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 hop on the Primerica Train to… financial freedom?
Back to the pyramid scheme
Is it a pyramid scheme? In legal terms, the answer is no. However, it does not mean that because it is legal that the company’s structure is not shaped like a pyramid. Everybody is making a cut off of the people below them; it goes four layers deep! I think it is clear that the guy on top makes the big bucks. They will answer that every company is the same, the President and the VPs sit in the box seats and the employees are left in the bleachers. It may be so. However, Primerica does not explain why they are able to compensate four people for the same sale. The answer is pretty easy: they have cut down the commission compared to the industry norms. For example, if a life insurance policy of 100K would provide one 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 many an individual to work hard for less that they could earn only because they have the option of building a team to earn extra commissions from somebody else’s work. In fact, if everybody concentrates on recruiting individuals, who will close the sale? You may have a hundred people below you, if nobody sells, it still means $0 in your pocket.
Anybody can do it
Another thing that bugged me was the fact that any Walmart greeter could manage one’s personal finances (no offense intended). With only a couple of licenses in hand, they are shipped to their relatives’ homes to sell them financial products. Primerica was able to build complete questionnaires that are completed by the clients 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 mechanics or any other profession, but would you really give me the keys to repair your car if you know that I am a banker and that I recently passed a three month technical class? I can barely check the engine oil myself, how the hell in three months would I be able to diagnose much less fix your car?
This results into a huge lack of credibility in the advisors. Most of them have very limited knowledge as to what they are recommending/selling and why. They follow the guide and offer what Primerica tells them to offer. There is little place for creativity there and real financial planning. The thing is that their market consists of every one that the advisor knows. Most people do not know much about finance anyways and they are even less likely to question their advisor if he is part of the family or has been referred by a good friend. The relationship you have with your financial advisor is based more on trust than competence. You simply assume he knows what he is doing as you know him through your circle of contacts. This is why dealing with a Primerica advisor might be dangerous. Then again, I am not generalizing the situation, but the way they recruit individual leads to this kind of supposition.
How you start making real money with Primerica
It took me a while to figure out the best way to make money through 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 sales. 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 advisors under my position, if they don’t sell, I do not make s%!t. So how can you really make money?
You have two options: The first one is to recruit good salespeople 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 base must remain with Primerica as it is not yours anymore (wait… I thought it was an opportunity to own my 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 licenses to sell insurance and mutual funds and then, meets 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 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 best five contacts, people that have a high potential need in financial products and that fully trust your new advisor. The evil plan goes beyond this point: if you train your guy to recruit efficiently, you will make extra commissions on his rookie’s first five sales.
This is obviously the main reason why I decided to not leave my job and work for Primerica. However, I understand that many people may find success with 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 partners?). This was an honest conclusion and if you think I am in the left field and did not understand the process properly, please feel free to comment
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