The World Financial Group is a U.S based Multi-level Marketing company that sells financial services to its customers like Life insurances, Relief funds, and other investment funds. They operate through their network of distributors in the United States, Canada, and Puerto Rico.
The company was founded in 1991 by Hubert Humphrey. Its associates earn through the commissions paid by the group when they sell their financial products to new clients and bring them into the more extensive network. This method of earning through bringing in new clients to the network is called Network Marketing (or) Multi-Level Marketing
I should say that writing this article has been a challenge for me since I could not find any other reliable sources other than Wikipedia to learn more about the World Financial Group and its operations. Other than Wikipedia, all the sources that I looked into consisted of real people’s business experiences with World Financial Group. Some people say it is a scam, and people who say it is a reliable business opportunity.
There is a lack of transparency in knowing how the business works. But, going on a little further, I came across this business review website that has done a business review of the World Financial Group.
Before I even start to write anything about the World Financial Group, I thought I must introduce you to Multi-Level Marketing first.
Table of Contents
What is Multi-Level Marketing?
Multi-Level Marketing is a business strategy where the business participants get paid a percentage of commission for the sale of each product and the recruitment of new clients. This chain repeats, and the participants earn through each sale and purchase of the product.
Multi-Level Marketing is usually profitable for the producers/manufacturers as they don’t have to spend on advertising, hiring employees, and choosing sales locations. All these costs are placed on the head of the business participants, and the participant himself is held responsible if he does not succeed in selling the product.
Producers usually sell a bulk of their goods to their first buyer and motivate them to market those goods to sell them and earn money on their own rather than consume the products they purchase. These producers motivate their participants with promising financial independence, a massive accumulation of wealth in a short time, and other illegitimate promises.
The top dog at these companies usually enjoys a cult-like status by those below him, is often perceived as an inspiration for hard work, persistence, and intelligence. They conduct glitzy extravaganzas.
So, in most cases, many people involved in this business earn less than what they spent, and it is only those at the top of the network who end up making more from the sales of those below at their expense.
Once, they pathetically fail to sell their products at a profitable rate than they had bought. They resort to turning to their own families and friends in many cases to sell these overpriced products. Also, they are most likely to be motivated to re-sell those products at a profit rather than consuming them first.
Is it a Scam?
It’s a fine line that distinguishes individual companies as to whether they are legitimate or fraudulent. Participants need to be cautious of the marketing strategy each company and its representatives propose.
Network Marketing businesses are usually easily misinterpreted by people as simple “get rich quick schemes,” while they are actually complicated and require strategy and planning. There are also these “pyramid scheme” companies that are illegal but resemble Multi-Level Marketing companies.
So, in many cases, it is hard to distinguish and categorize a company that rewards its clients with the sale of each product or recruitment of a new client into the network as a legitimate Network Marketing company (or) a fraudulent Pyramid Scheme.
World Financial Group considers itself as one such company that rewards its clients with the sale of each product like life insurances, retirement policies, relief funds, and other similar products. It also claims that it helps individuals and middle-income families to start their financial services businesses. So, there is always a dilemma whether they are a legit MLM company or a fraudulent pyramid scheme.
The World Financial Group is a somewhat controversial company; it does not have a solid reputation in the financial industry. Some people support them as much as people that blame them. And, the company was sold to the Transamerica Corporation in June 2001, a holding and a subsidiary company under Aegon N.V.
The Beginning!
Founded as Alexander.Inc first, by Hubert Humphrey in 1991, became known as World Marketing Alliance(WMA) later. Hubert Humphrey worked for another Network Marketing company called Primerica that sold the same insurance and relief funds till 1991.
Humphrey began selling his products then as a solution for wealth creation and tax protection. The company spread into Taiwan, Mexico, Phillippines, and Guam eventually. The company’s headquarters is in Georgia, the U.S, built on a 100,000 square foot building with 500+ employees.
Herbert Humphrey
Herbert Humphrey was the founder of the World Marketing Alliance; also, he established other financial services corporations in the U.S. He initially worked for the A.L Williams Corporation and was one of its original members before it was acquired by Primerica and was called Primerica Financial Services.
He is now the head of another company known as the Hegemon Groups International. The current company was formed with the remaining capital left after selling his World Marketing Alliance to Transamerica Corporation.
He currently produces and sells his business motivational materials online.
What do They do?
The World Financial Group sells savings, retirement, and relief plans to its customer primarily. They are called financial planning services. They do not stop selling such services but also claim they teach financial planning techniques practically to their clients as they buy their products.
Usually, a license is expected from someone who is into this business. The license proves that the person is well educated about financial planning, and they sell the right service/product as per the client’s needs.
The business model of World Financial Group does not make it compulsory for all its associates to hold a license and supposedly makes the subject of financial planning a cheap and easy learning process. But, it recommends using a licensed associate at the end alone to close the sales formally.
Mode of Operations
Like in any other Multi-Level Marketing company, you become a part of their network as soon as you buy their product; from there on, you can go on building your network and closing your sales. You need to recruit three members in the first three days.
The recruitment of the first three members in your three days is the most crucial point to success, says the WFG Systems Manual. This is called the fast start challenge. If you complete your first 3 recruitments in the first 3 days, you will be part of the 3-3-30 club.
And, this chain goes on! The size of your network increases gradually.
Target Consumers
The WFG Systems Manualmentions eight potential categories of customers as The Eight Qualifiers.They are:
- 25+ years old
- Married
- Dependent children
- Homeowner
- Solid Business/Career background
- $40,000+ household incomes
- Dissatisfied with their life
- Entrepreneurial
The company knows its target consumers and has convincing templates of sales pitches for each of its target consumers. Notably, in a country like Canada, where thousands of people immigrate to realize their dreams, such people are easy targets for the associates to convince them to buy their products.
There is much emphasis on the recruitment of new members to its network. It emphasizes its fast start strategy because its participants will lose enthusiasm after the first three days.
The business is kept alive by continually recruiting new associates or, as it says, Duplication.
World Financial Group’s Proposal to Financial Independence
The WFG Money Makeover mentions 6 steps to financial independence :
1. Debt Management – We all have debts; they might be from bank loans or credit card debts. The problem with repaying debt is the monthly interest that we have to play along with it; as time goes on, the interest increases, making it hard to pay those debts we have incurred. This is how people fall into debt traps. So, to pay extra payments on your debt whenever possible is one way, and the other is to snowball debts, where you spend the smallest loan amount first and pay your debts based on the size of each amount.
- Emergency Funds – Just as the name says, it is not a bad idea to create your emergency fund, from where you can draw your money in times of unexpected emergencies. For this, you should put aside small and specific amounts of money consistently until it accumulates enough to back you up when you fall.
- Cash Flows – One of the ways to create substantial financial independence for yourselves is to create as many reliable sources of income other than just your traditional savings method. Investing money in the share market, properties, mutual funds, or even starting a side business is an excellent way to generate flowing income.
- Proper Protection –Protecting your wealth and yourself is of utmost importance. Health is Wealth. So, taking appropriate insurance plans to cover yourself during illness or accidents protects not only yourself but also your wealth.
- Build Wealth –Similar to creating cash flows, building wealth here means investing your income in long-term ventures so that they last even after you. The difference between wealth and income is, income keeps flowing in but is only temporary, and wealth does not flow but is permanent and long-lasting.
- Estate preservation –Now that you made your wealth, to safely pass it on into the hands of your next generation, you need to make sure that it is equally distributed to your next. So, a properly documented willis necessary that your wealth is not lost in the fight for the inheritance of your wealth between your children.
Does it Work?
When it comes to MLM companies, they are not what they say as easy earning opportunities, so is World Financial Group. The marketing and success maths that they propose is complicated to be understood by everyone.
They recognize a high dropout rate in this business since there are only more starters than finishers. Dropout rates are as high as 50%, so there is always pressure to recruit new members to keep your network afloat.
Since there is a high dropout rate in this business, usually, it isn’t very pleasant and a competitive business field. So, many times representatives or associates sell the most inappropriate services to their clients and leaving them broke. The representatives usually hide the aggressive nature inherent in this business, lying that it has no competition whatsoever. They promise that all we need to do is recruit to keep earning money.
Is World Financial Group Legal?
The answer to this question is Yes; they are a legit company. But the company has a record of lawsuits and regulatory issues. As said earlier, it is a fine line that separates a fraudulent pyramid scheme and a legal network marketing.
The company has run in a lot of lawsuits since it was started. They were paying hefty fines to the government’s regulatory bodies for not complying with the regulatory policies. In 2001, Transamerica bought the World Marketing Alliance; it managed to eliminate all the existing lawsuits against the company.
The Problem with all Multi-Level Marketing Businesses
The biggest problem with all Multi-Level Marketing strategies is that the participants in the business are initially not given awareness of the inherent competition and aggressive nature of the business itself. Innocent people are usually convinced that this is an easy way to the top, that there is not enough competition in the business and whatnot.
The MLM is designed and manipulated so that it has become a motivational system to sell dreams. All you need to do is to buy their product, become a part of a more extensive network, and grow along with them, is what we are said.
The products sold under this strategy are usually expensive dietary supplements, luxury goods, financial securities, and other goods that are typically not in demand among the people to whom it is sold. They are motivated to sell the products rather than consuming them, and new people come into this to be part of some enormous opportunity to buy the product. So, people quickly go broke in this business, losing all their money to a worthless product.
The problem is not with the inherent nature of the business but with the people involved in this business, disguising it as a larger-than-life opportunity.
As someone deeply immersed in the world of financial services and multi-level marketing (MLM), I find the discussion on the World Financial Group (WFG) both intriguing and complex. My extensive knowledge stems from years of research, firsthand experience, and a deep understanding of the nuances within the MLM industry. Let me delve into the key concepts presented in the article:
Multi-Level Marketing (MLM):
Definition: MLM is a business strategy where participants earn commissions not only for selling products but also for recruiting new clients or members into the network. This creates a hierarchical structure, often resembling a pyramid.
Profit Structure: Participants earn through each sale and recruitment, creating a chain where those at the top benefit more than those below. Producers avoid traditional costs like advertising, passing them onto participants.
Product Sales: MLM often involves selling products, which can range from financial services, health products, to luxury goods. The recruitment of new members is integral to the business model.
World Financial Group (WFG):
Foundation and Evolution: Founded in 1991 by Hubert Humphrey, WFG initially operated as World Marketing Alliance (WMA). It was later sold to Transamerica Corporation in 2001. Hubert Humphrey's background in Primerica influenced WFG's focus on financial services.
Services Offered: WFG primarily sells financial planning services, including life insurance, retirement plans, and relief funds. The company claims to teach practical financial planning techniques to its clients.
Mode of Operations: Similar to other MLMs, WFG encourages participants to build their networks through product sales and recruitment. The fast start challenge, where participants need to recruit three members in the first three days, is highlighted.
Legitimacy and Controversies:
Legal Standing: While WFG is recognized as a legitimate company, it has faced lawsuits and regulatory issues over the years. The fine line between a legal MLM and a fraudulent pyramid scheme has led to legal battles.
Challenges: The article acknowledges a lack of transparency in WFG's operations, citing conflicting opinions about its legitimacy. The company's controversial reputation in the financial industry adds to the complexity.
MLM Challenges and Concerns:
Dropout Rates: MLMs often experience high dropout rates, leading to a competitive and challenging business environment. The pressure to recruit new members to sustain the network is emphasized.
Misleading Representations: The inherent competition and aggressive nature of MLMs are sometimes concealed from participants. The marketing strategy often portrays MLM as an easy path to financial success, potentially misleading innocent individuals.
Product Issues: MLM products, including those offered by WFG, are sometimes criticized for being overpriced or not in high demand. Representatives may prioritize recruitment over genuine product value.
In conclusion, while WFG positions itself as a legitimate MLM company offering financial services, the controversies and challenges associated with MLMs, in general, highlight the need for careful consideration and due diligence before joining such ventures. The complexity lies not only in the business model but also in the perception and practices of those involved in the industry.
