What Is WFG and What Does It Do?
A coworker asked me "Do you know anything about universal life insurance?" This one casual question opened a big can of worms.
He was approached by a friend of a friend who works for WFG. WFG is World Financial Group. It's a financial services marketing company owned by Dutch insurance company Aegon. WFG operates under a multi-level marketing (MLM) scheme. Instead of selling household products like Amway distributors do, WFG salespeople sell financial products.
WFG's products of choice include variable universal life insurance (VUL), variable annuities (VA), and equity index annuity (EIA). Many of these products come from Western Reserve Life (WRL), WFG's sister company also owned by Aegon.
WFG's salespeople are officially independent contractors of WFG. The MLM scheme makes WFG different from other companies like Ameriprise which also push variable universal life insurance products. In addition to selling the expensive products to a prospect, the WFG salesperson also recruits the prospect as a "downline."
Unlike other companies which usually go after the wealthy, WFG specializes in selling to the middle class. Because of the MLM structure, the middle class prospects are more inclined to become a downline than the wealthy.
It turned out that my coworker was already sold a variable universal life policy and a variable annuity several years ago. Because the funds in the sub-accounts did very poorly, and because index funds are receiving good press coverage, the "advisor" wanted him to switch to a new VUL policy with index funds in the sub-accounts. Switching, of course generates a new commission to the "advisor." The "advisor" also wanted to sell him an equity index annuity and recruit him as a downline.
My previous post $10,000 Lesson On Variable Universal Life (VUL) received some good comments. All the comments against VUL came from policy owners who were suckered into VUL. All the comments for VUL came from insurance agents who sell VUL. The insurance agents all argue that VUL policies are good for some people. I'm sure. Those some people are like needles in a haystack, when the entire haystack is sold VUL policies.
My co-worker contributes to our 401k plan only to the match. He does not contribute to an IRA. There's no way he can benefit from a VUL or a variable annuity. I told my co-worker "run, do not walk" way from this "advisor."
Becoming a WFG salesperson is a fast way to lose your friends.
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5 Comments on What Is WFG and What Does It Do?
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Sanders on August 31, 2009 |
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Stu on August 31, 2009 |
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phuntsok on October 10, 2009 |
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joe b. on November 14, 2009 |
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Can someone elaborate more on what exactly a downline is? Is it refering to the recruitment of the "downlines" friends and family like an ameriprise type advisor would advocate?
A downline is more than a referral. A WFG salesperson recruits you to also become a sales associate for WFG. If you sell to your friends and family, you earn a commission and your recruiter also earns a commission based on your sales. If you recruit your own downlines, you and your recruiter also earn a commission based on sales by your downlines and your downlines' downlines.
I never purchased a universal life policy but was recruited to be a downline by Ameriprise about 18 years ago. Once I realized the scam and that I had to pay my own way to certification I ran from the recruiting session like a bat out of hell.
this is completely ripped off business. all their approach is $100 fee, $250 for studying life insurance,buy life insurance from upline, recruit ,all geared towards upline profit by exploiting downline. they talk helping people but their secret is to enjoy from downlines money,effort
I have a loved one who has been drawn in to WFG. She earns less than $30k/year, has no assets other than her retirement savings plan and has no spouse/dependants. She has transfered her entire RSP ($90k) to them and bought high monthly payment life insurance as well. She has little financial knowledge, has never been exposed to MLM and seems completely convinced about WFG's ability to educate her, handle her money and help her help others while "running her own business".
Seriously, it is like she's joined a cult. I am desperately concerned for her but can't seem to get past the rhetoric she's been fed at their meetings.
Where can I look for a way to get through to her?
Thanks for any help
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