World Financial Group Expert Review by Brian Garvin and Jeff West

Thanks for insight into WFG and laying out what sets them apart from others in the financial industry.

The only fee required to become a WFG associate is $100 for processing the new associate application according to state and Federal regulations.

Additional costs include:
Getting fingerprinted – varies depending on where you do it.
Getting licensed – varies depeding on how and where you do it.
Getting appointed – one company charges $20 set-up fee, others charge nothing.
Training materials – pretty close to cost of production. Free from the product companies (WRL, Transamerica, ING, Prudential, etc.)
Conferences – weekend tix at $35 to about $100. Voluntary, but who would start their business and not get the most training they can?
Travel to and lodging at conferences – up to your research and negotiation skills.

What’s the big difference about WFG? — Why not the product?

99.9% of network marketing/mlm companies sell “lotions, potions and pills” – consumables that have various levels of effectiveness at improving one’s health. The majority of the rest sell other kinds of consumables.

WFG is the only mlm company(AFAIK) offering financial service products: insurance, investments etc….and the education to help you choose the right ones for your family.

Most financial service products are employee-based, that is the sales force are employees who usually start with a small stipend then move to 100% commission. Sales quotas in these companies lead to a 90% turnover rate industry-wide.

WFG is the only financial services marketing company I know of that sets no sales quotas because the WFG associate is a not an employee in any way. Of course, every person in the industry has to comply with regulations, so WFG can end the relationship with their associates who violate company and/or regulatory policy. But no WFG associate “loses their job” due to lack of sales.

Again, the question that’s begged is: Why would anyone start such a business and not attempt to help as many people as they can, thereby making lots of sales and earning lots of commissions along the way?

I am not, nor have I ever been, an agent or associate of WFG. Rather, I am a California resident-licensed Life Agent and Fire & Casualty Agent who also teaches insurance prelicensing classes for persons who wish to become a licensed life-only or accident & health agent in California. I am now in my 10th year as an instructor.

WFG is the reincarnated entity of its predecessor, World Marketing Alliance (WMA), which was created by a couple of former AL Williams (now Primerica) representatives who believed they and others with them could make more money selling Universal Life insurance (UL) as opposed to the “Buy Term and Invest the DIfference” philosophy of Art Williams which is still the credo of Primerica today.

WMA ran afoul of insurance and securities regulators in a number of states in the late 1990s, and some of the top persons in the organization were forced to leave as the company was shopped around the insurance industry to prevent its demise, and was eventually picked up by Aegon, an insurance company headquartered in the Netherlands. Aegon owns such insurance companies as Transamerica and Western Reserve Life, the only two companies whose products are likely to be represented to a client by a WFG representative, despite claims of representing more than 20 different companies. Probably has something to do with commissions.

WFG is not a “scam” in the loosest sense of the term. WFG provides a business opportunity, like other MLM organizations, but one whose products are highly regulated — insurance, securities, real estate loans — and as such, representative are required to be licensed in all 50 states. Those who market securities products such as Variable Universal Life insurance (VUL) require national securities registrations (FINRA) in addition to state insurance licensing.

A WFG representative who is securities licensed is not likely to discuss any insurance product other than VUL, despite the fact that insurance laws require agents to provide the most appropriate product the agent has available to him or her for the client’s situation, and at the best possible price. A WFG representative not securities licensed will most likely present UL or Equity Indexed Universal Life insurance (EIUL) as the only available product.

The problem with WFG, as I see it, is that they engage in a weak training regimen that fails to educate their representatives in the details of the products they are expected to market. When, in my classes, I explain how each of the major types of life insurance work to my students, those who are coming from WFG are often shocked to hear something entirely different than what they have been told. Some students subsequently bring their policies to me for an analysis. Many are not happy with what I show them about their product — not because the product is bad, but because they were not told how it works, or what their responsibilities to the product were.

My students come from many different insurance companies, so my instruction needs to be broad-based and absolutely accurate. I have no reason or need to discuss anything but the absolute truth about any particular product. And the truth about life insurance is that every product sold will do what it intends to do — IF — and it’s a BIG IF — the policyowner/insured understands what his or her responsibilities to the product are.

No life insurance product is perfect for all situations,, including term life. Term life is the wrong product in some situations just like UL, EIUL, and VUL are wrong in some situations. A good agent will tell a client when he or she doesn’t have the right product for the client’s need. A mediocre agent will sell them something that would be better sold to someone else to earn a commission. A bad agent will misrepresent the product and earn a commission they do not deserve.

The real issue with WFG is in its marketing and recruiting tactics. WFG seeks its clients in the middle income market — nothing wrong with that at all. But the middle income market is not the ideal target for VUL, EIUL, or even most UL insurance sales, because the premiums that are actually required to make the products work over the long haul (as they are intended to) are higher than most middle income earners have the ability to pay from Day 1. To get around this, many insurance agents create “Illustrations” using company-provided software showing hypothetical returns at interest rates that are currently not being paid or earned, yet by the force of the illustration, appear to be level throughout the lifetime of the contract. This obscures the fact that when these policies earn lower rates of return (even negative, in the case of VUL), the life of the POLICY is in jeopardy.

Persons have paid huge amounts of money (hundreds of dollars per month) into UL policies for years, only to discover (suddenly, they think) that they have a policy about to lapse with no cash value. The industry has know this since the polices were first created in the late 1970s/early 1980s. Newer policies have enduring “no lapse guarantees” — but they also cost additional money. It’s all disclosed in the annual statements sent to policyowners, but seldom read or understood.

So getting back to WFG, representatives sell what they’re trained to sell. They say what they’re trained to say. They are given scripts to memorize. Most, including some of the upper level “Leaders” have little real product knowledge, which is a dangerous thing across the table from a client. Clients are sometimes told, “Why put money in your 401(k) plan at work, which you’ll have to pay taxes on, when you can put the money in a VUL policy and never pay taxes on it.” Well, that’s a pretty sick perversion of the truth. Most representatives, especially those who are newer, have no idea just how wrong this is. In some cases, it might even be a crime!

Life insurance is protection against not living long enough to achieve one’s intended financial goals. It is supposed to leave money for the financial needs of those left behind by a deceased person and their lost stream of income. Life insurance is NOT a retirement plan. It does not meet the IRS test for a “Qualified Plan” and the proof of this is that you cannot rollover 401(k) or 403(b) or IRA monies to a life insurance policy. This means that to discuss life insurance in any way that equates it with, or makes it seem superior to, a retirement plan is a “material misrepresentation” of the nature of the product.

Yes, life insurance does enjoy certain privileges under the Internal Revenue Code, but when you truly read and understand what the IRC is addressing, the benefits are primarily intended for **beneficiaries** not policyowners. That’s the reason insureds cannot normally deduct the cost of life insurance premiums from their income taxes.

In the last couple of years, WFG, through its associated real estate lending arm, has gone sorely astray of its stated mission — to help families achieve financial independence — by encouraging folks to take huge ARM home-equity loans and use the money to fund VUL policies. There are a number of legal actions pending against WFG and its representatives in several states for these marketing practices. Folks are losing their life insurance and their homes. Some financial independence indeed!

It’s a shame that an organization such as WFG, in a noble profession such as insurance and financial services, can lose sight of the responsibility it has to its clients (many of whom are its representatives, who are also told, “You can’t be a hypocrite . . . how can you expect to sell something to your family and friends if you don’t own it yourself?”). WFG, as you’ll read in a variety of other posts here and elsewhere, recruits people with the lure of, “You’ll have an opportunity to earn a six-figure income in your first year.” The sad reality is that most will never achieve that, because WFG has no substantive training model. It’s essentially a RAH-RAH atmosphere where there is a high level of excitement and only a modest to low level of activity. Fail to recruit a steady stream new associates (“keep the pipeline full”), and you will likely fail in the business.

Most information about the organization is withheld until one pays a $100 fee for a “background investigation” which is unlikely to occur. And even if it did, the cost of such reports to most businesses is about $50. So where is the money actually going? You may never find out. I haven’t. It’s a closely guarded secret.

So, caveat emptor. To the buyer, beware. Insurance agents like myself, who are truly persons of integrity, have nothing to hide, do not hesitate to answer questions, put everything on the table, upfront, and in a matter-of-fact style. I can look a person in the eye and discuss being dead whether they are comfortable with the idea or not. If you are confronted by an agent who skirts your questions, won’t provide answers, needs you to make a decision NOW, turn and walk (or run) away from him or her. (Unless it’s December 31 and you need to make a decision about a Medicare Advantage plan, it’s unlikely that any insurance decision is a “gotta do it now” situation.)

MHH

This is very helpful! Thank you very much

Most of your stories are false. WFG doesn’t deal with mortgages and loans, and will never recommend people to take a loan from their mortgage equity to invest in a VUL. Also, WFG always encourage consumers to invest in their 401(k). Even A-Dollar-to-50 Cents, it’s 50% rate of return, free money from their companies. Why not invest in their 401(k)? This is common sense. Your story is too bias. Please do your research fully before post some wrongful information on here.

Max, can you back your assertion MHH is posting incorrect info?

I found this in less than 30 seconds of Googling:

http://www.sec.gov/litigation/complaints/2008/comp20768.pdf

Both WFG and WGS were litigated by the SEC for exactly what MHH posted.

Now if there are mitigating points I would like to see them.

Max, before you accuse someone of bias, you might consider presenting information in an unbiased way as well so as not to implicate you as being associated with the company of focus.

While Max may not know specifically the financial advice provided by the company, his points on the MLM aspects of the company are spot on. I have personally known many people who have ventured into the process and none of them have sucessfully pulled a workable income from it.

The whole process of recruitment is legal (for now anyway), but it requires the invested individual to go out and recruit others for the process. The investor sees little to no return until actual recruitment occurs. And even then, recruitment must continually occur for the process to pay dividends. If the recruits under the initial recruit do not successfully pull in more recruits, the initial investor sees even more diminishing returns.

Add to the fact that most of the new recruits know little about the product they are offering, let alone have any education in economics. If a company’s recruitment efforts extend to those who have little to no qualifications, then it is a poor reflection of the company’s values.

Ok. Greg, Kevin or whoever lack of research skills…here are some of the facts you all been waiting for and need to know…u wanna talk about our credibilities, our parent company’s and our providers…here they are…

1. WFG is the official supporter of the US Olympic Luge team. Let me clearify this one more time — THE US OLYMPIC TEAM

2. WFG providers include Transamerica, Pacific Life, Nationwide, Prudential, Allianz, ING, John Hancock & etc. Do I have to say more bout these companies? Do you own research, PLEASE.

3. Mother company Aegon is currently ranking 103 in Global 500, NOT fortune 500, GLOBAL 500, serving 40 million consumers worldwide with asset of over 459 BILLIONS.

4. David M. Walker served as United States Comptroller General (which responsibility is to audit the financial statements that the Secretary of Treasury present to the Congress and the President) from 1998 to 2008, recently sat down with WFG leaders to discuss current debt problem & other economic issues in this country. If WFG has such a bad name or poor values, why is the Comptroller General of the United States sat down and talked to us.

PLEASE DO YOU RESEARCH RIGHT!!!!!!!!

Max you are brainwashed and sucking people into a MLM, however the system may have worked for you but tell me how many , Having been in the industry for over 25yrs in Canada and being successful one is better off to go the broker route and sell insurance for a select few companies.

Access your warm market and continue to grow it through referrals and networking in industry functions. Build your client base being paid full commission, FYC and PB, get the additional industry designations to be able to give the consumer the proper financial advice. The recurring theme I have heard over and over from those who once belonged to WFG was ” I can earn more money outside WFG, obtain better training from companies directly by attending seminars they put on and not earn income from someone who really does nothing but continually recruit uninformed people.”

mlm and scams. i dont see any marketing strategy as a scam. sucess is based on your efforts, ppl who fail in mlm probably joined it thinking its easy money.
first question i was asked when they invited me to be an associate: would u rather get 4 ppl to save $7/day or work 8hrs/day at mcdonalds if they both paid the same? everyone’s inclined to answer get 4 ppl to save, because we automatically think ppl need to save and its easy to just not eat out or cut back on expenses. but the reality is: you’re not just trying to get them to cut back on spending, you’re trying to get them to put that money somewhere out of their pockets and convince them they’ll get more money back. it woild save them money if they do it, but will they believe you? his doesnt even cover the risks.

to any sucessful broker, have you ALWAYS put a client’s interest above your own? if i was a broker myself, i know my family comes first before my client’s.

Most people that DOWN network marketing companies FAILED at trying to market one… that is why they know so much about them …. NEVER entertain a LOSER you will go back and forth wasting time arguing about completely nothing when you could be helping another person achieve their dreams!! LOSERS don’t understand that this world is not perfect and not just anybody achieves success!! in every industry there are good companies and bad companies…. If WFG was a real scam they would have been shut down by the FINRA or the SEC a long time ago… I am not a REP but any one in the Financial industry would know that…. WFG took a bid risk FIRST trying to educate the middle class about SAVING MONEY because they are spend more than they save by nature and culture…. SECOND they are giving ordinary everyday people a Golden Opportunity to create an above average income and leave a inheritance for there FAMILY when they leave this world… These are things most people don’t like to do!! Loser spend money or I should say Lose money thats why there called LOSERS!! that is a hard thing to swallow it makes people angry to be called that!! A Failure or you Failed!! SEE a loser or a Failure or Failed person don’t understand that us WINNERS FAILED and LOST many things probably the same way they did but the Difference is we never GAVE UP in the process!!! Why look at all the negatives? they never point out the positives .. the testimonies! The people that died with policies and left there love ones 100K or 500k!! how about the people that didn’t give up and are now making $120k a year and are able to spend time.. time that you will never get back with there families and love ones “priceless”…..So don’t entertain these people leave them beneath You.. only say positive quotes to them and keep it moving… WE are true Net workers!! We broke away from the chains of the 9 to 5 slave shift!! but hey somebody has to do it right!!