Complaint Review: Primerica

Forgive the length of this article, but I had to get a few things off my chest.

I am currently a Regional Leader for Primerica Financial Services (PFS), although I have been inactive for over a year. I joined PFS full-time with intense interest, and was VERY committed to the work being done there. Having been laid off, with nowhere else to go, how could I turn down an opportunity to build a business with the backing of a company like Citigroup??

I gave it a great push for a few years, and was a key participant in our office and its work. But things change. After several years of always being there for virtually every meeting and special events, people were shocked to see me simply vanish. I wasn't earning enough to pay the bills. I had to either get a job, or force our family to move away from parents, family and friends and set up my PFS business elsewhere. I chose the former.

PFS leaders talk insessantly about not quitting and giving up on your dreams. That you need to make the big sacrifices for the bigger rewards down the road. Nice words, but in practice, very hard to deal with. Living in one of the most expensive places in the U.S. and trying to build a PFS business is very hard. And even the PFS stars' in our office barely earned what I needed to earn to survive. In looking at their lives, and what they had to do to make that income, it would only make me nauseous and worry even more about what I would have to put my family through just to balance our home budget.

Even earning a minimal income, the impact of a PFS career on my lifestyle and my family was significant. It required me to neglect what I felt were the more important parts of life. You know, those things which many in PFS would agree that you have to sacrifice in the short term to regain in the long term. For me, the long term at PFS would likely have achieved at the cost of my marriage, and who knows what else.

Being honest, this is not PFS's fault. Any business or career that has a large financial objective requires a lot of work. I just learned through my PFS experience that I wasn't the sort of person, that we were not the sort of family, that wanted to make those sacrifices for a financial ideal. Love and family is a much stronger motivation for us. Whether our daughter goes to Yale, or a community college, she will rise to her potential as God intends her to be.

An example of how PFS affected our lives. My wife was not a PFS adherent. She hated the hype she experienced at the events she attended. She hated seeing me transformed into something other that what she married. She became increasingly embarrassed when our trips to the mall, or visits to friends, became recruiting exercises. When money is tight and things get tough, and you are frantic about your lack of income, everyone you look at will have this dollar sign pop over their heads. They stop being people to you. They are simply a means to an end. She would see this attitude in me, and hated PFS even more for this.

Having stepped away from PFS, I cannot tell you the relief we experienced. I recall visiting a restaurant with a friend a few weeks after my decision, and for the first time in a long time seeing people as people. Mothers with kids in their strollers chatting with friends. Guys surfing the net on their laptops. And me, being there with no interest in figuring out a way to strike up a conversation with them so I could invite them to a PFS meeting. PFS speaks of financial freedom, but what I experienced was a freedom that transcended money. I was once more able to go back to being, in PFS terms, average and ordinary. A shame from their perspective. A joy from mine.

But leaving PFS also made me think further about the PFS Scam we read about on this website, and the never ending rebuttals. As a PFS agent, such negative information was always an issue when recruits or clients did their own web search on Primerica. We shrugged it off as the rantings of a few, and that big targets such as Citigroup and PFS always attracted such venom. I've also noticed that there is little real valid discussion about how good, overall, is PFS at actually helping its clients with their finances.

There are always the stories about getting screwed with term insurance that is too expensive, or misleading statements made by a PFS agent. My bigger concern is the fact that PFS is a very large organization, representing a very large financial services company, and are selling products to a very large market of middle income families. Are those families getting the best possible financial help? PFS thinks they are. After all, they always say We do what's right 100% of the time.

It became obvious to me, though, that it is impossible for PFS to fulfill that creed, even though I would chant it with the others at the meetings, and tell my clients that creed across the kitchen table.

Today, I believe this mantra should be restated as such: "We do what's right 100% of the time within the constraints of our current product line, our financial knowledge, and our motivation for profit and recruiting".

Why do I say it this way? First, let's take a look at the PFS agent.

Taking a financial novice off the street, recruiting and training them, putting them through field training (which is controlled by their upline, not some structured field training monitored by the company as a whole), then unleashing them on the public as a financial coach, is a big concern.

Most people joining PFS are eager to find a career alternative. Few have any background related to the financial industry. Few have even demonstrated in their own lives the ability to save money, get out of debt, and make decent investment decisions. Certainly, being a PFS agent helps you to learn and improve those things in your life. But, only as it applies to a specific range of products which Citigroup is willing to entrust to them.

PFS agents cannot sell everything Citigroup as a company sells, even though PFS is touted by its people as the primary marketing arm of Citigroup. PFS products are especially designed for PFS sales, and as a result, narrow the financial options an agent can bring to a client.

PFS by design targets a certain niche of people who have rather simple financial woes, then tries to help by providing a solution that is often not the most affordable, and certainly not by providing a view of all available options in the market. This fits Citigroup's marketing needs, since their other organizations do not really target this segment. PFS cannot deal with sophisticated financial problems, and can be made fools of by clients with more financial savvy than they have. I've been there.

Citigroup isn't stupid. PFS MUST be very basic in its subject matter and product line for any of its recruits to understand it well enough to sell it, much less avoid screwing up too many of their clients with it. So this begs to ask: would you want to work with a financial coach who has a limited arsenal of tools, products, and knowledge to help you?

Even with the limits on the product offering, most agents rarely learn enough about all the products to either sell them effectively, or discuss them intelligently. Even the Financial Needs Analysis (which I discuss later) poorly integrates information regarding securities, variable annuities and long term care insurance, leaving an agent with no clue as to what those products could, and could not do, for their client without more expert review.

For example, few agents know anything about their Long Term Care insurance product, although that is clearly something people need right now, and the PFS product is an excellent one. Instead, they know mostly how to replace cash value insurance with term. Sure, this could be important in some cases, but often isn't the biggest financial problem a client may have. Yet, if the agent is rather new to PFS, replacing cash value may be the only thing they really understand. But is this fair for the client?

I am sure there are a lot of cases where a PFS agent could have helped a client in different and more effective ways if they just had more knowledge about the product suite they represent. There is no way to determine this, though. There is no formal way for an agent's upline to monitor this lack of knowledge unless they are really involved in that agent's training (and assuming the upline knows what they are doing), so you can predict that there would be huge inconsistencies in how clients experience PFS across the board.

This is a problem in general throughout the financial services industry, but the downfall with the MLM structure is its loose supervisory approach and its the dependency upon the leadership of upline agents who may not have any more product knowledge or financial background than their recruits. Agent accountability is rarely to someone very experienced in financial matters who also take the time to review every financial solution that their agents sell.

Upline agents are also focused on recruiting and trying to build their business, so when a recruit makes a sale, they have little motivation to question if it was a good thing for the client. From a compliance perspective, the client signed all the right documents, understood all the limitations, and so on. It looks good to an auditor when they check the PFS records. But whether it was in the client's best interest or not, it can be hard to judge.

After all, PFS agent performance and accountability is measured by their income and recruiting numbers, not by the integrity of the financial solutions they bring to the client. Unfortunately, find any other financial services company that cares that much about their clients. Client success stories are exploited and displayed at meetings as evidence of PFS quality, but I doubt this reflects the majority of PFS clients.

The overlying assumption is that if you sold term insurance, that is what the client needed and you did what was right for them. If you made a big variable annuities sale, then obviously that was the client's only viable investment option (it often isn't). So, the more money you make and the larger your team, the more clients you are helping. There is rarely a question about whether they were helped in the best way possible.

So, regarding the PFS agent, between the lack of previous financial experience, the challenges in understanding their own product line, and their focus on recruiting and selling to those recruits and to their warm markets, you have to seriously wonder if the best interests of the client are objectively understood.

What about the quality of the products? In general, the products on their own are solid and in a few cases, better than most competing products. However, they can be expensive. Where there are overrides, you know the products are more expensive just to fund those overrides and sustain income up an MLM hierarchy. And to make money on securities, you have to sell front-load mutual funds, which was becoming hard for me to justify considering the other lower cost alternatives available to people. Telling someone to buy a no-load fund, unfortunately, doesn't pay the bills.

How do agents get over the cost objection? Well, they have to sell the value of the Financial Needs Analysis (FNA) which the PFS agent provides, as well as the personal relationship the agent has with the client. Clients often buy from you because you provide a complete' solution, and that you took the time to visit them in their homes to help them. But they also buy because you took the time to give them a complementary FNA to help them see their financial situation clearly.

The Financial Needs Analysis (FNA) is a tool intended to help the client understand their financial profile, then learn about possible solutions to help them solve financial problems. The FNA is prepared using a standardized computer program. However, the quality of the FNA output is still subject to the experience and thoughtfulness of the PFS agent.

In untrained or unthoughtful hands, which dare I say applies to many PFS agents, the FNA can intentionally or unintentionally build a case for a client to acquire many of the PFS products even though those products may not be the best option for them.

When I had enough experience with the FNA to do them on my own, I found it very hard to prepare them while providing a fair view for the client. The more I looked at the FNA, the more I realized that I could accidentally force wrong financial decisions with it. I decided I needed to create a number of scenarios for clients (not something the FNA tool makes easy for you), and would try to figure out in a more accurate way to represent the actual costs of, say, our SMART mortgage solution compared with other options using my own spreadsheets. In many cases, I had to tell the client that our solution would not be optimal for them, since the numbers didn't lie. But that was me.

With every FNA I produced, I realized errors I had made on previous FNAs, and noted that some of my clients had been misinformed and in some cases, prodded to buy something that either they didn't need, or in the case of insurance, covered them for more than they actually needed (thankfully a problem that is easily solved if you are willing to admit your error to the client).

But what about all the other PFS agents trying to do these FNAs? The FNA is not sophisticated enough to question its own findings, obviously. And I would be sitting at PFS meetings, and seeing part-time agents barely 20 years old with jobs working in retail stores or loading docks, wearing tee shirts and Levis, running up and grabbing term insurance commission checks. I had to wonder what they told their clients, and whether the right things were done in every case. In most cases, they were selling term insurance to their recruits. After all, the message to recruits is that you can't sell what you don't own. This is not a requirement of recruitment, but the pressure is there, whether the recruit needs the products or not.

Based on what I have observed, the FNA is just a sales tool in the guise of being a financial plan, and only a small percentage of clients follow even a good FNA plan to, say, prevent further debt problems from occurring over time. The FNA sets an expectation for long term debt elimination and increasing financial health, but I can't imagine them actually experiencing those benefits over time unless they have fully bought into the plan and that it is consistently updated by someone who fully understands what the FNA is, and isn't.

Only the most thoughtful PFS agents will return to update a client's FNA later on unless the client bought something from them when they first presented the FNA. Despite the idea that the FNA is complementary, it does take time to prepare, and most PFS agents will blow off clients who appreciated the FNA, but decided not to follow the plan (and therefore not buy a few products).

Also, there is an expectation the agent builds in their presentation to the client that the agent should receive referrals as 'compensation' for the FNA. Nothing wrong with this, but clearly the main thing agents need from a prospective client is their referrals and to convert them into a recruit. More money will come from that than any single product sale.

There is now a new version of the FNA with a questionnaire specifically designed to lead clients down the path of saying Yes, and creating an overall psychological need to acquire certain products. In some cases, clients really do need some form of life insurance, and such scripts do help them realize this need. This makes it potentially important for the client, and is a service that PFS can do very well.

However, the questionnaire also drives clients to make decisions about being recruits. In many cases, agents are told that this is the PRIMARY reason to meet with clients. That a client can solve their income problems by being a PFS agent part-time.

The FNA, by design, sells the client on being a recruit. For a majority of clients, the FNA will show a financial shortfall, especially when the agent takes into account all of the client's financial aspirations. Much of the information in the FNA are financial ideals the client would want (fully funded education funds, huge retirement amounts, 100% cash purchase of a care, etc.), which obviously overstates their cash requirements. Therefore, the FNA will show their income to be insufficient to meet those needs, even if their current income is capable of helping them meet many of their desires. Also, since the FNA can only propose the most expensive mortgage option (30 year fixed) when addressing debt consolidation, this will also overstate client expenses when you consider there may be other cheaper loan options which PFS simply do not have in their product portfolio.

The net result of the FNA, then, is to show the client that they are not making enough money to reach their "goals and dream", and when asked if they will likely get a raise, or another income source, the client sees that they need to find a way to make money part time to make up the difference. Guess what? PFS offers such an opportunity! Therefore, recruit the client and increase their income. PFS is now the solution to solve their financial deficit.

The PFS agent fully believes this is a viable option for their clients, even though we know that in all likelihood, the client will not make enough money fast enough to help them meet their FNA plan. But what actually happens is that the client becomes a recruit, the recruit is field trained in their warm market, earning income mostly for the recruiter. Then, if enough referrals are obtained at those training appointments and the recruit gets their licensing training and testing completed quickly, the new recruit has a good start in building their new business. However, most recruits do not have such a successful field training experience, which is why the fall out rate of new recruits is so high.

There is more, but I've run out of steam. Before I close, though, I want to share one personal story about why I feel like I do about PFS.

I had a new recruit, a very nice gentleman in his early 60's who had just been laid off. I pumped into him the PFS dream. He had a small warm market to start, and we were very good about getting him out to that warm market to train him. He didn't have his license in term insurance yet, so I made all the money on those sales. This is standard practice. He had a license for mortgages, but those are a hard sell in our area. I kept giving him hope about selling mortgages, since you can make a lot of money, but not one of his clients had a situation that warranted a refinance (even though we tell PFS agents to take a SMART application at every appointment regardless).

Once we visited his market, and after promises I would get some for him, we had obtained almost no referrals. We tried hard to get them, but we failed. So, all he had left to do was try to recruit people. We had already sold to those he knew. He tried to recruit. We went to malls together and tried. But he was facing financial issues, and was a gentle spirit. He wasn't the type to be too aggressive when meeting with people.

Soon, there was little more I could do. We got him to the meetings, he had a great attitude, but I was also spending more time with other recruits who were more active, more aggressive, and more demanding of my time. We talked about tactics for getting names, getting his securities license which could open more doors, and so on. But he slowly faded from the scene, and eventually relocated back east with his wife.

In PFS, you just write this off as a failure of the recruit to catch the dream', or a failure of your leadership. Point is, although I thought my intentions were honorable, the net result was that I basically exploited this recruit's warm market while selling him a dream that only becomes a reality for a very small percentage of the total PFS agent population. I knew in the back of my mind that this recruit was likely going to fail, given his wife's weak support, his gentle nature, and his lack of a real profit motive. But I still tried to sell him the dream, since it was mostly to benefit me, not him.

Sure, he learned a lot about sales, finance, and their own financial situation. But those benefits are overshadowed by the overall reason that any of those things happened for him. This wasn't the only situation like this I've experienced, and I can't help but feel sorry for the thousands of others who have been exploited by PFS agents who, like me, had good intentions, but in the end just wrote them off as a casualty of the business while moving on to the next recruit.

I am sure a lot of PFS folks will argue about what I've said, but whatever they say, they will site the examples of the minority. There are people of integrity at PFS. Part timers are making good money. And so on. But if you look at the numbers, which can be done when you access the PFS agent website, you know that only a rare few truly achieve their goals, and that so many others struggle year in and year out, in pursuit of a dream that seemed so easy for others to achieve.

My heart goes out to my friends that I've left behind at PFS. They still believe in the dream. Perhaps a few will actually experience it. My gut, though, tells me that most won't even though they are always told otherwise. Besides, the PFS social experience for them is often as important as the income. They will stay there even if they are not making money. It supplements their need for recognition and acceptance. It does this very well, but for me, it had a ever so slightly slippery veneer that I couldn't take any more.

Where I am today? In lieu of all I learned at PFS, I still had a financial crisis. I had to get an average and ordinary job. I refinanced with an Option ARM at another financial institution. I know all the risks with these loans, but it has bought our family some time to sort out our financial future. This is something PFS could not do for me. Their solution for me was just one thing: make more income, and PFS is the best way to do it.

The PFS plan obviously didn't work for me. And I was one of many bright and shining stars rising in the PFS heavens that crashed and burned and faded into its very, very short memory.

I became like that recruit I exploited. Sure, it was all with good intentions. I don't blame anyone for it. I just had to move on with my life, like he did, and learn that you can still be happy, and even proud of yourself, when you resort to being average and ordinary.

James
New York, New York
U.S.A.

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