

Nothing good can can from assigning commissions from the agent's side of things. It may be wonderful for the IMO/FMO. Not so much for the producer.

 

[Todd King]

I'm a bit confused. You say it is for the IMO (who wouldn't need protection to begin with), but you also say you want to give the agent something to look for.

This would be a form made more for the agent, not the IMO. Let's face it, once commissions are assigned, the upline really doesn't have to pay you what they said they would. This talks about "Payment in accordance with this assignment", yet there is nowhere to put in the percentages or flat money amount.

If I were signing this as an FMO/IMO, yeah, it says I have to pay...but how much? (Thank you for that sale, Mr. Agent. Now here's your dollar...go sell another one!)

The only thing this really says is that the FMO pays the agent and it can be revoked by either party. There you go, I said it all in one line.

Since I don't/won't have agents assign commissions, I may be missing the whole point of this form.

 

[midwestbroker]

I agree sportsnut, that most if not all FMO's will have their own form and will probably not use this one. But, to show an agent what an assignment of commissions sheet looks like, and what verbiage means what could be a useful tool. I am mainly using this as a teaching tool for new agents who join SIMA.

And yes JD, I agree that one should not assign commissions, but there are numerous FMO's who do ask agents to. I am looking to protect an agent who comes across this, and to make sure they have an exit strategy if they decide to.

Thanks for all your input so far...
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Thanks Todd. I figured most of the commission percentages would be in a producer contract.

I am trying to take bits and pieces of other forms to make a generic one for a tool. I know of many agents, many who we hear stories of on this forum, who blindly sign these and then are burned at some point for doing so. I figure if we have a form to show and educate them with, then hopefully they will know what they are signing and put some thought into it.

 

[SportsNut]

Good idea to attempt to teach newer agents what an assignment of comm form is and how it works. However, I'm concerned that the form you have drafted will confuse the issue because assignments aren't cancellable by either party, or at least I've never seen one. If an FMO would allow the "bring your own form" approach, then this would also be good... but it is not realistic. Again, think like a new agent that doesn't know any of this... and if they come across with an FMO that I want to use my own assignment form they will get laughed at... before the phone goes click.

Good in theory, but not practical maybe. Probably better to teach the agent that assigning comms is the last resort; try every way avoid doing so.

 

[taterpeeler]

Here's a good rule to end all this talk... Don't assign commissions..period. You loose all... I say again...loose all control as an agent. You want me to assign I'm not your agent.