A pyramid scheme as define by the Securities Exchange Commission is where participants solely make money by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.
What is a ponzi scheme? The SEC has full information about it. Web address is: http://www.sec.gov/answers/ponzi.htm Primerica has over 25,000 registered representatives, the largest mutual fund sales force in North America. They market mutual funds from well known companies such as Legg Mason, Fidelity, Inveco, American Fund, Oppenheimer, and many more. Primerica has done very well in regards in providing customer service. They have won the Dalbar Service Award every year since 2004.
So what is Primerica? It is a multi level marketing company (MLM) and there are thousands of companies that are MLM in the United States. It is estimated that over 1 million people are currently involved in MLM companies. People who have problem with a MLM company are usually people with a job and they are stuck with a job mindset. But people with a business mindset will say that Primerica is the best business opportunity in America so far that is worth trying.
Anyway, I'm here to discuss on how Primerica is not a scam. Here is a list of facts about Primerica:
1) There are over 100,000 life licensed representatives in the company, the largest marketing organization in North America.
2) Primerica been in business since 1977.
3) There are currently over 4.3 million clients in Primerica. That's lots of clients for a company that you think is a scam. Not only that, clients has invested over $28 billion through Primerica in various mutual funds and money market funds.
4) Primerica has marketing agreements with various companies. They market Citicorp Trust Bank debt elimination loans, Metlife's Variable Annuities, ING 401(k), Genworth Financial's Long Term Care, Auto&Home Insurance referral program for Answer Financial Inc, mutual fund companies such as Fidelity, Legg Mason Partners, Oppenheimer, American Fund, Invesco, and so on. Primerica Financial Services owns their own life insurance company called Primerica Life and an investment company called PFS Investment Inc. It markets term life insurance for National Benefit Life in New York.
5) Primerica has over 5000 offices in USA and Canada. The home office itself (located in Duluth, GA) is over 1 million square feet and it has its own zip code.
6) Primerica spun off from Citigroup on April 1, 2010 and is listed on NYSE as symbol "PRI". Prior to this historic event, Warburg Pincus has agreed to invest $230 million in Primerica (which by the way spent $10 million researching Primerica), owning roughly 23% of the shares. Citigroup will own 50% of the shares. 12 months later, Primerica was named the best IPO of the year.
7) Every financial company in America has to hold an annual compliance meeting. Primerica holds their Annual Compliance Meeting in the month of November. Every representative in those companies that are licensed in life, mortgage, and/or securities must attend that meeting. The purpose of this meeting is to keep representatives up to date to rules and regulations set by the federal government. By having this meeting, it protects the consumer as well as the representative.
8) Primerica representatives are require to get certain licenses in order to talk about certain financial products. For example, if you wanted to solicit life insurance, you need a life license or a producer license. If you want to talk about mortgages or debt consolidation, you need a mortgage license. If you want to talk about investments, you need a securities license. These licenses are only issued by the state or the federal government (mostly state, except for the securities which is issued by the federal government), they are not issued by individual financial companies. To get these licenses, you have to pass a test. After you get your licenses, continuing education is required.
9) Besides the fact that Primerica has over 100,000 licensed representatives, they also have about 2000 employees.
10) Primerica has its own TV network that does live broadcast every Mondays and Wednesdays at 12pm. The broadcast usually has Co-CEOs or the President of Primerica speaking first. Then after they speak, successful leaders in the company does live training.
11) Over 60,000 people attends the Primerica convention, which occurs every other year on an odd year. I'm not sure if they will still hold it at the Georgia Dome in the future since the company is getting bigger and bigger. I've been to every single convention and that dome is packed from the seats to the field. Its the most amazing event where everyone gets together. "One team. One dream."
12) Primerica is member of the Better Business Bureau, which gave Primerica a business rating of A+ (as of April 1, 2010)
13) Winner of Dalbar Service Award in since 2004
14) Primerica is member of Insurance Marketplace Standard Association (IMSA). More info can be found about IMSA can be found at: http://www.imsaethics.org/Content/AboutIMSA_46.aspx
15) Member of American Council of Life Insurers, as association of 377 companies representing 91% of total life insurance assets in the US, 90% of life insurance premiums, and 95% of annuity considerations.
16) Listed on Russell 3000 index and Russell 2000 index as of July 1, 2010. The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 8% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership.
17) Named as a perfect business model in the book "ABC of Making Money"
But if you think Primerica is still a scam after all this proof, I got news for you. You are either ignorant to information or someone who really hates Primerica. No matter what you think, Primerica is here to stay for generations to come because the company always do the right thing with their clients. If you seen what I seen, you will be heart broken by how so many people out there screw up their finances. What's even worse, many people don't know they are financially hurt or they think their problems will go away. Its not that these people wanted to be in that position, they just don't know there are far better options out there.
I believe there is no company out there that is better than Primerica. I help people save money on their life insurance and providing them 2 to 5 times their current coverage. I help people get out of debt. Banks want people to stay in debt for the full term so they can collect all the interest. Primerica helps people to get out of debt faster, therefore paying less interest and saving time. I remember helping one client pay off the mortgage 14 years sooner. He had 26 years left to pay on the mortgage and now he has 12 years to pay off all his debts. I help people build wealth toward retirement and other goals by investing in various mutual funds. There are all kinds of mutual funds that is right for any investor. There are mutual funds for the conservative investor who don't like to be exposed to high risks in the market and there are mutual funds for the more aggressive investors who are willing to accept high risks for potential of higher returns. On top of all this, I provide a free financial needs analysis to all my clients to help them reach their goals. I even take it a step further by inviting them to the business opportunity.
Some additional sources for you to look at:
Primerica Financial Services
Better Business Bureau
Federal Trade Commission Comment (pdf file. Adobe Reader required)
S1 Registration to Securities Exchange Commission (Final Prospectus)
Primerica Scam: The Real Picture
American Chronicle "The Escalating Mortgage Crisis"
IPO VIEW-Primerica IPO, despite problems, could sell
Insurer Primerica poised to break away from Citi IPO
Last edit on May 25, 2011