This is where your finance takes place

According to their sales pitch, they do. If I sit down and I listen blindly to what they have to tell me, they will explain that they are not there for the money (but will be bragging later on that they are making 6 figures by working teens hours) since they really care about people. They want to help out people with their debts and bring them to a better financial position. They pretend that you only need term insurance and that the rest of the products are useless. Therefore, they don’t sell any (or so they say, because I heard they have them too).

The truth is that if you sit down with another company, they will more likely tell you that they place the client in the center of their business. Their goal is to meet their clients need. Well duh, Have you ever heard somebody saying that his main goal is to sell a low cost product at the highest price no matter what the client wants? Seriously! All that to say that any personal finance oriented company will consider their client as their core of business. It is crucial to build a network and survive in this world. Primerica says they are there to help, some proclaim that they are providing clients with professional help, other will explain that their goal is to keep their clients as happy as a rabbit in a garden.

In fact, Primerica does not have a commercial advantage compared to other companies. The truth is that if a client google Primerica compared to most companies prior to the meeting, the Primerica agent will have a hard time selling anything!

Can you build your own business within another company than Primerica?

Primerica is advertising the “build your own business” model. It is up to each agent to create their own office and run their own business with their own employees and their own clients. Most companies in the personal financial field does not offer this “opportunity”. If you want to manage employees, you can become a “team leader” or a “director”. Those positions are still commission based but since you are also a recruiter for the firm, they will pay you a commission on your team’s sale in addition to your own. You also have the possibility to go higher up in the company and become a regular salary based employees.

In fact, Primerica is more or less supporting the same system. They office that you “own” is rented and show the Primerica banner. “Your employees” are self employed / commission based employees that are totally independent. Finally, “your clients” belong to Primerica. In their contract, it is clearly stated that if you leave Primerica, you are leaving your clients to Primerica as well. Hum, to me it sounds more like a franchise than anything else.

What is so different in their commission structure?

If you want to meet with clients, write financial plans and close deals, Primerica is definitely not for you. You do not really have to write financial plans since everything is populated from the Primerica system. And when you close deals, you are making less money than you would with any other company. Commission rates are very low since you have three other people on top of you that will eat a part of the cake you just bake. These individuals have to be receive money from somewhere. Guess what, Primerica is not giving a penny to them, you are financing their “team leader”, “regional director”, “VP” position.

So unless you want to become a full time recruiter, the commission structure is much better with other companies. And if you recruit people, you have to convince them to sell with under paid commissions. Sounds like a real challenge, isn’t?

Please let me know your comments, and once again, I encourage Primerica advisor to explain what I am missing in the system.

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After this fourth post on the Primerica Paradox series, I finally put a final dot on the reasons why I decided to not follow this career path. While I was able to find somebody that was successful in this kind of business, it was still not enough for me to leave my job and get in the Primerica Train to… financial freedom?

Back to the pyramid scheme

Is it a pyramidal scheme? In legal terms, the answer is no. However, it does not mean that because it is legal that the company’ structure is not shape like a pyramid. Everybody is making a cut on the people below them; it goes up to four level. I think this is clear that the guy on the top makes the big bucks. They will answer that every company is like that as the President and the VP’s are in the driver’ seat and the other employees are left with nothing. It is right also. However, they do not explain why they are able to give a commission to four people for the same sale. The answer is pretty easy: they have to cut down the commission compared to the regular industry. As an example, if a life insurance of 100K would provide another agent with $1,500 in commission, a Primerica advisor at the lowest level will earn $900, then his recruiter will receive $300, the recruiter’s recruiter will get $200 and finally the guy who put all of them together will earn $100. So for those who are in to sell, Primerica is definitely not the right place to be. “Yeah, but you could build a team and create your own business”, I guess they forgot that the best sellers on earth are not necessarily interested in building a team compared to earning the big bucks right away. The main problem I see with this approach is that you have to convince individual to work hard for less that they could earn only because they have the option of building a team a earn extra commission on somebody else’s work. In fact, if everybody concentrates on recruiting individuals, who will make the sales? You may have a hundred people below you, if nobody sales, it still makes 0$ in your pocket.

Anybody can do it

Another things that bugged me was the fact that any Walmart greeters could manage one’s personal finance. With only a couple of licenses in hand, they are shipped to their relatives’ house in order to sell them financial product. Primerica was able to build complete questionnaires that are filled by the client with the advisor and then sent back to their control centre. An evaluation of the client’s file is done and the result is communicated to the advisor. This is how they manage to have a mechanic suddenly “specialized” in financial products. Don’t get me wrong, I have nothing against mechanic or other profession, but would you really give me your keys to repair your car if you know that I am a banker and that I pass a three month mechanic class? I can’t barely verify the engine oil myself, how the hell in three month would I be able to fix your car?

This results into a huge lack of credibility from the advisors. Most of them have very limited knowledge as of to what they are selling and why. They follow the guide and offer what Primerica tell them to offer. There is little place to creativity there and real financial planning. The thing is that their market is everybody that the advisor knows. Most people do not know much about finance anyway and they are even less likely to question their advisor if he is part of the family or referred by a good friend. The relationship you have with your financial advisor is mainly based on trust than on competence. You simply assume he knows what he is doing as you know him through your contacts. This is why dealing with a Primerica advisor might be dangerous. Than again, I am not generalizing the situation, but the way they recruit individual leads to this kind of assumption.

How you start making real money with Primerica

It took me a while to figure out the best way to make money out of Primerica. The reason is simple; they prefer presenting their company as an opportunity to build your own business and make money on your team’s sale. However, if you think about it twice, you figure out that if everybody is trying to build a team, nobody is concentrating on selling. As I said before, I may have a hundred advisor under your position, if they don’t sale, you are not making s%!t. So how can you really make money?

You have two options: The first one is to recruit good salesman/saleswoman that will concentrate their business on their own capacity to sell financial products. However, you have to be prepared to answer their questions when they find out that they would make almost twice their income if they would work for another company. You will have to show them how to recruit people in order to keep them. If not, they will surely transfer to the competition. Unless you remind them that the client based must remain in Primerica as it not yours anymore (wait… I thought it was an opportunity to my own business?).

The second option is how you really make money. When you think about it, the training process is done in two steps: the advisor gets his license to sell insurance and mutual funds and then, meet with his five best contacts to see how to close a deal. The recruiter makes full commission on these meetings as the advisor is not fully trained and “not ready” to jump into the hot water. Therefore, every time you recruit an individual, you are more likely to close four deals out of five. Why? Because you ask them for their five best contacts, people that have a high potential need in financial product and that they fully trust your new advisor. The evil plan goes beyond this point: if you train your guy to recruit efficiently, you will make extra commission on his rookies fives first sales.

This why obviously the main reason why I decided to not leave my job and start working for Primerica. However, I understand that many people may find success in this company. The problem is not that it doesn’t work (because it does) but how Primerica is presented to their new employees (or should I say partner?). These was an honest conclusion and if you think I am in the left field and I did not understand the process properly, please feel free to comment

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