The Primerica Paradox: The Conclusion Part 2
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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?
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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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hehehe!
October 19th, 2007 at 9:07 am
Interesting series.
Are you into sales as a career yourself?
Mike
October 19th, 2007 at 9:08 am
You wonder how multi-level marketers make money:
MLM is not about beating the pavement to make sales, it is about building referral organizations. That’s why the compensation is not geared to one-off end customer sales (as you mention, just making a sale is not that lucrative), but to find more people who will join the organization AND have lots of other contacts who will join. These people will all buy and the big incentive is earned by those who can bring in the biggest networks of buyers.
MLM is a very excellent concept but I think it is mis-executed very often because people who either don’t have the ability to get many contacts or don’t have an understanding of the product are sucked in.
October 19th, 2007 at 1:34 pm
FP, I’m not into directly into sales but I really like the sales development part of my job. I guess I was born with this marketing interest
CR, the problem with MLM is that there are not promoted correctly. Most people get in with the wrong information…
October 27th, 2007 at 7:03 am
[…] debate initiated by Customers Revenge and I must say that I was quite satisfied with my series on The Primerica Paradox last week. I think I was able to bring up a complete picture of what this company really offers. On […]
October 30th, 2007 at 9:15 pm
[…] Financial Blogger concludes an investigation of Primerica. I haven’t read the rest of the series, but I certainly plan […]
October 31st, 2007 at 7:19 am
The worst part, IMO, is that they have people start on family. Trying to get family involved in a pyramid group (even its products) can lead to tension and fights. Suppose that after selling them you product, you eventually recruit your nephew, then things go bad, then your sister isn’t speaking to you and your mom’s a bit pissed too….
October 31st, 2007 at 6:07 pm
Mrs, Micah, you are damn right! The fact is that it is much easier to convince relatives and people you don’t know! family members are most likely follow you on your path to “financial freedom”!
November 17th, 2007 at 8:09 pm
Here’s my 2¢
I’ve been with Primerica part time for a few months now (got school and a different job outside of it) and while not all it’s products are “the best†and they are a bit cult-like, they’ve got their uses. So here is my opinion on some various aspects:
MORTGAGE
I was in the mortgage industry for 4 years until I had a conflict of conscience, and the $MART loan really isn’t anything to write home about. Frankly, there are a dozen lenders that offer simple interest mortgages, sometimes with better rates.
INSURANCE
I’m not an insurance expert, but I’ve done some competitive shopping. While Primerica’s life insurance isn’t going to be the best for everyone in every situation, for people with less-than-perfect credit they seem to come out on top in terms cost for amount of coverage.
SECURITIES & INVESTING
If you’ve got $50,000 or more laying around to invest, Primerica sucks. However, for middle class folks with no securities aside from a 401k (if that) they’re a great place to at least get educated and begin to build a reliable portfolio.
$199 TO JOIN
Actually, for me it was $117.50 and I was able to talk my recruiter into paying that for me
. Seriously though, if you stick around long enough to get your licenses (Primerica pays for those, btw) it’s well worth it. Where I live the licenses would cost over $3,000 if I paid for them on my own.
WORKING 80 HOURS A WEEK
While they encourage that and some of their hardcore zealots swear by it, I don’t find it to be necessary. Hell, I put in maybe 20 hours a week (that includes “kitchen table†meetings with potential clients) and I’m getting numbers equal to if not better than people who signed on around the time I did.
RECRUITING
Yeah, this aspect doesn’t exactly thrill me. I signed on three friends who essentially do the same thing I do as far as hours and commitment. Sure, they urge me to get more (and I’m not about to sign someone on who wouldn’t benefit from this and/or couldn’t do it) so I occasionally get a friend to come in and sit through one of the intro sessions and buy them a drink later.
COMPENSATION
Well, compared to similar jobs at similar companies (the ones I’ve researched, at least) the pay sucks. However, those similar jobs at other companies are going to require specialized college degrees, licenses and/or 2+ years prior experience. This is a foot in the door for the financial industry. You’ll get knowledge and experience first hand and your licenses for free. If you can do the same thing elsewhere and get an hourly/salary wage + full commission elsewhere, go for it.
CAPTIVE/NON-COMPETE CONTRACT
It blows. No company should hold those terms in their contracts. You aren’t really going to “own your own business†here (granted though, RVPs do make good money).
IT’S A BRAINWASHING CULT
In some respects, yeah. Certainly it can come off that way with some of the reps/recruiters, and that can be compounded with the MLM pay structure. Frankly, I think this aspect depends on the individual. To quote Tim Leary: “Think for yourself; question authorityâ€.
So to sum it up, Primerica isn’t perfect though it isn’t an evil scam. It has it’s uses and can be extremely beneficial for many middle-income families that are drowning in debt, as well as people looking to get their feet wet in the finance industry for less time and money. It’s working well for me and doing wonders for my clients.
All in all, it’s a good place to start (as a client and employee), but doesn’t look like a great place to stay.
[Yes, I’ve posted this via copy/paste on a few other discussions about Primerica]
November 18th, 2007 at 9:37 pm
Noah, I think that you are confirming my thoughts on Primerica; not the greatest of all, but the the evil minded company like many people like to pretend
However, I would appreciate more honesty from the recruiters when you ask them questions. In general, they tend to make the job more like a real dream and not for what it is…
November 25th, 2007 at 5:05 pm
Very interesting… as always! Cheers from -Switzerland-.
December 17th, 2007 at 10:47 pm
[…] I should bring another point regarding personal finance companies. While I still do not think that Primerica is being honest with its marketing, it does not mean that all their financial advisors are crooked. […]
February 17th, 2008 at 11:38 pm
So do tell, are you upset with the company because you submitted business and the company didnt pay? Or because you never submitted business and expected to get paid? I have started submitting business and I am getting paid, feels great from where I am at.
February 18th, 2008 at 7:47 am
Primerica Man,
I am definitely not upset and I never said that the company will not pay if you submit business. All I am saying is that the system is not as wonderful as Primerica claims it is. If you recruit a bunch of people and they make sales, you will obviously make money.
However, when you sell for Primerica, you earn less money than if you would have sold the same product under another company. Therefore, you basically have to convince your recruits to close sell for a lesser commission since there is no point of recruiting 1,000 advisor and all they do is that they recruit. They must make sales as well.
If you understand the system correctly, all you have to do is recruit somebody, tell him that you will “train him” and close his first 5 to 10 easy sell (close friend and family that will already believe what you and your new recruit says). So you make commission on those sales and your new apprentice isn’t because he is “on training”. Once your done with him, you recruit somebody else and your first recruit is doing the same thing. While he will be earning the big commission on the first 5-10 sales of his own recruit, you are still making a cut.
Primerica never advertise their system as I just described it even if it’s the most productive way to make money out of this system. Then again, I am not upset, I just wanted to give a clear point of view on a company and its system.
Cheers,
FB.
March 4th, 2008 at 11:36 am
So I haven’t read much on this site, because I don’t really have to. I do know that most people hear MLM and think Pyramid. Now did any of you ever wonder about the GM,Ford,Chrysler etc etc plants that some of your parents may work for, or any other company for that matter. I am certain that their is One guy on top and thousands of little worker slaves putting there 40 YEARS of hard work in to get some pension that is half decent but nothing to write home about. Have any of your parents or people you know with “GREAT JOBS” ever come to you and said “Man you will never guess what the CEO of (Insert “Great Jobs” company name here) just came down from his office, HAND picked me to show me every single detail to get to where he is” NEVER happen Never will. You know, if most people actually did some research they would realize that PFS is just trying ot get people out of financial trouble, and offer people a NEW way of thinking. Do you agree that Banks should be allowed to offer you more and more CREDIT when you are down and out and wondering how to keep you children feed? Nope they don’t care, why would they, they’re in the business of keeping us in debt. PFS is jsut a company that is GENUINELY trying to help people see things from a different point of view. You know how when you go to IKEA and they have those blue arrows on the floor to show everyone exactly where they want YOU to go?? How is the any different that what every Bank in the US and Canda do??? Come on sheeple just put you head down and do what everyone else is doing!! Yep that sounds liek a good idea, pretty sure your moms have all told you, “If all your friends jumped off a bridge, would you?? Well thats exactly what happens everytime people really on banks to “Help” them. Its funny that people can go on and on about what THEY believe is wrong with PFS, but what you don’t know is that its just a company trying to help people. I don’t see any of you coming up with “BLOGS” about how bad the local bank is ripping your Grandparents or parents off on a daily basis like they’ve done for hundreds of years, nope you just pick apart a company that tries to off regular Joe’s like you and I an oppurtunity to see things from a different vantage point. There is a reason why only 1% of the population can enjoy the “Golden years” because they step outside the box. So everyone who is a “Sheeple” keep doin what you’re doin and enjoy working until you die, because believe me, I have done it all, Everything from Wall forming, to Truck driving and LITERALLLY everything in between, and this is by far the best thing I’ve ever come across, it may not be the be all end all, but I have worked my ASS off for way to long and made way too much money for people who consider me just another #. So I thank GOD that Primerica found me because i may have just wondered the earth for the duration of my time inside the box like most of the sheeple out there. Life is good now, and I don’t have to put money in anyone else’s pocket, the harder I “Work” the more I make, I only say “Work” because compared to the work I;ve done up until now, is work. So not sure if anyone will read this but hey, jsut had to say sumthing. take care of yourselves and try t okeep those blinders off, or I;ll see yas at the local Wally mart when your 70 saying, “Its a PYRAMID” LOL if only you knew, you either see it or you don’t, hope to see ya;s on the beach someday.
SCOTTY B
March 4th, 2008 at 9:56 pm
Scotty;
I find pretty funny that you “haven’t read much on this site, because I don’t really have to” and simply presume what I think instead of reading. I guess you did the same thing before signing with Primerica; “did not read much, did not ask much question, because you did not have to”.
There are a lot of people that are far ahead in their financial life and they don’t work for Primerica. Just look outside your “new box” and you will find a world of opportunity.
I suggest that you read my series and comment again on the blog. Since you are on the beach, you probably have a lot of time to do it anyway
No offense, and enjoy your reading!
March 22nd, 2008 at 4:20 pm
[…] 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, […]
March 25th, 2008 at 6:17 pm
I was accosted at the local Wal-Mart today by a two-person Primerica team. While my immediate assumption was that they were husband and wife, I quickly picked up on the fact that they were more likely a mentor/mentoree team instead. I wasn’t so much offended by their cheesy tactics as I was baffled by them.
How many people are actually so gullible as to think a successful insurance salesman or money manager goes to the local Wal-Mart to drum up a sales team? If these Primerica shills were as successful as I would think they’d hope to be in a similar business, they wouldn’t have to step foot in a Wal-Mart to interview prospective employees. These people aren’t selling financial products so much as they’re selling themselves.
Sadly, neither of these two jamokes grasped the first step of making a successful sale which is to divorce oneself from the desire for the outcome. From moment one they wreaked of trying to delve into my pocket and social network at any cost.
No thanks.
When you sell yourself to family and friends, you do just that. If you get them to buy, you have perhaps put a few quick dollars in your pocket, but in so doing you traded integrity that you once had with the people who trusted you most. This same integrity, mind you, is integrity that you cannot easily buy back. Regardless of how big your sphere of influence might be, staying on this path will guarantee that your well will eventually run dry.
Granted, those very few select big wigs at the top of the Primerica pyramid (by the way, if you’re reading this then it’s too late to join their ranks) may earn a killing, the newest recruit however will simply soil his reputation to family and friends.
Not my bag, Baby, and if you’re smart, it won’t be yours either.
April 21st, 2008 at 3:47 pm
On your response to PRIMERICA MAN,
selling the same product for a different company and making more money off of it, means that you will be ripping off the customer…What you fail to understand is that Primericans care about their clients…Go with New York Life and sell cash value insurance and make more money!!!….Where’s the morality in that?
Pyramid scheme, huh!!??
Manufacturing companies have an Owner, who has a sales team, with busy bee’s working on the production lines who work their butt’s off to make minimum wage all the while the owner WILL ALWAYS STAY AT THE TOP…
that sound like a Pyramid Scheme to me!!
but of course it cannot be called that because that is illegal…
Primerica has an opportunity for Everyone to make it to the top….
Unfortunately some of you don’t have the people skills, and your fear will always keep you on the bottom.
You just don’t have the personality and heart for it so that is why you rag on Primerica…sorry.
April 25th, 2008 at 4:28 am
So I read the authors remarks and they didn’t do that bad of a job but still is lacking very basic and very important information to be imo writing about Primerica Financial Services. I work for and have been with Primerica for almost 3 years now. So I have 6 licenses through the state of Oregon and Finra (formerly NASD). They are Life, Health, LTC, Variable Annuities, Series 6 and Series 63. Because these licenses come from the various levels of Goverment I do think that they bring something to the table as far as credability. I loved it when you said that a greeter at Walgreens can do Primerica - granted they can if they could pass the back ground check and the testing requiments. Thats the great thing about our free enterprise system and your right here to have self determination. You went on to say that the people at the top make all the money….. Again your wrong because lets say for instance if you recruited me into the business and I out performed you….. At that point then you would loose any over rides. It’s all performace based and you do loose it if you don’t perform even if you did recruit me. What I found was funny is that you don’t care about me nor my family so what does it matter to you what I make? I didn’t get a Christmas card from you. With that said then now lets change our focus and put it on the customer - where it should belong. You never mentioned how good our products are compared to the rest of the industry.
Term insurance - The rest of the industry pushes Whole life because they make more money off of it. We only sell Term. Keep in mind that life insurance was ment for one thing and that was if you die then it pays out, thats it and nothing else. Remember 9/11? When other companies with held life insurance payments because they wanted to see if President Bush was going to declare it a act of war or not, Primerica paid out. For you people that don’t know - Most companies put in an exclusion in there insurance policies that say they don’t have to cover an act of war and thus don’t pay out. I am not even going to go into the whole Cash Value thing because that is so out dated and not in the best interest of the consumer.
Lets talk about Long Term care or LTC. Long Term care is designed to protect your assets (home) and also add to guality of life (helps with IADLs and ADLs and also adds additional insurance coverage) .
We do 1st, 2nd and debt consolidation loans. You don’t need anything other then that. If someone else tells you that you do then I suggest your run the other way and get with some one else who has your needs ahead of there own. Primerica tries to find ways for the customer to pay the least amount in intrest dollars that they can in the shortest amount of time. Who benifits from that? Duh, the customer. Primerica only does 30 year loans, 15 year loans and thats it. I suppose if they wanted to get into marketing the jumbo loans, the 40 year loans and the 50 year loans then they could legally but the won’t and in 33 years have never.
Lets talk about Retirements for a second. You said that Primerica wants you to talk to your family members first. They never stress that but okay I can see where you are coming from. With Social Security due to be bankrupt in 2014 wouldn’t you want your family member to talk to you about that if you don’t have your own retirement set up. Remember time is money.
You make it sound as if Primerica is going to come to your home every day and balance you check book, if thats what you thought then let me clarify it - they won’t.
You never did point out one of the top benifits of our company and that is that it’s all under on roof and one person to supervise. Go to a stand alone security company and most likely they are not going to care what kind of life insurance you have nor how you are doing on your mortgage that may or may not be an arm. I dare you to go into your bank and ask them about life insurance, drivers insurance and home owners insurance. What is wrong with one stop shopping? The left hand can see what the right hand is doing because it does matter. You talk about not wanting to be with primerica but why don’t you talk to the people that are with primerica. Something tells me that they are happy watching this mortgage crisis from the sidelines because we never sold 1 adjustable reate mortgage and on top of that we never sold any mortgages off to other companies. When the mortgage industry as a whole is down 24 percent and we are up todate 27 percent then isn’t that saying something? Thats a 51 percent swing. You don’t sit there any tell the people that Primerica is made up of the people by the poeple. I know thats sounds like a cliche but it’s true. The consumer wins because of this. I have never in 3 years ever heard anyone at any level ever tell someone that they needed to sell or they were going to get fired like what is very common in todays sales industry. When a sales person gets put into a corner like that then they start doing things that just are not right. So let me ask you a question - How much advertising from Primerica have you seen on TV? Answer= the don’t and haven’t. That means that they can be very competitive in the products that they offer. Here is another question for you. Think of the other financial services companies and there advertising, Where do you think that they come up with the money to pay for all that? Duh through charging the consumer with it by the products they sell.
I need to just say one more thing before I go and thats this. In Primerica you don’t need skill and know all about x’s and o’s because if we don’t have the answer we have so many people that we can call that will be more then happy to bend over backwards to help us out to find the answer needed. Yes we don’t make as much as others in the industry but let me ask you this. Would it be better to make a little bit less per transaction if that meant that we are not going to have to look for new jobs every time a trend is over like in the mortgage industry today? A lot of those business’s are shut down today and have no employees. I met one girl here a while back who said that she made 105k last year and now she is out of a job and out of money because she didn’t think the bubble was going to burst. Whats worst is that she thinks that bubble is going to come back and it isnt at least for 3-5 years and it won’t be the same as what it was because I think that there is going to be some legislation to prevent a big bubble popping again.
Later.
TG
May 13th, 2008 at 6:00 pm
I am an insurance- and securities-licensed financial specialist for a Fortune 500 company. Primerica has a really bad reputation among legitimate financial specialists for many of the reasons outlined in this series.
All of the other Broker-Dealers I know of forbid their representatives from being involved in any multi-level marketing activities. While it may not be ‘illegal’, it is at best ’shady’ and they try to distance themselves from any ‘appearance of evil’. Not Primerica. No, not only do they not forbid their reps from engaging in multi-level marketing outside of the company, their whole business is set up that way. I love the arguments about how MLM (or ‘network marketing’ as they like to call it in an effort to sound legit) is set up the way any other business is set up. There are a couple of ’small’ problems with this argument. First, the owners, CEOs, top management, etc. of normal companies have usually busted their butts to get where they are. Generally speaking, they are the best of the best at what they do, or they wouldn’t be where they are today. Secondly, people who start and run their own businesses accept all liability and all risk associated with their businesses. From the cheap seats, it may appear that they aren’t paying the shipping clerk or the secretary enough, but it stands to reason that the person who has the most at risk in a company should be compensated the most. After all, if the company goes down due to that business owner’s mistakes, everyone is out of a job, not just him. Let alone the fact that if I own a business, I can choose to pay a certain position whatever I want to pay a position. If I hire a shipping clerk and pay them $8.00/hr., then it’s my option to pay them $8.00 an hour. The person applied for the job at that rate, and that is what they received. With good performance, they may be entitled to a raise at my discretion in the future. I don’t, however, tell my new shipping clerk hire that with some hard work, he could be pulling down $500,000 a year. I also don’t introduce him to shipping clerks out there who have done that, to show him what’s possible. If all they are qualified for is the shipping clerk position, they realistically will probably not make more than $12.00 an hour in that position in my company. But that is what they signed up for. Now, if that shipping clerk is qualified for a promotion to a higher-paid position, they may be able to move up in the company and, who knows, maybe they will be able to pull down $500,000 in my company at some level. But not as a shipping clerk. And, in order to get to that level eventually, they will have to have much more training, much more experience, much more skill, and a little luck. It has nothing to do with him referring other employees to the company. At best, they may get a gift basket for that, or a slap on the back. With MLM, you accept no liability for the company, you accept no risk other than your own stupid risk you took when you quit your real job. You have no real stake in the company, so if it goes down, what the hell, just get another job. With MLM, your ability to make money hinges on your ability to sucker other people into the business with promises of making millions, in fact, you will even introduce them to the rare few who have made millions to increase the chances of ‘getting them’. The Primerica reps never actually own a tangible business, and therefore have no inkling of what it means to actually have others depend on you for the bread on your table. So if they go by the wayside, nobody but them loses. And so you bet, the CEO at Ford should make more than the assembly line worker. There is a lot more riding on him. Primerica reps use him as a scapegoat to legitimize themselves, but as you can see, their reasoning is faulty. They try to compare themselves to him as if they are real business owners. It’s laughable. I could go on and on about this topic alone, but I won’t.
My last point is that Primerica reps consistently do what is in their best interest rather than a customer’s. Todd’s comments above make this abundantly clear. Once example is that he mentions that Primerica only offers Term Life Insurance and expounds on the virtues of such a model. Well, let’s look at national statistics. Of all life insurance benefits paid out in the US, 99.7% are from a permanent life insurance product (he groups them all together as ‘whole life’, but I guess that just goes to illustrate his lack of understanding). Only 0.03% of all life insurance benefits paid out in the US are from Term life insurance products. Hmmm, now who did he say was greedy? With all of the premium coming in from their overpriced term life insurance products, and very little chance of actually having to pay out, do you honestly think that the reason they don’t offer permanent life insurance is because they are such a benevolent company?! I think not. Let’s talk about why, as Todd said, reps make more money off of permanent products. Usually, reps are paid commission based on a percentage of first-year premium. True, permanent life insurance products cost more in the beginning, therefore the commission amount (not the commission percentage in most cases) is more. But let’s look at insurance premiums over the long term. Term insurance is for a short term, usually 5, 10, 20 or 30 years. At the end of that term, your premiums jump way up. Look at any life insurance illustration to see that not only do they jump up drastically on the year following expiration of the term, but every year thereafter. It takes just a few short years to bring your $30 a month premium to $3000 a month and more. If you look, however, at a permanent product, while you may be paying more to begin with (maybe $200-$300 a month) you will pay that for the life of the policy, not just for a specified term. Therefore, after somebody’s 10-year term expires and their premiums jump from $50/month to $500 a month (and increasing astronomically every year), you are still paying your $200-$300. Even another 10 years down the road when their projected premiums rise to several thousand dollars per month, you are still happily paying your $200-$300 a month, all the while building a cash value from which you can borrow, withdraw, etc.
Primerica’s main deal is that you should buy term insurance and invest the difference. Their claim is that you will have more to draw from at retirement if you do it this way. While the reasoning behind this is faulty due to tax consequences, it is an opinion shared by several financial advisers and one that is certainly open for discussion. But when dealing with historically average rates of return you will have more available money to pull out of a permanent life insurance policy, as opposed to mutual funds or other investments, in every case. That is the beauty of a tax-free vehicle. While Todd is right that life insurance was originally intended to only pay out a death benefit, insurance companies have created a vehicle that can do that and more. Why not take advantage of it?! And if you think for a minute that people are going to keep a term life insurance policy after their term expires, you are crazy. With a permanent policy, you have coverage for life at a steady premium.
Along the lines of that last paragraph, compare the rates of Primerica term insurance with just about any other life insurance company out there. Primerica can be more than double the rates for the same coverage. So if their model is correct (buy term insurance and invest the difference), wouldn’t it make sense to ditch Primerica and go with the cheapest term policy out there that is underwritten by a solid company. Then, the invested difference (which there will be more of) would really do you some good. But because they have to cut the pie into so many slices because of their MLM structure, their rates have to be what they are to cover costs. It is the same reason you buy $40 per bottle vitamins, $50 per bottle fruit juice, and $30 per bottle lotion from other notable MLMs. Of course, their reps will all tell you that you pay more because it is a better product, but when it all comes down to it, most production methods, most insurance contracts, and most quality control measures are pretty standard. You can quack all day about your gimmicks, but the core product is still the same.
Todd also mentions that the top benefit of his company is having everything under one roof. He talks about this like as if it is unique. In the US, the same legislation that allowed insurance companies to offer financial services allowed banks to offer insurance products. I think nowadays you would be hard-pressed to find a bank that wouldn’t offer you help with your insurance (life, auto, home or otherwise) and vice versa. While the insurance they offer might be from a third-party company, they can service the policy in-house. Therefore, everything is still under one roof.
I am happy that Primerica is out there for one reason. I am glad that those without some form of life insurance are being encouraged to buy it. I am glad that those without a Long Term Care policy beyond age 40 are being encouraged to buy it. I am glad they have products available that can help people if used correctly. That is the purpose of these products. Unfortunately, an untrained hand can lead to financial destruction, and that’s where I worry.
Thanks,
BT
May 19th, 2008 at 2:32 pm
Why do you waste your time complaining about this company. It seems you all try to find out more reason why to not do it!
It’s easier to say that’s it’s not godd than I don’t have the guts to do it.
I’m not in Primerica, but I know some people doing very well, i’m a client… Their Concert series and Common Sens are quoted #1 in canada…
You are negative people crying about averything… get a life
May 19th, 2008 at 5:54 pm
First and foremost — Primerica is not a “get rich quick scheme” or scam of any kind. Primerica offers quality products, services, sound advice and customized solutions to thier clients. To that woman that was “accosted” at Walmart - i’m sorry you had a negative impression. However i’m guessing those guys were trying to approach you as a potential client - most likely for a free and confidential financial needs analysis, in hopes of doing business with you and possibly getting referrals for more business as Primerica operates by word-of-mouth.
As far as the “anybody can do it” concern, that is true to an extent, but there are stipulations and prerequisites determined by your state and various regulatory agencies. In order to work with Primerica you are required to complete a background check, an individual license from state of residence has to be obtained, and participate in training with a seasoned representative. Why can’t one go from working “as a Walmart greeter” to educating others about finance? Is there a special advanced degree required before one is able to explain the benefits of a term life insurance policy vs. whole life or variable annuity?? // Sorry for the rant, I just had to say my piece, seems there is a lot misinformation on this thread! I’m just a representative posting my personal opinion/experiences. Please visit the official site if you are seeking information about Primerica -> http://www.primericabusinessopportunity.com/
My advice is — when you are approached about any organization that you suspect might be a pyramid scheme or MLM scam, utilize websites such as MLM watch or Quackwatch and see what others are saying. Ask critical questions like - Does the money I would be earning come from the sale of the products/services or from getting recruits? Would I be required to purchase *pricey* training materials or company products? Would I be expected (pressured) to attend events where an admission fee is charged? If yes, that could indicate the money is generated by recruiting or those “training” materials or workshops, and not from the products and services. I asked myself these questions prior to making the decision to join Primerica and i’m glad I signed up because my experience has been very positive.
Primerica is in the business of financial education and debt elimination, aimed at the under-served middle income market. An individual can make a decent supplementary income, even on a part-time basis, without recruiting anyone. And the clients are often in dire need of the products and services we (licensed agents) are educating them about.
Going with the bloggers life insurance example, those commissions are possible because that is a one-time payment based on the annual premium of that policy. If a person “recruits’ you into Primerica, they are instrumental in your training and development, so yes, they do have a vested interest in your success. There is no bonus or pay incentive to sign people up that won’t invest the time and energy it takes to get licensed/ trained (AND most, if not all, fees associated with obtaining the license of your state are reimbursable) so the “name of the game” is not endless recruiting.
If one has an entrepreneurial mindset and wants to build a team and run an office - that is an option as well.
May 28th, 2008 at 3:26 pm
TG, if someone is trying to sell me something and does not have the knowledge to answer my questions then he is gone. I can research just about anything on the internet so when someone wants to sell me insurance, etc. I expect them to be up on their subject matter. Kudos to those making money with Primerica. Any poster can tell you they are making thousands but my first question if I were to think about becoming a partner would be show me your results and how the money or commissions ripple down the chain. I feel it is a fair question.
P.S. - I have no interest in working to feed multiple layers of people!
June 9th, 2008 at 10:29 pm
I have been with primerica for 21 years full time. Best thing that has ever happen to my family financially.
June 11th, 2008 at 1:59 am
I went to a Primerica “meeting” tonight; a girl I’d just met invited me and I thought why not. I like her so far, I’m interested in financial work, and I’d like to see where an Econ degree will take me. I knew she was involved with some financial institution, but she’s been pretty vague about what exactly she does, so I went. I have studied economics in university and am now working while I take a sabbatical from school (temporarily burned out!); I’ll be doing more econ when I go back.
The job I’m at now pays well and is offering me an apprenticeship if I want it (a trade apprenticeship, not a Primedia “training” course) so I’m in no hurry to switch jobs, but if I can make some extra money in my downtime, I’m all for it.
After the presentation, wich is pretty much just as TFB described his, I was asked to fill out a questionnaire which turned out to be little more than my name and phone number on a recipe-sized card. In hindsight, I regret leaving my number after reading about their guerilla recruiting tactics.
While I was filling out the card, I was approached by someone else (who I assume is this girl’s supervisor/mentor/ whatever) and asked what I thought. I’ve never seen someone so interested to set up an interview with me who had no idea what my credentials were! All they knew was what I do for a living now and what I plan to study when resuming University, which I’d mentioned in casual conversation before the meeting started — and he was trying to get me to come in for an interview in the next couple of days! This is when my guard went up; I’m a little apprehensive about things that seem “too easy”. But I was still interested, so I asked how exactly you make money there. All he said was “I don’t have time for that now, I have a meeting at 9 but if you come to see me later we can go over it then.”
Other questions I had were mostly about points brought up during the presentation, and I was mostly paying attention to the specivity (if that’s a word) of his answers than anything else. For example:
“Why don’t you advertise?” (I don’t think he answered that one)
“Who do you sell insurance to? This isn’t really an insurance office.” (It was a hole in the wall behind Princess Auto; maybe rented office space, but definitely NOT your typical insurance or any financial office). I assume you sell to people you know, and then they hate you.
What I found particularly interesting was that I would ask her questions, and he would answer. She had apparently just finished her ‘training’… but he wouldn’t let her answer, and I’m not even a potential client who might be grilling her about more serious issues.
I also found it pretty interesting that I seemed to be the only one wearing a name tag?? I wonder if a handful of the other “guests” tonight were actually employees.
Scott Brown: You might want to do a little more research. I only read the first 3 lines of your comment — the lack of any proper grammar, spacing, capitalisation, etc. gave me a headache — but Ford, GM, and Chrysler have excellent pension packages. The lifetime benefits and life insurance packages that their full-time employees have are part of the reason why they’re in so much financial trouble right now. (Regardless of what you think of their cars!!)
June 14th, 2008 at 2:31 pm
when you sell for Primerica, you earn less money than if you would have sold the same product under another company. I think this particular statement could prove to be true for multiple companies across the board. Which wold be why people are constantly looking for better jobs. I’m interested in the company but it’s just something to get my feet wet. Most places don’t tell you all of the bad things about their company. Ex: you have an interview at a local Bank branch well they might not tell you that the position that you are interviewing for was vacated by the previous employee because of sexual harrasment charges and the branch is known for vicious gossip. So take the company for what it is. If you think you can find a certain level of success in it then go for it. If not don’t worry about it.
June 21st, 2008 at 11:16 pm
I am contemplating Primerica, somewhat skeptically. But perhaps an advantage to the commission being paid up more than one level is that the new agent’s recruiter has a vested interest in training the new agent well. In fact, multiple levels have this interest in training. My recruiter would do the speaking at my first 10-20 appointments so I can watch and learn. If there is a sale, we both get paid. This allows for immediate income in parallel with training. I’m leery of the emphasis on recruiting, however. Need more research into their products.
June 26th, 2008 at 12:40 pm
Im a PFS “kid”, who was born and raised around the business. My father was an original founder of AL Williams. I have seen many people come and go. I have seen more become successful.
It all really depends on your philosophy of how you (the agent) wants others (possible recruits and clients) to perceive you. I have found the most success with the laid back approach to recruiting. I hate pushy people. People who would open a phone book and call to try to recruit the first number they come upon.
I understand some that has been blogged here. I would definitly steer clear of anyone approaching me at Wal-Mart. If someone who came across educated and was willing to help a person (we are dealing primarily with lower/Middle class families)acheive financial independance all along building a business and a legacy for his/her family…..why not?
I agree with Marc, quit complaining about Primerica, its the largest Marketing division in the country for a reason and backed by Citi……not a bad gig I’d say.
RC
June 26th, 2008 at 8:54 pm
RC,
Primerica is a company of mostly amateurs. My father also started off with A.L. Williams, and in the end Primerica left him. You cannot be in a professional business when your main goal is to recruit people, unless your position in your professional business is that only of a recruiter. My advice to anyone is before picking a financial advisor do some research and make sre they are an independent agent. Primerica’s #1 problem is not the company or the people; it is their limited product line. As for your comment “largest Marketing division in the country for a reason and backed by Citi” I hate to burst your bubble but Primerica is for sale! See the link below. Just like Travelers and Smith Barney Funds were sold off. In my opinion Citi never did anything wonderful for Primerica anyway.
http://en.wikipedia.org/wiki/Primerica_Financial_Services
July 13th, 2008 at 9:11 pm
I don’t know if it’s different out here in Vancouver, or if this Primerica office happens to be more ethical than the average… but when I was meeting with the representatives, and attended the meetings, I was given complete and detailed answers to all of my questions. Including hard questions about comission, pay structure, the fact that it’s MLM, the fact that they profit from my hard work, etc…
Perhaps I am lucky to have come accross a no BS approach from Primerica people — but the whole office seemed to treat me the same. It gave me the feeling of confidence in what they were doing, rather than the feeling of “I hope he doesn’t figure out what’s going on here” which other people have encountered with other Primerica reps / offices.
However, knowing that MLM (which he himself admitted they were) has a bad rep, I decided to do some research before jumping in (I still haven’t jumped in, but I have decded to try it).
It was a pleasant surprise to come and read a blog like this, with an excellent and objective opinion (and many equally valuable comments to clarify many points), that I still felt like I had received the complete picture from the Primerica rep.
So hats off to the Vancouver office for managing to be intelligent enough to decide that the truth is out there — and the best way to cover an objection in sales is to be up-front.
The only concern I have left, after reading this site and talking to people at Primerica, is if I do sign on, I have to give up my best “leads” (also known as the people I care about)…
Well, it doesn’t take a rocket scientist to conciously decide to NOT give them my best leads, no matter how much they beg for them. If they become bullheaded about this believe, me I will be out of there.
I have decided to leave my family and closest friends out of this until 2 things happen:
1) I make some decent money
2) I’ve actually helped somene else achieve a financial goal with no feeling of guilt.
If these two things never happen, my family will never know how silly I was to try this Primerica thing.
Years ago I read The Wealthy Barber on advice from my parents. It surprised me that the “education” the financial advisor who talked to me from primerica gave me was essentially verbatum from that book… this tells me 2 things:
1) The financial advisor is, as people on this website point out, providing simple and well known financial advice… it’s not rocket science, it’s not magic, and it’s definatley not revolutionary. It also shows me that he didn’t have to be highly trained (and wasnt), and simply parroting what is common knowledge in the financial world.
It works because most people in north america don’t know, or don’t practice these simple principles of how to be rich at retirement — so it sounds revolutionary to them.
2) The financial advice they gave me was sound, and the only negative is that they only have a limited set of products and didn’t recommend I shop around (but in their defence, they didn’t object when I said I would).
At one point I did business with Altamira. They sat me down, and gave me an overview of how money works and how to invest for my future, and didn’t ask me for a penny in return. At the end, they offered their own products as a potential way to achieve these goals.
That one aspect of Altamira’s business was exactly the same as that one aspect of Primerica’s business.
The only difference is in how they market, advertise, and prospect for leads.
I see no evil (nor, I think, does the author of this blog) in a business which asks someone to offer fundimental no-brainer financial advice to their freinds (most of whom wouldn’t learn it on their own, in today’s world).
The fact that they have products at the ready that align with that advice is business as usual.
Everyone should be intelligent enough to shop around… regardless of who’s trying to sell them somthing.
If I ever come to your home, as a Primerica representative (which I am not… yet)… I would hope that you would turn around, do your own research… and of course I would also hope that you would come back and say “Your product is as good, or better than the products i compared it to” and agree to do business with me.
From what I can see in my own research is that Primerica’s products are, at the very least, as good as everwhere else… so I can believe that I am doing the right thing for the people I would be advising… The “best market” people they told me about in the meeting… the middle income people who have no investments and lots of debt.
Trying this out is, in my opinion, a small risk, as long as I keep my family out of it…. so wish me luck!
July 14th, 2008 at 5:35 am
I really like your approach of not including your family and closest friend at first. It will be harder to make your first sales but will definitely protect your relationship until you are a 100% sure that you are in the right place.
Each Primerica office is lead by its VP or Director like most companies in this field. While they have guidelines, each office operate according to the VP/Director’s value or ways to make thing (even though they always have to stay in the guideline of the company). This is probably why you end up with a great office with no BS.
They do exist (for any companies) and the only way to find out about honest people is to make your own research as you are doing right now. Congratulation on your open mind and the best of luck with your career