Primerica

Primerica Logo

Primerica Financial Services (PFS) is a wholly owned subsidiary of Citigroup, which engages in direct marketing of financial services, notably term life insurance, long term care insurance, mortgage refinancing, mutual fund investing, and prepaid legal services.

History

Founded February 10, 1977, the company was originally called A.L. Williams after its founder, Art Williams. Their business model closely resembles the real estate structure but models itself after a modified form of a general agency. A.L. Williams marketed term insurance for Massachusetts Indemnity Life Insurance company (MILICO).

In the mid-1980s the owner of American Canning company, Jerry Tsai, unsuccessfully attempted to convince Art Williams to sell his company. Unable to purchase A.L. Williams, Tsai purchased MILCO, whose term insurance A.L. Williams marketed. Later, the company was renamed Primerica. Sanford I. Weil of Citigroup, later purchased both Primerica and A.L. Williams.

The division was named "Primerica Financial Services" and the Smith Barney investment company became part of the portfolio. Weill's company Commercial Credit then purchased Primerica in 1988, for $1.5 billion. In 1992, Weill paid $722 million to buy a 27 percent share of Travelers Insurance, and Primerica adopted the Travelers familiar "red umbrella" logo as part of their own. By the end of 1993, the merged company was known as Travelers Group Inc., and was wholly owned by Weill. In September 1997, Travelers acquired Salomon Inc. (parent company of Salomon Brothers Inc.), and merged it with its own investment arm to create Salomon Smith Barney (later reverted to Smith Barney).

In April 1998 Travelers Group announced the merger of Travelers and Citicorp.

Products and Services Offered

Save Money And Reduce Taxes ($MART) is the refinancing program offered exclusively to Primerica Financial Services by Citicorp Trust Bank, fsb. Primerica agents resell this program to clients. Primerica agents are trained to compare total interest expense of the $MART loan versus competing options. Primerica representatives are trained to focus on the total cost of the loan (total interest expressed as a dollar amount) and the client's "debt freedom date" as opposed to the size of the payment. The loan program is aggressively marketed as a debt elimination program.

Criticisms of Primerica

Primerica has been criticised for engaging in "false, misleading and deceptive sales inducement presentations communicated to the public for the purpose of enticing and luring the public to engage into a business relationship with the company." ^{[citation needed]} Some Primerica recruiting agents contact potential recruits through online resume listings and other resources, and some identify themselves as representatives of Citigroup. Some potential recruits have reported being offered a management or salaried position when in fact essentially all applicants enter the company at a bottom-level, commission only sales position. [1] New hires are a required to pay a $199 fee for state licensing, regardless of state. Some Primerica offices are reported to "hire anyone" who passes their background check (and pays the $199 fee), regardless of experience, education, or competency. The average Primerica sales rep is reported earn $15,000 a year. [2] Primerica resembles Multi-Level Marketing in structure. There is a tiered commission structure or broker-agent relationship and commissions are paid only when products are sold. Proceeds from a given agent's sales flow upwards to their recruiter, and to their recruiter, and so on. Recruitment of new agents is not compulsory but strongly promoted as a means to increase earnings, and this has led some to speculate that the organization is more focused on recruitment of agents than the sale of financial products. [3] Primerica has been referred to by some as "the Amway of the insurance industry". [4] Some have also charged Primerica with being a cult [5]. There is no evidence that any aspect of Primerica's operation is illegal.

Approaching & Addressing criticism

Agents recieve no commission for recruiting. Business done in traditional Multi-Level Marketing organizations (like Amway) is internal; recruits primerily do ongoing business with each other so money is made within the management structure. Primerica does business externally bringing value outside the management structure to clients via the Financial Needs Analysis. Few clients are recruits. ^{[citation needed]} Agents cannot write business until licensed in the respective field (mortgage license, series 6 etc.) New hires are required to contribute $199 to their first state license (Group 1 - Life and Health) in addition to the 2 day life insurance cram course Primerica provides. Licenses are from the State and can transition to other jobs. In addition, the company offers a scholarship program. In addition, the company offers a scholarship program. Primerica Agents work out of their Regional VP's office until recruiting and business promotion guidelines are met at which point they are in charge of their own office (until then business is overridden by VP and recruiting agents). Primerica agents, being over 100,000 independent business owners with access to hundreds of job sites, are naturally difficult to contain. Compliance strictly prohibits posting on job sites or enticing recruits with the promise of a salary. Very few agents are full time.^{[citation needed]}

External links

Official Sites

Critical Sites