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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