Wednesday, May 7, 2008

The Truth Revealed, By Someone Who's Been There

Welcome to The Truth About Primerica Blog.

As I already mentioned this isn't a hate blog. However I want to expose some myths for people that are looking at this opportunity, so you will know the truth. If you're in the business right now, don't be upset with me, I know your blood boils when someone speaks poorly of Primerica, I know because that's exactly how I felt, until I found out the more importantly ACCEPTED the truth.

I was an RVP (Regional Vice President) in PFS, for 10 years. I've made money, had a team of people, won many company contests. I was breathing Primerica. It was way more than my business, it was my life.

Alright, let's get right into it.

Unlike some of these stupid remarks you see on the internet in forums, about Primerica being some multi-level pyramid scam, it's not.

As a matter of fact the structure of having multi tiered commissions is best structure in the world, and every sales organization has that in form or another. So let's forget the stupid pyramid/mlm stigma and let's talk about the real flaws of Primerica.

The concept of getting people out of debt, saving money, and protecting their families is right and there's nothing wrong with that either.

However, there are 2 sides to Primerica. First the product side for consumers and people who want to produce and get paid for their efforts. And second the opportunity to build a business.

Unfortunately the products at Primerica are less than great. Now I want to remind you that I sold very successfully every product that PFS offers.

Let's look at Term insurance.

The concept of Buy Term Invest Difference is right on, for the majority of the people in this country, and Canada for that matter. But Primerica term is one of the most expensive ones. Now I was taught by the best. For those of you in the business, I know all of Hector's overcoming objections. I know it's not the price but the value, etc..... BUT, why should you pay sometimes up to 70% more for the same coverage. Because Primerica term is so expensive that's why a lot of agents end up with significant chargebacks, which is when the client drops the policy in the first 12 months, the company takes back the unearned commissions, since you get an advance upfront. (we'll talk more about that in the business section, probably in a different post)

Ok, so what makes their term coverage better? Nothing!

- IBR, increasing benefit rider, where the policy amount goes up automatically without the client having to qualify medically, is good, BUT if they can get a cheaper term somewhere else, they can get double the coverage right away for the same money, so there goes the IBR concept.

- Primerica's ratings? They're ok, but there are better ones. Recently Fitch ratings reduced Primerica Life to A- (not a big deal, but nevertheless, a reduction is not a good sign)

- Guaranteed insurability for life, with guaranteed renewals at the lowest cost. I sold this concept for years. I sold tons of life insurance for Primerica personally, probably close to 1,000 policies, and I always sold this benefit. That yes, this policy maybe more than others, but later on if you want to renew, you will never have to re-qualify to get the best rate we have available.

Well, it's true, except that most Primerica reps, like 99.99% don't know that there's something called Life Settlements, that a person at the age of 70 for example, who may not need insurance, instead of dropping the policy, can sell their policy to an investment company for about 20% of the insurance amount. (This is not a viatical, go check out Life Settlements, even Warren Buffet invests in them.)

Well, here's the catch, in order to qualify for a Life Settlement, the policy has to be permanent, meaning any type except for term. Well guess what, Primerica policies don't convert to permanent insurance, therefore they could NEVER qualify for a Life Settlement. BUT any other term insurance out there by other companies would qualify, because they all have an option to convert to permanent.

- Next, what about the fact that 70 years of age, is the cut off for issue age. If you have a client that's over 70, you can't sell them a policy.

- What if your client get's denied. In Primerica you're a captive agent, meaning you can ONLY sell THEIR products. Any other independent insurance agent can shop with impaired risk carriers, but in PFS you're stuck with ONE company, you're living at their mercy. Oh how well I know that, and I'll challenge anyone on that fact.

- What if you have a client, that's only concerned with the cost. They want the lowest premium, and don't care about bells and whistles. So you might talk them into your policy, but then they go online and find something for half the price. It's chargeback time, by by commissions, and the customer is gone.

But if you're an independent agent, you will shop with different carriers to find the best product for your client, which is what you should be doing in the first place.

Ok, I think we've beat the Insurance horse to death.

Let's talk about mutual funds. I won't get into all the details how the company has steered their reps for years to sell Smith Barney (Citigroup owned funds) instead of anything else. And how pitiful the performance has been during the down years as compared to their peers.

Yes, Primerica offers other funds, BUT not all of them. Because PFS is so special, you can't sell C shares or T shares of some of these companies. (If you're new to this, it may be a little confusing, but let's just say that if a fund company has a bunch of options for their investments, and every rep in the world who represents them has access to them, PFS reps, only have access to certain options and not all of them.)

Here's a great example. 529 plans for education. As a rep you should have access to every 529 plan that's available through the companies you represent. Primerica, even though you can sell other funds, you CAN'T sell their 529 plans, although anywhere else you would be able to.

Why is that important. Oh I don't know, how about doing what's right for the client?

Scholar's Choice, which is Primerica's ONLY 529 plan (at least up until this point and for the last 8 years) is one of the worst performing 529 plan's out there.

As a rep, making a living at this, putting your credibility in your community on the line, why should you be limited to the choices you offer?

I'm going to keep hammering this question.

Let's talk about Variable Annuities.

Great product for the right person. Good retirement alternative. Quick problem. Again Primerica offers ONLY Primelite by former Traveler's Life and Annuity, (now MetLife)

Problems with Primelite:

1. Up until recently they had NO living benefits. Which is income options to guarantee a stream of income to your customer, without annuitization (or without losing control of your money) THIS IS HUGE!!!!

When the market is in turmoil like in the last year or so, why subject your client to risk their income when there are several big well known companies who offer great living benefits to protect the income.

And the option that Primelite now has for that is pitiful and nothing like what these other companies have.

Now I've sold millions of dollars of investments through Primerica, but I never knew about all of this, and thought that I was doing the best thing for my client. Was I?

Here's another very interesting point. Primelite Variable Annuity, started with Primelite I, then added some options, and they started selling Primelite II, then III, then IV.

Ok, so each one got a little better, BUT the clients who bought Primelite I, couldn't change to the new one with much better options, without having to pay huge charges, even though they would still stay with the same company. How stupid is that? I had family members that I sold that too, and I thought (at the urging of the company that I was offering them the best)

Every other Variable Annuity company, when adds new and better features, makes sure that the old clients get them.

This is very sad, considering that Primerica is in the top 20 of idependent sales forces in terms of volume of sales of this product. How many people are getting hurt?

Again, if you're a rep, don't be mad at me. I probably had more assets under management (all of my clients accounts combined) than 99% of the people who will read this post.

OK, let's talk about SMART loans.

Simple interest? Bullshit. Primerica teaches that 8% simple interest is better than 6% scheduled. I know because I used to teach this. I also sold millions of dollars of this horrible product, I didn't know it was that bad at the time. Just didn't really look at all the facts.

The idea of getting out of debt is good. But if you take someone from a 6% mortgage to an 8% mortgage, that's a big jump in the payment. Simple interest or not, why not stay with the lower rate and take the difference and either invest it or pay down the other debts, including the mortgage, and it will accelerate faster. Do the math on the financial calculator and tell me I'm wrong.

Why refinance at 8%, when you can refinance at 6%, combine all the debts and save even more on the payment, which you can apply to the principal and pay it down much MUCH faster.

Plus SMART loans, have a 1.5% points built in, and yet the reps can't even control the YSP (yield spread premium) Most don't know what that is. That's ok, I didn't either. Basically anyone who sells mortgages has a room to work with in terms of the rate and their commissions (ysp), BUT NOT in Primerica.

Nooo, you get ONE rate and that's it. Oh, plus it has 1.5% in discount points, which really should reduce the rate, not the other way around. And it has a pre payment penalty, which no other conforming fixed rate loan has.

We won't get into all of the mortgage options that are out there, but if there are lots of options that exist, why would you limit your self and your clients to one?

This wraps up my products rant, and let me quickly go over the business.

Yes, you can recruit people, and yes you will get paid overrides. I've made lots of money in overrides. I didn't have a big organization, but I've had many months where my override income would be over $5,000, that's just overrides from other agents.

Here are the problems:

1. I don't care what they tell you in the Opportunity Meeting on Tuesday or Thursday night, this business will take a TON, of hard work. It'll take EVERYTHING YOU GOT AND SOME MORE. Anyone who tells you differently is lying and never made any money with the company.

2. You're a captive agent. We talked about that. You only sell for 1 term company. 1 Variable Annuity Company. 1 mortgage. Very limited in mutual fund options as compared to the rest of the industry.

3. Because you're a captive agent, your agents when they realize that there's a better option out there will leave and go somewhere else. Don't believe me? Check the company, you'll see that there are a lot of former RVP's, who were making between $50,000 - $250,000 and left to go somewhere else. I'll touch on that in a minute.

4. You don't own your business. If they tell you do, it's a lie! The minute you leave Primerica, your clients become THEIR clients, and you can't touch them for 2 years. Oh, that is one hell of a deal. You spend a decade running around building YOUR clients, but if you want to leave you GET NOTHING. And you can't LEGALLY touch your clients or your agents for 2 years. Otherwise Primerica will send their scum sucking home office attorneys after you, with nasty threatening letters and so forth. I got boxes full of plagues from the company being #1 in this and that. I got letters from John Addisson the CEO, how great I am, and what a leader I am. And then I leave and I start getting nasty letters from their attorneys. Talk about double standards.

Oh, and as far as their ownership program, yes it exists. BUT you only own something WHEN you have 3 RVP's under you. So what if you only have 1 or 2 or none, but you're a great producer, like so many people in Primerica, YOU'RE SCREWED!!!

But you won't know it until years later, when you finally realize it.

Is that enough or you want me to keep going?

Ok. Here's a biggie for you. Primerica brainwashes you to think that they have the BEST products, the BEST opportunity, the ONLY legitimate opportunity and a shot at Financial Indepence. They do it with EPN TV, Go Solo, Fast Start Schools, Conventions, Trips To Hawaii (which I've been on several of them). All that is nice, and I'm not against motivation and promoting the company, but listen carefully:

When you do this to put the blinders on the people, so they won't see all the flaws, and the fact that the products are flawed, that there are better opportunities in this industry, than that is intentionally hurting people, and that is wrong and evil.

I know of RVP's who tell their people to keep going, it'll be better, go invite more people, go recruit people. And these poor souls are starving, their making NO money, they're having marital problems, financial problems, but they keep paying for their Go Solos, and keep spending money to go to Fast Start Schools, and Conventions, because you should NEVER MISS AN EVENT. And they listen to another million dollar earner speaker about their rags to riches story, which again there's nothing wrong with that, except that the opportunity that this speaker had is over. It doesn't exist anymore like it did before.

The people for the most part that make money and survive Primerica, except for the ones that built it in the 80's when everyone had whole life insurance, fall into 2 categories:

1. They recruit a ton of people. Which means throw them against the wall and see what sticks. Yep, they don't like to admit that, but it's the truth. How else do you explain the fact that you have to recruit 100's of people before you find any good ones, BUT, here's the kicker that no one will tell you about - all the people that come in that won't make, which is most of them, you have to keep bringing them to the meetings and sucking their warm markets, because they may lead you to the next one and the next one and the next one, until you find a good one. That is a fact.

2. The second type of people who make it in Primerica are the producers. But it's a tough road. Why produce with the poor products that you have, when you can have it all by being an independent agent, and yes, you can still get overrides by recruiting other agents, EVEN if you're not in Primerica.

Ok, so to summarize:

Why limit your self to few product choices?
Why offer your clients only what you have and have to convince them, instead of finding the best that's available for them?
Why give up ownership of your clients because PFS fears you will leave so they put their hand on your efforts?
Why recruit into an agency that you may never own, and subject your downline reps to all of the above?

Can you honestly answer these 4 questions and tell me that Primerica is best opportunity in Financial Services today?

If you can, I feel sorry for you, just keep drinking the coolaid they're feeding you, until one day realize the TRUTH.

If you're new and exploring this business as an option, think hard about the facts I've presented, this a serious business that will require lots of time and effort to build, why not give yourself the greatest chance of succeeding by having all the options not just some of them?

Lastly, I just want to say that there are a lot of great people in Primerica. For the most part even the big leaders, they're not trying to mislead people, they just bought into this whole thing, but the fact is they don't know and they're hurting others, maybe even unintentionally.

It didn't start out this way. Art Williams built a great system and the company is big. But it became part of a corporation and as all big dumb companies they destroy the entrepreneurial spirit and slowly dismantle what was once great.

Don't believe me on this last point?

Ok, well here's my last point for today. We used to proudly say that we're part of Citigroup the largest company in the world, trillion dollars in assets blah blah blah.

That Primerica is THE distribution hub for Citigroup, the largest company in the world.

Well now what? Citigroup posted a $5 billion dollar loss last quarter. They're stock is down over $30, or more than 60% in the last 12 months, and they've sold off all their divisions except for Citibank.

And now, it's been in the Wall Street Journal several times already, that Citigroup is selling Primerica, because it's a peripheral business, profits are down from last year, that means no growth, which is bad for this type of company and so far no one is interested in buying. That's as of today, it might get sold eventually. Check it out for yourself:

I welcome your comments and/or questions.