A broker-dealer is an organization that buys and sells securities for itself or on behalf of others. Many of the large, well known financial services companies have broker-dealer operations. Brokerage activities involve matching buy and sell orders, while dealer activities involve taking an ownership position in a financial transaction. Variable annuities require the participation of a broker-dealer because the products include securities (stocks, bonds, mutual funds, etc).
Wire House
Wire house is a term used to refer to larger brokerage firms that are networked and able to communicate buy or sell orders among various branches of the firm.
Brokerage Firm
In the securities industry, a brokerage firm is basically the same thing as a broker-dealer. The term brokerage firm can also be used to refer to an insurance business that matches buyers and sellers of various insurance products.
Financial Supermarket
The term financial supermarket can be used to refer to larger financial institutions that are involved in a broad range of financial activities such as banking, insurance, asset management, employee benefits, annuity sales, etc. Many of the larger commercial banks fit this description, as do well known companies such as Charles Schwab and Fidelity.
Bank
Commercial banks generate a very large amount of annuity sales. Personal finance staff within branches will often serve as the annuity salesperson. Some credit unions also sell annuities.
Field Marketing Organization
A field marketing organization (“FMO”) is an intermediary between the insurance company and the financial advisor. In other words, the FMO deals directly with the insurance company on certain issues and then passes this information along to financial advisors.
FMOs recruit and support financial advisors on behalf of an insurance company. A FMO may provide a financial advisor with: contracts or appointments; sales support; product training; sales training; lead generation programs; marketing and sales software, product pricing; client proposals; commission payments, and; sales incentives. With the exception of lead generation programs, consumers typically have limited direct interaction with field marketing organizations.
Independent Marketing Organization
An independent marketing organization (“IMO”) is similar to the field marketing organizations described above. The nature of the relationships between and IMO and the insurance company it represents may differ slightly, but an IMO is essentially an intermediary between the insurance company and the financial advisor. Similar to field marketing organizations, an IMO deals directly with the insurance company on certain issues and passes this information along to financial advisors.
IMOs also recruit and support financial advisors on behalf of an insurance company. An IMO may provide a financial advisor with: contracts or appointments; sales support; product training; sales training; lead generation programs; marketing and sales software, product pricing; client proposals; commission payments, and; sales incentives. With the exception of lead generation programs, consumers typically have limited direct interaction with independent marketing organizations.
Managing General Agent
Similar to IMOs and FMOs, a managing general agent (“MGA”) is a liaison between insurance companies and the insurance agents and financial advisors who deal directly with consumers. A managing general agent will provide: contracting and appointments; sales support; sales training; product pricing information; sales proposals; sales incentives, and; commission payments.
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