The Primerica Paradox: The Conclusion Part 1

I spent 5 years with the company and had these observations:

1. Outdated Business Model: Primerica’s business model is around thirty years old and a lot has changed. When the company first started, the founder began a crusade to provide cheaper, higher coverage term life insurance to the masses. It was an easy environment to replace cash value policies, get out cash if there was any, reduce payments or increase coverage. Information and competition in the term life insurance market was scarce so agents could make money and consumers felt relatively good about Primerica’s crusade.

2. Competition: In the meantime, the rest of the insurance companies have responded with similar and even better term life insurance products. Now Primerica agents contend with almost the reverse of what they had in the beginning—hard to compete with term life insurance products in restricted markets. For example, if the client is uninsurable with Primerica, over age 70 or needs permanent life insurance for estate planning, most of the time the agents cannot meet their needs. The competition has taken the lead in the crusade and Primerica has not kept up.

3. The Internet: Today, the internet gives consumers access to easily compare products and pricing and Primerica’s are often not competitive. Beyond limited term life insurance, their lending products, mutual funds and variable annuties are also less attractive to consumers who can readily find many other suitable products and companies to buy from without the pressure to be recruited or to refer other friends and family.

The internet also provides an unfiltered forum for dissatisfied agents to vent their frustrations. Recruiting becomes more difficult because there are thousands of negative comments, many of which are very valid. The old adage, “You can fool some of the people, some of the time, but it is hard to fool all of the people all of the time”, probably applies, as well as, “Where there is smoke, there is probably fire”.

4. Legacy Costs: Primerica also faces the same legacy costs haunting many of the older companies such as the airline and auto manufactures. Paying large sums of money to “retirees” who are no longer working (selling or producing) hinders these companies’ ability to compete with the newer, financially unburdened companies. However, Primerica needs to promote the idea of reaping big rewards for having big hierarchies and therefore must continually pour profits into the older generations at the expense of competitive new products.
History shows the legacy cost can be handled in several ways:
1. the company is sold with assets being bought and liabilities being dropped
2. the company simple goes out of business
3. legacy costs are passed on to retireees (in this case overrides and bonues are reduced)
4. new employees are not given the same incentives the old ones had

All of these scenarios are less than ideal for the Primerica agents, new and old.

5. Citigroup’s relation to Primerica: While the merger of Citicorp and Travelers was big news in 1998, the situation today is much different. Sandy Weill is gone and Ann Jordan retired from Citigroup’s board in April, 2006. Both were important supporters for Primerica.

Since then, Charles Prince, current Chairman and CEO, has changed the vision and structure of Citigroup by selling Travelers and its Asset Management Business (includes Smith Barney Mutual Funds). Citigroup’s Annual Report for 2006 annual report does not paint the picture for a giant integrated financial services company. In fact, it is hard to find Primerica mentioned except in reports and in generalities.

Further looking at excerpts from Citigroup’s 2006 Annual Report, Primerica contributed 1% growth in 2005 and 4% in 2006. Primerica’s meager growth in net income makes it prime for the next piece to go. Finding someone to buy it may be an issue. Even if that doesn’t happen, what is the long-term security of promised overrides and bonuses?

6. Primerica’s Exaggerations (really a personal and corporate integrity issue):
a. Success is available to all. Primerica spends a great deal of time and money promoting itself to its agents through TV, internet, conferences, CDs, schools, meetings and literature. The constant theme: Primerica has the best products, best solutions, best compensation, best system, best incentives and all you have to do is work hard. However, in all of the hundreds and hundreds of hours I spent listening, the whole success story was never explained. Of course it can’t be which is why the internet is full of sour stories.

What are the odds? When I left 65 people had at one time elipsed 12 month running cash flow of $1M. 65 divided by (30 years X 12 months X 15,000 recruits/month) = .0012 %, or 99.88% chance of not becoming a million dollar earner. If you want to lower the bar to $250,000/ year the odds would still be greater than 99% fail rate. I know of no sane person who would take those odds while at the same time being told to quit their job, work late nights, recruit everyone, and attend every meeting all with the sole focus of selling more non-competitive products. Selling a false hope hurts individuals and the country by just making everyone more skeptical.

b. Best Products. Stepping outside of the Primerica environment is an eye opener because of the vast array of competitive products available for clients. Just imagine if you could offer your clients the best product for their situation, regardless of who carried it?

However, the company mantra which is continually reiterated by the senior leaders is: Primerica has the best products, hands down. This simply isn’t true and any experienced Primerica agent knows this. I once asked the CEO of Primerica at dinner why we didn’t have a certain product. His reply was, “We have to give our agents nerf balls, not scissors.” In other words keep products simple so we don’t hurt the agents or the clients. Nerf balls can’t equate to best products, you’re lying to yourself and your clients if you think so.

c. Jobs are bad. Here is one I really don’t get. Having first hand experience of quitting myself and helping others to quit I would definitely not reinforce the company philosophy that JOBS are bad. Given the odds of any one person succeeding (less than 99.8%), the company is hurting many decent people and making them feel guilty for not “firing their boss”.

What is wrong with people keeping some steady income with a job they need or love while working part-time in financial services? If the opportunity is so good, people will realize it and quit their job on their own. The real kicker, the real hypocracy is when the CEO of the company frequently bad-mouths JOBs yet has one himself. In fact, if the opportunity is so great, the entire senior leadership should be licensed agents or else they don’t really believe 

d. Everyone else in the industry is a crook. I was trained in Primerica to believe all other companies, agents and products were bad and Primerica was the only company who did the right thing for the consumer. When I left, I remembered what I already knew– most of the “enemy” happens to care about their clients and provide an even more professional service because of the products, tools and training they have. A huge weigh was lifted off my shoulders once I didn’t have to think everyone else was evil, they were just with a different company. Isn’t there enough hate in the world?

e. Everyone who isn’t one of “us” is unintelligent or a loser. Along the same lines as other agents, I was taught to categorize those who didn’t join, weren’t successful or who quit as: losers, quitters, people who were lazy, who couldn’t handle rejection, didn’t have goals, weren’t willing to sacrifice, would let their family down, … Again, assuming you have been around you know how important it is to discredit the person, not the system. The hard part is when your best person quits—how do you explain that to the rest of your group. Maybe you tell clients and agents they are “sick”. Isn’t there enough lying in the world?

f. You own your business. Not true. Primerica’s contract, the one you sign to join the company says that if you leave, the people you recruited and the clients you have are theirs. They do have a system where you can qualify, own and sell your code number, but that is different. Again, the whole truth would be a more ethical way of dealing with people.

Larry, I am really glad that you shared your experience with Primerica. It seems that I am not in the left field with my conclusion even though I never worked for them. Like I said, I am not saying that the company is bad, but the real way of making money out of it must be clear and explain upfront.

Unfortunately, it is easy to impress people with dreams. Who would not like to start working late, finish early and have their Friday off so they can play with their kids? Who would not like to make even more money while they are not working or on vacation than when they actually work? Seriously, it is everybody’s dream. But a dream remains a dream until it becomes reality. Stop the show and be honest with people. This is what I have to say to Primerica. The risk of surviving the first year as an agent/advisor/consultant is minimal, let’s face it.

Anyway, a big thank to you and your story. Comments are what makes a blog unique and you definitely contributed to mine today!

Cheers,

FB.

I see that you have correctly idenified the main problem facing Primerica today: The Internet.

The mantra they esposued of being the only company championing the fnancial well being of middle income America by delivering the most inexpensive term insurance, was just patently false.

However, it took the compiling of various company term rates into an accessible data base to show that there were some 800 companies with a more inexpensive term insurance. Of course, when you have to pay out 13 levels of compensation, your product must be expensive.

Now,some people are still buying from Primerica but two months later when they decide to go on line and see if they got a good deal, they find out they could have gotten twice as much insurance for the same money.

The quote system they are looking at even allows for the downloading of a life application that the client can fill out themselves and mail in.

The first time the Primerica agent knows his case has been replaced is when he has a chargeback. Clients don’t have to do replacement notices, so the agent was not aware of what was happening.

Quite naturally, even if he was, how do you conserve a case where your company was charging twice as much for insurance than the client has now found on their own…and at 1/2 the price.?

Primerica’s term insurance business is done.

But the real money that was made by the top people in Primerica was not in selling insurance, it was in the fast start school business.

Every six weeks was a new fast start school at some location far enough away where everyone was told they had to stay at a hotel for two nights.

Everyone was supposed to show support and was told not to be staying 6 to a room because that was showing people you were not making money.

The NSD reserved 200 rooms in a hotel and then had his leaders commit to taking so many rooms. They in turn had their downline take rooms. The downline were being charged nearly double what the room actually cost.

The NSD’s girl in the office collected everyone’s money in advance, then the NSD paid for the rooms on his credit card, pocketed the money he collected and wrote off the rooms on his business tax return.

Outright fraud and tax evasion. Plain and simple.

Then to boot they charged people $5 a day to get into the ballroom to hear the great speakers. This was, of course, to pay for the cost of the ballroom.

Just a note to the unknowing, when you take 200 rooms at a hotel…they GIVE you the ballroom!

So, an NSD could pocket approximately $15,000 on one of these two day affairs.

How do I know this? I know the man who started the scam. The late, Joe Ensor.

The interesting part is that I have never had an NSD or anyone from Primerica refute me on this matter.

I have no axe to grind with Primerica nor do I sell term insurance. I am just stating that Primerica’s term isurance machine is in a downward spiral and it can never recover.

NSD’s or what whatever the new term is, perhaps, Intergallactic Exalted Senior NSD’s could care less if no nsurance is being sold,…just keep the fast start schools going and everything will be alright.

Larry, Mike (Financial Blogger)and Dr. John Maguire Phd(Ooo),

First off. Let me start by saying, I rarely respond to stupid blogs because you never win battles with people that just like to criticize other people for trying to succeed in something. Fact is, that most people that blog against Primerica are usually other company agents that sell other financial products even though they say they are not or try to say they’ve tried Primerica and they really didn’t.

I do not intend to bash financial blogger even though it will very much look like that specifically and purposefully.

No one is guaranteed to make it in Primerica because no one coming in can guarantees they will work.

2nd of all Mr. phd guy. You should be ashamed of talking about a guy that died already. Like Joe Ensor. The ridiculous and absurd remarks that you know of him to make money as much as $15,000 per fast start school, how stupid can you be. You only say this of him because he is not alive to kick your anatomy all over the place.
If your so concerned with people getting scammed or people doing fraud or tax evasion, why didn’t you turn the company into the authorities Dr. Dolittle or is it Dr. DoNothing but just let me save the world by blogging. Cute.
It is illegal in our company to make any money off of agents by selling anything else but financial products that this company sells.
And the idea that every hotel will give you a free ballroom just like that is crazy. It might be true if the certain area was dead, meaning not sold out. But that is not the case everytime.
By the way I’m sure your a Dr. because you got a free education right? It didn’t cost you a penny right? If you did get it free it’s possible your a freeloader and possibly joined Primerica and wondered why they wouldn’t pay you just for having a phd or add or whatever same thing but couldn’t hack it because you didn’t have the courage to be somebody in your life, you schmuck. And that is not Primerica talk, thats Life talk. It costs money to own and start a business. But freeloaders would not understand this.
None of the blogs is true and the only person that would listen to all of you would be people like you. Sour!
You bash Primerica because only few people make it, You BIG DUMMIES,where you’ve been living all these years, in a cave? Every organization that grows will have a small percentage only making it. Not because everybody can’t make it, but because only a few of every organization will do it. Its called the thinning of the ranks. Let me name you a few of the institutions: High schools, Colleges, Professional Sports, The U.S. Military, Churches. Tell us Messrs. and Drs. of nothingand confusers of this world. Does everyone graduate high school and college with a degree (Mmm… do those numbers? That would mean the U.S. school systems would be a scam based on your theory). So does that mean Dr. your a Intergallactic Exalted Senior Phd because theres only a few of you? Is every athlete that ever played competitive sports make it to the Pro’s or the Olympics?( How about those numbers?) Is everyone that ever joined the military make to a 3-5 star general?(Try those numbers) Or you want a better one for all of you. Is everyone that goes or has ever gone to church, go to Heaven?(Do the those numbers if you dare, because chances are, you are probably one of them that will not go.) I will not continue to scare you. If we base numbers on your stupid theory then the U.S. is a scam because I heard the other day on the radio that less than 2% of the population make less than $100,000. And since you don’t belive in those numbers you should go out of this country because none of you would be part of that, huh? And by the way I believe every organization should be that way including the USA. Otherwise we would have people like you that want something for nothing in charge and we would not have the free enterprise system. Thank God Primerica Works the same way and it repels uncourageous people like you. But don’t worry because the same system needing doer’s also needs the fans, cheerleaders, and critics alike. There is so much more but it would only sound like blah, blah, blah to your ears.

I probably will not respond again, because while you guys continue to go to schools to get more degrees to impress the world and blogging, I have to go to work trying to change my families future the world in a positive way,

Yes a proud RVP of Primerica that had his family changed forever!!
S.M.

[...] Paradox Part 1, part 2, part 3 and the final conclusion on Primerica with part [...]

Just wondering how it was over looked that the majority of middle and low income earners that are not financially savvy ever consider sitting down with someone whom is to figure out a solid plan?
I have read the entire blog and I could go either way. I am savvy enough to know about insurance, mortgages and mutual funds. Not that I am rich, far from it. I served in the military and it does not pay a great deal. The point I would like to make? I see enough here to believe Primerica in general is taking care of their clients and of course, the company. What business is out there not to make a buck.
What I read is the legit people in this company are helping those that need it the most while making a fair living.
I do not work for Primerica but I intent to check it out. Maybe my service in this company would be better appreciated than being a teacher. The parent, kids and society in general has no respect for teachers so maybe it will be a step up.

Well said John and we’re all Proud of you for your services in protecting your country and people! Good luck in your PFS career and like in the army..NEVER GIVE UP!

God Bless!

Brainless Mike or Larry whatebver your name is.
I just saw this entry almost a year later. Please don’t embarass yourself any further in a public forum with your writing.

You mention bashing Joe Ensor.

I grew up with Joe and he was my friend for 40 years but that does not change what he did.

It was entertaining to hear about him getting over on people…well..just like you, who bought into the nonsense

Joe never hustled me, so I have no axe to grind. And as far as knowing your company, my brother was one of the first NSD’s.

But again, do something wirthy of your skills…Wendy’s…collecting the carts at a supermarket etc.