Since writing our review on World Financial Group, readers have been asking us about a similar MLM called Primerica. We have finally decided it's time for a streetonomic review of Primerica. Our goal is to provide an outside opinion of whether or not you can make money with their business opportunity.
Finding information was surprisingly difficult, which we see as a red flag. Their own website only gives a very limited description of the Primerica Business Opportunity. Despite this hurdle we will share what we have learned from the information we were able to find.
Some of the data used for this review was not supplied directly by Primerica, so we apologize if it is incorrect or out of date. If you are interested in joining Primerica or just want to know more about them, then we hope that you find this review useful.
What Does Primerica Do?
Primerica is a financial services company which sells a range of insurance, investment and debt products to consumers. They recruit and pay their agents through a multi-level marketing system. If you've met a Primerica agent, then you've probably been invited to see a presentation so they can recruit you to their team
Before you look at the Primerica opportunity, you should ask yourself one important question. Do you want to be a financial advisor? If the answer to this question is no, then Primerica is not for you. You can not make money with Primerica unless you are a good financial planner
If you do want to become a financial planner, then you will need to study and pass some exams. First you will need to become a licensed insurance agent, otherwise it would illegal for you to speak to customers about life insurance. If you plan to get promoted through the Primerica ranks, then you will eventually need to get a securities license too. If study and exams is something you don't want to do, then joining Primerica probably isn't for you.
What is the Primerica Business Opportunity?
The company website describes it as 'a great opportunity for people from all walks of life to achieve their dreams'. If you are looking for financial freedom then they say 'Primerica is the company that can help you discover that freedom'. While this all sounds very positive, they haven't told us anything about how you can make money with Primerica.
We were able to find a copy of the 2010 Primerica New Recruit Manual, which gave us a better idea of how the business works. This has not been supplied directly by Primerica, so we can not confirm if it is still valid and unedited.
From this manual, we can see that Primerica focuses on providing clients with three key services, which are:
- Income Protection
- Asset Management
- Debt Solutions
By helping your clients understand how these services work, you'll put yourself on the path to financial freedom, while also helping them. Their mission statement is: 'To help families become properly protected, debt free and financially independent.'
You can make money with Primerica by selling a combination of term life insurance, mutual funds, and debt management products. How much you can earn will depend on how well you generate sales. Don't worry if you're not a sales person because Primerica has 'a time-tested method of building a business and earning a potentially unlimited income'. They confirm that you will need insurance and securities licensing to reach maximum income levels.
The manual takes you through around 40 pages worth of material for getting started in this 'time-tested method'. It starts with setting goals. It's important to have well defined personal goals which include short medium and long term time frames. Then you commit to your goals which is planning the steps to achieving them. Goal setting is important, but it's nothing new, you could find similar worksheets online
It then moves on to a 90 day plan to help get you up and running as fast as possible. To succeed you need to 'coachable' and commit to field training. In MLM language, being 'coachable', usually means being able to copy what those above you are doing, it's part of the 'duplication' process. Field training means shadowing your upline, attending client meetings the intention being to learn through observation.
Allegedly the first 90 days are 'the most important of your entire Primerica Career'. The way to get off to a 'fast start', is to build a list of contacts right away, and start recruiting new members to Primerica. They note that recruiting will be your main activity while you are waiting for your insurance licensing.
You can't discuss any products until you are licensed, so in the early stages all you have to do is introduce Primerica in a positive light and book appointments so your field trainer can take it from there (with you observing).
The prospecting skills supplied explain that there are different types of prospects which are hot, warm and cold. The manual suggests you start your business by contacting your 'warm market':
Hot Prospects - Are people in your very close circle of friends and family. You see them often know their spouse and family, and probably know a lot of their other friends
Warm Prospects - Are people you are familiar with, but aren't in your close circle. They might be work colleagues or members of a common club.
Cold Prospects - Are people you've never met
Once you are familiar with prospecting, you'll learn the most important skill, recruiting. The manual describes recruiting as 'the life blood of Primerica', stating that is a 'better way to sell', and a 'better way to prospect'. So we guess that means your prospecting in the first 90 days is actually recruiting.
Some recruiting techniques suggested by this 'time tested method', include 'looking at everyone as a potential recruit'. It doesn't matter if people say 'no' because it's all part of the process of finding the next yes. Remember to play the numbers game because recruiting is 'an all the time activity' and 'the engine of your business'.
Like all network marketing companies, the motivation for the constant recruitment, is money. If you have a downline, you will earn an 'override commission' on any sales generated by them and whoever they recruit (for several layers). Advancement through the ranks, and access to the higher pay scales in Primerica requires recruitment.
The commission you make from your own insurance sales, and the override you are entitled to, are both dependent on your rank in the Primerica hierarchy. We constructed the below table to illustrate how your Primerica commission is calculated at each level (qualification requirements are from a Primerica team page):
Primerica pays override commission based on a 'differential' basis. This means that if a new member is sponsored by someone in your team, you earn the difference between their maximum override, and your own.
If you pass your insurance licensing and become a representative, you can start selling insurance. You will earn 25% commission on every life insurance policy you sell. You will also generate 70% of commission for your upline from the same sale. When you are starting out in Primerica, your upline will earn 2.8 times more commission than you on any sales you complete
Your upline will try and use this big difference in pay to motivate you. They might say something like 'keep recruiting and one day you'll get here too.' The Finance Guy thinks that this is unfair. Nobody should earn more than you for the work you do, but that's just the opinion of someone with several years financial planning experience. We'd question the true motives of a 'mentor figure' who will get most of the reward from your work
What is the Primerica Fast Start
We already know that this is part of the 90 day plan, but for more information, we looked at a version of the Primerica Fast Start Manual. This outlines the keys to a successful career with Primerica.
It explains that if you follow the Fast Start guide then 'every goal or dream you have, can and will be accomplished'. You'll be in a great position to make money because 'you’ll have an unlimited number of appointments to go on because of all of the new recruits coming on to your team'
Following the Fast Track program could have you on the path toward earning '$30k - $50k in income your first year, and $150k - $250k plus your second year'. The first step is to book 15 'kitchen table' appointments for your field leader in your first 30 days. This is something the Finance Guy disagrees with. This former financial planner would suggest only approaching people you know after you've got some experience and built up enough confidence in the products and how they work.
The manual then provides a telemarketing script for booking appointments. The script involves calling people you know and telling them that you are 'very excited' about working for a new company and asking them to 'help you out' by letting your 'trainer' come and show it to them, as part of your learning. The script then goes over a few possible scenarios, all of which end with you asking what time you can come over and show them Primerica.
We found it odd that script instructs you not to confirm appointments. They suggest you tell your friend that the appointment is in your diary so unless you hear from them, you'll see them at that time. People sometimes forget, or circumstances come up. Professionals confirm every appointment (even if it's just via a text message). If you don't confirm appointments then you will waste a lot of time showing up to cancelled appointments
It is our opinion that they don't want you to confirm the appointments because this would give the prospects a chance to cancel. If a client can't keep an appointment then your confirmation call is a chance for you to reschedule. If they are simply disinterested, then they were never going to buy so cancelling the appointment saves you time.
The manual explains that the best results come from the 'right market'. They suggest focusing on married couples who are employed with financially dependent children. Clients also get points for having a mortgage and being aged 22-55. Now find 15 people from your warm market who best tick the boxes.
You can also improve your results by ticking boxes on the company side of the appointment. These include being motivated, wanting more money, being competitive, have people skills and you must be credible
Some more tips for success from the fast start manual include:
- Show up to all training and meetings
- Bring guests to the 'opportunity meetings'
- Listen to Primerica recommended CDs
- Read Primerica recommended training and books
- Plug In
Theses tips for success including the phrase 'Plug in' remind us very much of Amway. This is not good thing because we believe that you can't make money with Amway.
The fast start guide gives an overview of the different ranks in Primerica and how to achieve them. It then explains that if within the first 30 days of joining, you can achieve 50,000 in 'builders track points', you can earn the $300 fast start (which might be paid in scholarships and vouchers). Your points must include at least 4 insurance sales. You can also get points for attending meetings and coaching sessions, and generally plugging in.
Are Primerica Agents Making Money
We know that it is possible to make money with Primerica. We've been told that this is 'a time-tested method of building a business and earning a potentially unlimited income'. If you follow the fast start program, we are told that we can earn '$30k - $50k in income your first year, and $150k - $250k plus your second year'.
While these statements sound good, we thought we'd find out how much Primerica agents are earning now. After all that should give us an indication of how likely it is that we can make money with them.
We were unable to find a full version of their income disclosure statement, but there was a reference to personal incomes on the general Primerica disclosures page. Here we learned that the average annual income for Primerica representatives in 2016 was $6,088. That's less than $120 per week!
We have no doubt that some representatives earned a lot more than this, but that also means that a large amount of representatives also earned absolutely nothing. Maybe the vast majority who join, never follow the fast start program. It's also possible that the Fast Start Program is all hype and no delivery.
Why Is It Difficult to Make Money With Primerica
The main reason people aren't making money is because they aren't making sales. We learned this from the 2016 Primerica Annual Report. In 2016, Primerica agents sold an average of 0.22 life insurance policies per month. That's only 2.6 sales for the year! The same report shows that this was a good year. The figures in 2014 and 2015 were even lower!
Even though the company made over $1.5 Billion in revenue in 2016, the average representative only made a sale once every 4.5 months. We know that some representatives made a lot more sales, but this also means that several made no sales at all.
We believe that the constant focus on recruiting is part of the problem. Like all network marketing companies, Primerica teaches representatives to 'recruit everyone'. The problem is that while everyone is focused on recruiting, nobody is focused on finding retail customers. This makes it very difficult for representatives to turn a profit because not enough money is coming in from outside of the MLM network.
Can You Build a Team With Primerica
If you want to become above average, and earn more than $120 per week, then you will need to build a good downline. Remember, you can't earn 95% commission on your own sales until you've recruited enough people to become a Regional Vice President (RVP).
To find out how well the Primerica representatives grew their teams in 2016, we again looked at the annual report. We constructed the table below using information found in it:
We see that at the end of 2015, Primerica had a total of 106,710 licensed representatives across USA and Canada. During 2016, they managed to sign on a total of 262,732 recruits, or around 2.6 recruits from each consultant. It turns out that only 44,724 (17.02%) of these recruits became licensed. That means that less than 1 in every 5 recruits completed their insurance license.
If you're not licensed with Primerica, you can't move from associate to representative, and can't make sales or earn significant commission. We can't confirm, but we will assume that recruits who don't become licensed all quit Primerica. This would infer that in 2016 82.98% of new recruits quit Primerica without completing the initial training.
The total number of Primerica representatives grew by 10,117 or 9.5% during 2016, yet in the same time, 44,724 new representatives joined. From this we have calculated that 34,607 or 32% of existing representatives quit Primerica during 2016.
This should give you an idea of what it would be like to build a downline team with Primerica. In order to earn overrides, you will need to sign up 5 new recruits so that 1 of them can become a representative. Building a team in these conditions will require constant recruitment because every year 1/3 of your existing team will quit. Every time a representative quits your team, you will need to sign up five more recruits just to replace them.
If you can't recruit enough new representatives to replace the 32% who quit, then your team is will be shrinking. This would become difficult as your team grows. Imagine if you had 50 representatives in your downline. That means that you should expect 16 to quit. To replace these 16 represenatives, you'd need to sign up 80 new recruits. To grow a team with Primerica, you need to find new recruits at rate of more than 160% per year.
Imagine if all businesses were like this. What would it be like at your work, if every year they hired 5 new staff for every 3 existing staff members, just to keep up with everyone who was quitting? Would you accept a new job with a company where 4/5 of staff quit before they earned a paycheck?
Is Primerica an Illegal Pyramid Scheme
Network marketing companies are legal as long as they are backed by a product or service. They only become illegal pyramids if you are being paid for recruiting new members to the system. Having said that, the line between making sales and recruiting new members if often quite a blurry one.
As noted above, the annual report showed us that in 2016 each Primerica representative signed up an average of 2.6 new recruits. During that same time, the same representatives made an average of 2.6 life insurance sales. Is this a coincidence, or is that most of the insurance policies are being sold to new recruits?
In the 'Doing it Right' section of the new recruits manual, Primerica states:
'You do not get paid for recruiting. That would violate anti-pyramid laws and is a practice Primerica does not permit. Please remember that recruits are never required to purchase any Primerica products or provide referrals in order to become a Primerica Representative.'
It's nice to know that new recruits aren't required to buy any products, but that doesn't mean that they aren't encouraged to buy them. In the same manual it tells us that recruiting is a 'better way to sell'. This can only be true if the new recruits become customers.
The 'Building Credibility' section of the manual states:
'Credibility is essential to your future success', it goes on to say 'One of the best ways to establish your credibility is to complete your own FNA and start working on your own financial program. You will become familiar with the FNA process and understand what is required to begin your own journey down the road of reaching financial independence.'
So you aren't required to buy products, but if you want to be successful, then it's essential. Completing your Financial Needs Analysis is one of steps in the 30 day fast start program. Doing so will earn you 1,000 points toward your $300 bonus. Buying your own life insurance policy will get you another 2,500 points. Once again, we can't be certain, but we believe if you join Primerica your field trainer will try and sell you an insurance policy while you are still a recruit.
We would suggest waiting until after you have your license done so you can be your own first client. Then again we are not getting paid a commission and are not worried that you only have a 1 in 5 shot of actually getting that license.
If MLM Doesn't Work, Why Does Primerica Use It
We regularly say that you can't make money with network marketing. We have never said that network marketing companies can't make money. In 2016, Primerica reported a total profit of almost US $338 Million. A big part of their profit came from the fact that they use multi-level marketing.
In the annual report they proudly say 'RVPs’ efforts to expand their businesses are a primary driver of our success.' They go on to mention that because of the constant recruitment, 'our sales force is able to continually access an expanding base of prospective clients without engaging costly media channels ' In other words paying the MLM incentives is much cheaper than using advertising and other branding techniques
The company mission statement says they want to help their clients achieve financial freedom. We believe that all representatives are part of the Primerica client base. Perhaps they should work harder on their mission because we haven't met a lot of people who could be free on an income of $6,088 per year. Then again this shows that commission only contractors are a lot cheaper than regular staff, so it helps with the profit line. Perhaps the best way to make money with Primerica is to become a shareholder.
Should You Join Primerica
At the beginning of this post, we said you should only join if you want to be a financial planner, but you can also join if you want to work in recruitment. If you are interested in becoming a financial planner, we recommend you consider this as well as several other opportunities.
The last time the Finance Guy joined an independent financial planning group, he got 95% of the commission he generated from day 1. Furthermore he owned his client base and was able to sell it when he decided to leave the industry. At Primerica you will not earn this level of commission until you reach the top of the pyramid.
If in any given year, you decide to join the 32% of representatives who quit Primerica, there is no guarantee that you can sell your clients. In the Annual report, they mention:
'Primerica Ownership Program. This program provides qualifying RVPs a contractual right, upon meeting certain criteria, to transfer their Primerica businesses to another RVP or a qualifying family member at such time as they desire.'
If you attend a presentation of the opportunity for any MLM you will probably hear claims that you can earn passive income and work on your own business. No matter how many times they make this claim, it simply isn't true. Maintaining a downline requires constant work, and if you quit you can't sell your 'business', unless the company allows you to.
In our opinion you are unlikely to make money if you join Primerica, but that's just our opinion. What's your opinion? We'd love to hear from you in the comments section below, specially if you can share your experiences with Primerica.
For more posts like this, look at our list of mlm reviews.