Primerica Financial Services
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Primerica Financial Services (PFS) is the name of a division of Citigroup, which engages in multi-level marketing of financial services, notably term life insurance, mortgage refinancing, and investments through mutual funds.
Consumers are typically approached by a Primerica agent under the auspices of engaging in a complimentary "financial needs analysis" (FNA), a 20 page overview of a family's finances. The client provides pay stubs, bills, retirement plan information, etc. and are evaluated as to how they are saving, how much debt they have, and what their goals are. Agents then recommend plans for managing their money -- some non-profit strategies such as the speediest way to pay down credit card debt, others involving products provided by branches of Citigroup, such as life insurance from Primerica Life Insurance, investments from Smith Barney, refinancing through the $MART loan program, personal loans through Citibank, long term care insurance policies through GE Capital, pre-paid legal services and more. Agents are licensed separately for each area of business with the appropriate state and federal authorities.
Agents are paid by Citigroup for the business they write, not by the consumer. Agents also make money by overriding business written by their downlines (agents they have recruited), as in real estate and other multi-level marketing companies. However, agents do not make any money until they become licensed.
With regard to recruiting new agents, Primerica charges a $199 licensing fee (that is mostly refundable for unsatisfied recruits) a fee (states the company) that offsets mandatory state-sponsored life insurance courses and also to provide for a background check. Upon completion of the course the new agent is not licensed; in order to obtain the state license (and begin earning money), the agent then takes the state-sponsored test. Any associated fees with the state-sponsored test are reimbursed, although only for a successful test (fees related to failed tests are not reimbursed).
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History
This MLM distribution network business was originally called A. L. Williams after its founder. It was one of the first group of agents to aggressively sell term life insurance, heavily criticizing other forms of life insurance, especially cash value insurance. Its motto was/is "Buy term and invest the difference". This approach angered many large insurance companies, prompting many years of vicious attacks on the company and on the MLM method itself.
Later, A. L. Williams was bought by the insurance and brokerage firm Primerica. After A. L. Williams left the company, the MLM division was named simply "Primerica". The Smith Barney investment company became part of the portfolio. Sandy Weill's company Commercial Credit then purchased Primerica in 1988, for $1.5 billion. In 1992, Weill paid $722 million to buy a 27 percent share of Travelers Insurance, and Primerica adopted the Travelers familiar "red umbrella" logo as part of their own. By the end of 1993, the merged company was known as Travelers Group Inc., and was wholly owned by Weill. In September 1997, Travelers acquired Salomon Inc., (parent company of Salomon Brothers Inc) for over $9 billion in stock, and merged it with its own investment arm to create Salomon Smith Barney. (The name later reverted to Smith Barney after the Salomon name was tarnished in a series of scandals.)
In April 1998 Travelers Group announced an agreement to undertake a $76 billion merger between Travelers and Citicorp, creating the largest single company in the world. (It now claims over a trillion US dollars in assets.)
The company is American in origin, but now has branches in Puerto Rico, Canada, the UK, and Spain, and plans for further worldwide growth.
What Primerica says about itself
According to company documents, Primerica's mission statement is "to help families become debt-free and financially independent." Primerica says it is in the best position to educate consumers about finance because they offer mortgage products, life insurance, and investments, wrapped in a directive document called the Financial Needs Analysis (FNA). The central idea behind the FNA is that as debts are eliminated, investments can increase. As investments increase, the need for life insurance decreases as well. Primerica feels that it is in the company's best interest to do what is right for the customer, not to sell any one individual product. The company claims that their goal and vested interest is use their products as stepping-stones to move all clients out of debt and into appropriate savings and investment vehicles (including retirement funds and college funds), thus building up enough wealth so that the need for insurances and repeated refinancing is eliminated. Primerica caters to small (working class and middle class) investors, not requiring a large amount of money up front to open an account (as little as $25 USD monthly). (In practice, some agents focus solely on the cornerstone life insurance business and do not become securities licensed, thereby neglecting to enact a long-term plan for their client's financial freedom. Consumers should know that each Primerica branch has, by law, at least a handful of securities-licensed representatives and should feel free to insist that the "buy term and invest the difference" philosophy is fully enacted by appropriate agents.)
Criticisms of Primerica
Primerica has attracted criticism from competitors due to unorthodox practices, particularly trademark aggressiveness in pursuing client relationships and alleged excessive usage of religious themes in selling products and training new recruits. Accusations are wide-ranging, and are often focused on distribution practices rather than the actual products themselves. Given the religious overtones, some even accuse Primerica of being a cult- however, despite its mainly-Christian workforce, the company does not have an official policy of being partial to a single religion. These accusations date back to mid-80s, when A. L. Williams shocked the insurance business with previously unheard-of MLM techniques and a refusal to sell cash value life insurance products. It is difficult to say how much these problems might have been systemic, and how much may have been due to the failings of individual hierarchies -- like many financial services companies, certainly some agents have been censured, had their licenses removed, and even had criminal charges filed against them. However, they seem to be a small minority among the sales force (which as of 2004 approaches 100,000 agents).
Primerica's detractors fall into three main camps: 1. other financial services companies/agents 2. people irritated with Primerica's recruiting strategies/persistence and 3. dissatisfied agents. Most noteworthy are average consumers irritated by Primerica's practices, with complaints usually focused on recruiting methods, not the financial products offered by Primerica. Many former agents are upset that the business didn't live up to its billing; they gave it a try and failed and are therefore disgruntled. Some former agents have legitimate claims against those that recruited them, oftentimes focusing on the lack of training received by new recruits on the many aspects of financial planning.
Given its choice of marketing strategies, Primerica has been named by its detractors as the "Amway of financial services." As its agents are registered with their respective states (and countries; the UK and Spain both host Primerica operations), Primerica mandates $199 fee to join the business, similar to Vector Marketing, although many Primerica offices offer full reimbursement of the $199 fee upon completion of training transactions. Primerica branches often host "Opportunity Night" presentations (where potential recruits and clients review/evaluate the company) which reinforce the ease at which applicants can earn money, contrasting the Primeica experience with other kinds of employment. Primerica hosts these meetings to showcase its marketing opportunity, obviously omitting or pushing the less attractive points of Primerica employment to the discussion's periphery.
Some former agents allege that the initial $199 fee was covertly charged to them; possibly because the "application" process was not explained properly. Some former agents have reported that they made little or no money at all with the company, a fact the company has admitted (documents released by the company have shown anywhere between 1,200 to 5,000 of the workforce actually earns a six-figure income). An average agent with the company is usually underemployed, a low-income earner or unemployed, including many students, with the majority of their recruits having no formal financial experience. The company states that it believes anyone can offer sound financial game plans when properly trained, but some believe that the company plays on the low-income bracket's vulnerabilities.
External links
- Primerica (http://www.primerica.com)
- Primerica responds to accusations of being a cult (http://ww3.primerica.com/public/who/articles/metamorphosis2.html)
- Rip-off Report: Primerica (search results) (http://www.ripoffreport.com/results.asp?submit22=Search+All+The+Latest+Rip-Off+Reports+Now!&q1=ALL&q2=&q3=&q4=&q5=Primerica&q6=&q7=)