For Primerica reps, 'opportunity' becomes a pitfall
The insurance company charges new recruits $99, but more than 80% drop out without passing the licensing exam.
Primerica (PRI) has grown into one of the most profitable insurance companies by promising opportunity to thousands of would-be representatives by dangling the potential to earn $100,000 or more a year.
But as Bloomberg Businessweek reported, the company's promises of advancement and earnings don't work out for the majority of new recruits, who each pay a $99 fee for the chance to join the business, according to company documents.
Take last year's recruitment numbers. Primerica drew 191,752 new recruits in 2012, according to a regulatory filing. That means it may have booked nearly $19 million in fees from hopeful applicants.
But only 34,425 became newly licensed insurance sales representatives in 2012, suggesting that roughly 80% of the initial applicant pool dropped out.
Recruits typically need three months to pass their state licensing exams, so some may have qualified in 2013, the filing notes. A spokesman for Primerica didn't immediately return an email seeking comment.
Primerica has built a profitable business by combining a financial-services firm with multilevel sales techniques, similar to companies like Avon Products (AVP). In Primerica's case, sales reps are responsible for recruiting new applicants.
Most of the company's 91,000 reps work part time, but 4,000 have reached the level of regional vice president, which entitles the worker to higher pay and bonuses, the filing notes.
"I think they want you to make it, but they know you're not going to," Phillip Bowers, who left the company this year and never made more than $50,000, told Businessweek. "People would get into the business, bring their friends, and then after a while, the person who brought those friends would quit."
Primerica's website is full of hype, billing its structure as providing "freedom from a boss" and the "freedom to dream big." It also promotes success stories, such as Brant and Adiris Vogt, who earned more than $100,000 and received a "power builder ring."
That sounds great, until you notice the small print at the bottom of the page. It cautions that the average pay for a sales rep is just $5,513 per year.
Follow Aimee Picchi on Twitter at @aimeepicchi.
The 80-20 rule is the norm for sales positions. The $5500.00 annual income is probably high for the insurance industry. The $99 dollar fee to help get your license is very generous. Would you like to train someone for a month for $99 dollars?
I don't work for Primerica, but I have 30 years in the recruiting and training of sales people.
My question would be why single out Primerica. In all sales positions " opportunity " become a pitfall to the 80% falling, especially in the insurance industry. It is, however, very rewarding to those that don't fall into the pit.
I guess I am one of the "fortunate few" who made the ranks of Regional Vice President and am a $100,000 earner. As with any business you have to work hard; the more people you help the more money you can make. Unfortunately with a job you have ceilings and limitations on you. I made a $100,000 income by selling instead of building a distribution system. Now I'm trying to help others achieve what I have done. I agree that people quit but people quit on lots of things. It is hard studying and then passing both insurance and securities exams. Most people give up before they ever get started. In our state it would cost about $300 just to take a prelicensing insurance class; and for $99 Primerica will even pay for your securities courses and exams once you get life licensed. (Oh by the way you can not get paid without a license.)
And let's not forget the many clients I have helped become properly protected, debt free and financially independent. Yes it is hard work but the rewards are worth it.
It is so easy to bash something without looking at the whole picture. Yes it's $99. Do you get an online study course and additional assistance to help you pass your exam...yes. Do they take it for you? NO!!!
As far as the turnover rate well....name me any successful sales organization that does not have a high turnover rate. Furthermore, you can explore other industries as well. Retail, customer service, advertising, it's not just one company. Primerica get's a bad wrap. I will say this, if this company is so bad then why does the insurance industry, federal regulators, NYSE, and whoever else allow them to continue doing business?
I have worked for large corporations for over 22 years. I have seen many people come and go. Expecting to be able to retire and enjoy life because they bought the company's line. Only to be working multiple jobs in retirement trying to survive. How right is that? How fair is that? I have also seen the tragedy we call downsizing and how that effects lives. People who have given and sacrificed for 25-30 years for an idea, a brand only to be told your services are no longer needed. How those families have to start over because they believed in the dream of a good job being good security. Explore these facts...
Back to Primerica....The fact is they DO have greenies in the world of financial services. They are set up as a MLM. They also have people who don't take their exam or fail the first time never to take it again. What I see is someone getting a shot. I would rather have a shot and miss then to never shot at all. So if Primerica is creating an even playing field where I can help other people and change the lives of my family and friends then what's the problem?
I looked them up. I also looked up several other financial services companies. I would love to see someone do a true comparison. I did... I'm turning in my $99!!!!!!!!!!!!
I'm not a Primerica member. But, I have to say this is a supreme waste of time. Why don't you compare the current state for college students in the same way? How many sign up for college, sign the initial loans and stop before they ever get going? I promise you they owe much more than $99. What about those who go a year or two and drop out? they all owe thousands, many ruin their credit, most can't return to another school unless they pay cash. A large percentage can't leverage the credits they've accrued because they can't afford to pay off the old school and attend a new one. Even those who "make it" aren't really successful. But that's OK? Wow. We have a systemic problem in this country where we haven't reconciled the shifts in opportunities with the realities of what we're asking people to do to participate in those opportunities. By the way, investing $99 to make, on average, $5,513 per year isn't a bad deal at all.
They are a giant pyramid scheme who prey on people. I was contacted by one of their people over 10 years ago. They didn't know me, they called because I was a local sales person (for a telecom company). I never expressed a desire to go into financial planning. The guy was a good sales person and I showed up to check things out. I never did pay anything but I did look into it. I sat through one of their meetings and trainings for their insurance classes. Anyway, the more I heard the more I realized it is a pyramid scheme and not for me. I have a child to raise and wanted dependable income.
They just seemed shady to me. They also didn't seem to put much into educating its sales reps. They would just get licensed and throw to give advice to people without really knowing much. They would use the financial planning software that is similar to what you can come up with on your own. They sell it as something you can do in your free time to make an extra buck while working another job (sort of like selling Avon, Candles, etc.). The difference is, candles or cosmetics will only set you back a little. If someone takes all of your money and screws that up, it could be your whole life savings down the drain. They prey on those who do not know better. Those people give them whatever little bit they have to these sales reps who really do not know that much more themselves. Who cares if I pay a little more for makeup and candles for a night with the ladies. I do however care if I were to give someone who isn't that knowledgeable my life savings. When I was approached by them, I was young (early to mid twenties) and didn't know better. I didn't know what credentials and experience to look for. I just had a gut feeling something wasn't right.
Before you think I'm being unreasonable and picking on anyone, I do have some experience in the matter (now). I've been working in the financial industry for almost 10 years now. So, I have been enlightened. Even now, I would still not feel comfortable playing with people's money. I would be terrified to lose their life savings so I am in an administrative role. I leave the investing to more experienced people. So, they did do something good as in they made me more interested in that industry. I was in technology sales before this. However, it did enlighten me to all of those people out there who know nothing about investing yet take money every day and pretend like they do. So many people in the industry don't even know the tax laws and rules. Granted we are not to give advice (that is for a CPA or other tax advisor), we are still supposed to know general rules or how things work.
Ugh...anyway, my advice is to check and double check references, experience, credentials and more before giving anyone your money.
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