One of our readers recently asked us a question about a multi-level marketing company called World Financial Group. It is a network marketing company which sells financial products such as life insurance and mutual funds. After doing a little research, we decided to write a review of World Financial Group (WFG).

Finding information about World Financial Group is rather difficult, which we see as an early red flag. The WFG website is full of miniature sales pitches aimed at potential new recruits but there isn't much detail. We are assuming that their goal is to be as vague as possible so that the only way to get information is to see an agent, and receive a full sales pitch.

It took a little more web surfing, but we were able to find a copy of the a brochure called WFG The New Standard, and copies of the WFG System Manual, and the WFG Leadership Manual. We also managed to find a slide show version of the WFG Business Presentation, and a video of the WFG Napkin Presentation.

The WFG system manual, teaches us that answering too many questions as the 'scenario of disaster'. They tell their associates to 'focus on selling the dream'. Giving detailed information or answering difficult questions will lead to failure. This explains why the website was so vague..... they didn't want it to be a disaster zone!

This is actually quite common in all MLMs. They tend to hate it if their prospective recruits ask for too much information. They want people who will blindly jump at the chance for easy money, they’re not interested in those of us who prefer to know more about it before we join. Maybe it’s because they know that people who make informed decisions wouldn’t join an MLM…

What Is The World Financial Group Opportunity?

World Financial Group is a network marketing company, which focuses on financial dreams and offers to ' teach basic financial concepts to everyday people'. They tell us associates make commission from selling financial products. These are summarised into three areas:
1. Savings
2. Protection
3. Retirement

Like all financial planners, WFG associates need to obtain the proper licensing before they can legally sell these products to customers. This will involve some study and exams. Before you join WFG ask yourself ' Do I want to become a financial planner?'. If you are expecting long term success with World Financial Group, then a career change to financial planning is part of the process.

If you'd rather not be licensed or find the exams a hurdle, then we believe WFG will still allow you to join as an unlicensed associate, and sell on a referral basis. This means that you will prospect for new customers, but someone in your team with a license will have to handle the final sale of any financial products (we assume they would also take a share of the sales commission). It is important to understand that not taking the exams will seriously limit your earnings ability with WFG

If you are genuinely interested in becoming a financial planner, then we suggest that you look at other options along with WFG. If possible speak to financial planners from other companies to see if they describe the industry the same way WFG does.

How Does the WFG Business Work

Rather than use a standard business model, WFG has chosen to promote themselves using a Multi-level marketing structure. We believe it is very difficult to make money with MLM. Based on our research so far, World Financial Group has not changed our opinion about MLM. Like most network marketing companies, WFG places a huge focus on recruiting new members. Very little attention is given to selling their services or attracting and retaining retail customers.

If you join WFG, then you will be encouraged to get yourself off to a 'fast start'. To do this you will need to introduce 3 new recruits, and sit in on 3 training sales within the first 30 days of becoming a WFG associate. We notice that there is no focus on finding customers, it’s all about recruiting new members to the MLM. To us, this is a red flag!

If you achieve your fast start challenge, then you will be a part of the '3 - 3 - 30 club'. The fast start process is very important in World Financial Group. In the WFG systems manual, fast starting new recruits is one of the 7 keys to success and is referred to as 'the big push'. It's part of the MLM mentality of 'the more the merrier'. The bigger your team is, the more residuals you'll earn, so keep recruiting

The sales presentation will make you believe that all you need to do to be successful, is find three new recruits, then help them to 'duplicate' the process and find their own recruits. This duplication will lead to your team going into auto pilot. Recruiting and fast starting is essential to your World Financial Group success. The systems manual says 'FOCUS ON 3-3-30, YOUR DREAMS CAN COME TRUE'. Once again there is no focus on actual financial planning

If you find three recruits, and they each find three recruits, then you'll have 12 associates in your WFG team, and will earn residual income from any sales from your entire team. But it doesn't end there you can go more than two layers deep. By the time your team is 4 layers deep, you will have 120 associates in your network, all earning residual income for you...Your team might look like the one in the diagram below:

WFG Fast Start — If you find 3 friends, and they find 3 friends, who find 3 friends who also have 3 friends each, you'll have 120 people in your network with only 4 layers.

Why Does WFG Really Focus So Much on Recruiting?

Bringing in new recruits is how they make money
Part of the process of becoming a new recruit, is completing an online financial needs analysis. Once this is complete, you are offered a complimentary financial plan - this means they won't charge you an upfront fee for preparing the recommendations. Your sponsor, or a licensed agent in their team, will show you all the insurance and investment products you personally need to secure your financial future. They will earn commission on any products new recruits sign up for.

The WFG systems manual states 'WFG associates are not required to purchase any products, goods, services, inventory, marketing plan or property of any kind, or pay any consideration in exchange for becoming or remaining an independent contractor of WFG'.

This is where WFG stands apart from other MLM systems in that they do not force their associates to buy product to 'remain active'. Buying product might not be compulsory. The WFG presentation however, explains that to be successful, new recruits need to be 'coachable + willing to follow a proven platfrom'. In other words, they need to do what they're told by their upline

New associates are told that in order to succeed, they need to duplicate the system, and follow exactly what their up line did. This includes buying their own WFG products. Unlike other financial products in the market, these come with the added bonus of unlocking all your financial dreams...

The manual says 'Aim at Recruits; Hit Sales'. Buying products is not compulsory for new associates. Selling products to new recruits is part of the WFG process.

If they don't keep recruiting, they risk their business dying
The WFG systems manual also tells associates that they need to focus on recruiting and ensure their recruits get off to a 'fast start’. This they say will help grow their business. What they don’t mention is that WFG Agents need to keep recruiting to replace people who drop out.

MLMs have very high rates of attrition. It is common for over 50% of members to quit every year. This means that your downline of 120, is likely to drop to less than 60 after 12 months, unless you can recruit fast enough to replace those who quit.

Once you reach leadership levels and become what they call a sales marketing director or 'SMD', the business starts to look a little different. If we look at the WFG leadership Manual, we see the real motivation for the fast track recruiting.

The leadership manual says associates 'must consistently and continuously bring new people into the business'. They also tell their leaders that 'a leg isn't a leg until it's four deep', and 'an associate isn't an associate until they've recruited someone'. This is quite a contrast to the 'get three friends and let the business grow' story the new recruits are told.

The leaders refer to this aggressive recruitment as 'tap-rooting'. Essentially they believe that once you've recruited others, you are less likely to quit the business. Furthermore they want you to recruit within 3 days of joining the company, because after that there is a risk that you'll lose enthusiasm, or perhaps learn that the system isn't what you thought it would be.

It seems to us that, WFG expects a large number of associates to quit every year. In their leadership manual they refer to this as the 'Law of Averages' claiming that 'there are a lot more starters than finishers'. They go on to tell SMDs to expect high drop out ratios and that very few people will become SMDs.

This is most likely whey they teach their leaders that a leg is not leg until it is 4 deep. What they’re really telling us is that until someone has 3 layers of recruits beneath them, they are at risk of quitting. This would suggest that even with 2 layers of downline it’s very hard to make money in WFG

The dictionary defines the Law of Averages as - a statistical principle formulated by Jakob Bernoulli to show a more or less predictable ratio between the number of random trials of an event and its occurrences.

So this 'Law of Averages' is based entirely on people who have previously joined WFG. So by their own observation, most people who start in WFG don’t finish… World Financial Group is admitting that their system has a track record of high drop out rates...

WFG is a system where people will quit at a high rate. So to build your team you need to work extra hard to find people who won't quit. Finding good recruits is a highly unscientific process, WFG will prospect anyone and everyone. It doesn’t matter what your criteria is, they want you in their downline.

Their hope is that if they recruit heavily enough, they might get a few people who stay in the system, and even start recruiting for them too. The image below is a table from the leadership manual, which illustrates their expectations for recruitment and retention:

They tell us that to get the business going we only need 3 SMDs beneath us. But if only 25% of prospects (who attend a presentation and follow up meeting) become associates, then we have to have follow up meetings with 12 prospects to get three associates.. But then only 25% of associates will become licensed or registered so we'd really need 12 associates to get 3 licensed / registered associates in our team. This means we'd need to have follow up meetings with 48 prospects

It gets worse after that because only 1 in 50 associates is expected to become a SMD. So to get one SMD in our team, we need 50 licensed associates which means 200 associates and 800 prospects. That's right the leaders are told to expect to have follow up meetings with 800 people to find one SMD. So finding 3 SMDs means having follow up meetings with 2,400 people. All of a sudden finding 3 people for your team just got a lot harder!

Even if you know 2,400 people, then this still won't be enough because they are basing their expectations on prospects who have made it all the way through a presentation and a follow up meeting. They are not counting all the people you prospect which are simply not interested or the ones who agree to see the presentation but decide not to proceed to a follow up meeting.

Remember these figures were formulated from previous results of WFG associates who know how to sell the dream and avoid the scenario of disaster that comes with answering too many questions. Even if you duplicate the system and parrot the scripts perfectly, you can still expect 3 out of 4 people who make it to a follow-up meeting, to decline to join WFG

World Financial Group claims that you'll need to focus on high numbers to 'overcome the negatives inherent in the law of averages'. Could it be at all possible that the negatives are inherent in their own system? After all, this is how they created their version of the ‘law of averages’.

On the WFG website, they proudly state that they now have 50,000 licensed associates. This sounds like a good number but if we look at the WFG opportunity page, we see that in 2014, WFG signed up 120,000 new associates. The total number of licensed associates in the entire company is less than half the number of people who joined in a single year. This supports our expectation that most of the people who join WFG don't become licensed. Furthermore, a large portion quit withing a short time of joining. Does this sound like a system which is making financial dreams come true?

What's Wrong with using the Multi-Level Marketing model?

Multi-Level Marketing is a motivational system designed to sell dreams. If you join, (and buy their products), then a world of financial freedom will be opened to you. The problem is that there is so much focus on the dreams, that nobody bothered to promote the products and services.

Like all MLM opportunities, you will only make money in WFG if you sell products. Running mass recruitment seminars and dangling carrots of wealth, is not going to earn them any money. Therefore they make buying their products part of the process. You need to follow their example and buy the products yourself.

MLM is designed to make you a customer. They are not interested in making you a business owner or creating your pathway to financial freedom. They want to sell their products and earn profits.

The biggest problem with MLM is a lack of organic demand. Customers aren't coming because they want the product. They are buying the product because they want to be part of the MLM opportunity.

When agents buy their own WFG products, part of what they spend is paid as a commission to the people who sponsored them. Your upline might tell you that they are trying to educate and train you but in reality they want you to join so they can get a percentage of the money you spend in the system.

WFG proudly state that they are 'committed to identifying innovative ways to push more compensation to the field'. These 'creative ways' involve charging higher fees on the products so that when you pay for your insurance or savings plan, your sponsor and upline can get a bigger portion of your money. This makes the products more expensive to you, and higher fees will reduce the financial performance of any investment.

We are ethically opposed to MLM, which is part of why we are indignantly negative toward it. If you watch the WFG Napkin presentation, you'll see that it starts with a reference to the Robert Kiyosaki book Rich Dad Poor Dad. This book is a favourite within the network marketing world

The presenter goes on to show the 4 cash flow quadrants. He alleges that by joining WFG you become a 'business owner'. This is not true, at best it's an honest misinterpretation, at worst an intentional misrepresentation.

As a WFG associate, your agreement refers to you as a contractor or representative of the company. This is very similar to having a real job known as a sales representative. Even if you did own your business, you would be in the 'self employed' quadrant, not the business owner because the income is not passive.

The standard MLM formula continues with an explanation of why 'you don't have to be a sales person', this system will 'teach you how to be financially free' and you 'should tell everyone you know to also join'. There are no sales quotas, but if you don't sell, you don't earn.

One of the interesting points in the presentation is where he claimed that WFG 'created jobs in the community'.... wait I thought it was creating business owners who didn't need jobs.. I'm not sure business owner means what he thinks it means.

Is WFG an Illegal Pyramid Scam

Even though MLMs such as WFG closely resemble pyramid schemes, they are not illegal. To the best of our understanding, the reason dates back to a case of Amway vs FTC 1979. It was settled that Amway was not a pyramid scheme because of the wording in their agreements. This does not mean that MLMs don’t operate like pyramid schemes, it just means that they have rules against it. Whether or not they enforce these rules is questionable.

Now other MLMs just follow the same formula to remain legal. They make rules telling consultants to make retail sales etc. Unfortunately none of these rules are monitored or enforced. That has lead many to believe that WFG is a scam

What Will WFG Teach You About Money

One of the benefits of joining WFG, is that they say they will teach you basic financial concepts. We managed to find a copy of the WFG money makeover, which explains their ‘6 steps to financial independence’. We’ll go through each of the steps below:

Step 1 - Debt Management
Personal debts such as credit cards can lead to financial hardship. As the debt mounts up, so does the monthly interest, and it’s very easy to fall into a debt trap. The post we looked at suggested a couple of ideas for managing this. One was to make extra repayments, another was to ‘snowball’ your debts. While these are both valid ideas, it’s nothing new. In fact both were included in a post we wrote about tips for repaying credit cards.

Step 2 - Emergency Fund
This is exactly what the name suggests. WFG will ‘teach’ you that it’s a good idea to have some funds put aside for unexpected expenses. The best way to build an emergency fund, is slowly. Put aside small amounts on a regular basis, and it will hopefully build up over time.

Step 3 - Cash Flow
Here they suggest a way to improve your cash flows, is to increase your earnings. They advise to start a business or get a ‘gig’ job on the side. While earning more cash is great, if it were that simple, everyone would do it. Starting a side business or taking on a gig, will take time and money, and there’s no guarantee that they will be successful. We think a better way to improve cash flows is to try and reduce your spending. Look for opportunities to save money.

Step 4 - Proper Protection
By this they mean life insurance. This includes income protection and other types of related cover. Put simply they are telling us that it’s important to have insurances that will help you financially in the event that you unable to earn an income due to illness or injury.

Step 5 - Build Wealth
This is similar to savings in that you need to put aside as much as you can as often as possible. However unlike savings, these funds are invested for the long term. You might choose a simple index fund, or try and invest directly in shares of your choice or even property. The important thing is to choose an amount you can afford to set aside and then keep it invested for as long as possible. No matter what style of investing you prefer, you will do better if you keep at it for longer.

Step 6 - Estate Preservation
This is just another way of saying ‘get a will’. If you have assets that you want passed on to your family after your time is up, then you should get yourself a will. It makes sense for you to do this so that you can decide who gets what. It might solve some problems which we often see when relatives end up arguing over how an estate should be handled.

While there is nothing wrong with this information, there’s also nothing new about it. You could easily learn all this and more for free on the internet. WFG is not offering any unique education.

What Are Others Saying About WFG

While this review is now 5 years old, we do our best to keep it current. So here is an update from online 2020 WFG research. We’re going to play the trust game here and assume that the information in these other online sources is credible.

Duford Insurance
Upfront disclaimer, you can become an insurance agent through these guys, so maybe look at them before you join WFG, they can’t be worse!…

Duford was kind enough to tell us that in 2018, WFG paid $792,000,00 in commission to 42,000 agents. While the numbers look big, when we do the math, it’s disappointing. Based on these numbers we find that on average WFG agents earn less than $19,000 in annual commission.

When we consider that the average annual income for financial planners / insurance agents is close to $60,000 per year, it shows that it’s expected that you will earn 3 times more if you join someone other than WFG. These dismal results represent a 7% increase from the previous year.. so things have been worse at WFG.

Duford then tells us a bit about the products sold by WFG. Like us, they found that WFG seems to push Indexed Universal Life (IUL) as there main product. Now speaking as someone with a degree in Finance and over 15 years experience in the industry, these products are overly complicated. They appear to be a life insurance policy which also have an investment component, but the investment is capital protected…

Here’s some general advice (because I don’t know you enough for it to be personal advice). These things should be kept separate. Nobody is saying that you shouldn’t get insurance… but I would feel better getting a stand alone insurance policy.

Yes IUL’s come with an investment component, but you pay for it… so I’d rather get the same cover with an insurance only policy (which would be much cheaper), then invest whatever extra I choose in an investment fund.. My choice would be low fee index funds… but your choice is your own.

Then there’s the capital protected aspect… in the current Covid times, it may seem appealing to have downside risk, but this is actually quite expensive.. Even though markets are down substantially, I’m still up because I’ve just been throwing in spare cash every month for several years… Capital protection only works if you need to sell… If I had paid for capital protection every year, I’d be much worse off now, than I am now without it.

The Duford review goes on a bit more, and we scanned through… the main point we got is that they agree that the key to making money with WFG is recruitment. This is a problem because the focus should be on learning about financial products and helping clients, not building a pyramid downline.

Finance Geek
These guys don’t waste time… in their introduction they suggest WFG is a scam

Something new we learned from the Finance Geek, is that WFG focuses their recruitment on relatively young students… Those just out of high school or college.. In other words impressionable, and trusting. Our research found they target ‘First Generation Americans’… well their info is based on WFG Yelp reviews, so we’ll accept it.

WFG might have adjusted their recruitment behavior, or they could target both markets… either way it doesn’t change the opinion that WFG is not a good business opportunity.

The Geek also points out that WFG has had a history of legal issues.. This is no surprise as most MLMs tend to spend their fair share of time in the court room

Wealth Awesome
These guys open with their list of pros and cons… Based on their findings, joining WFG has many cons and few pros. Like The Finance Guy, the person who wrote this review actually works in the industry.

As expected, they point out that WFG pays less than half the commission available from similar sales opportunities.

Another important point they raise is that WFG expects you to prospect to all you friends and family. In other words you do your own promotions, WFG provides no marketing.

This would be fair game if they paid an above average commission, but they don’t. Given that WFG pays less commission so they should provide leads. After all, that’s the trade off. If you work in a branch of a company, then they will give you a base plus a small commission for any sales you make. The upside is that they will do marketing which will provide you with customers.

If you work for yourself, you’ll earn a lot more per customer, but you won’t have a ‘branch’, and you won’t benefit from the marketing budget. So there are benefits to both models… If you want company benefits like a regular salary and insurance, then join a big company.

If you are a great sales person, you might do better on your own so get your own clients, make lots more per sale, and pay your own benefits.

If you join WFG you earn less and you get no benefits.

If you keep reading the Wealth Awesome review, you’ll see that we agree with their opinion that you should not join WFG

Should I Join World Financial Group?

Unless you already want to become a financial planner, there is absolutely no reason to consider joining World Financial Group. If you do want to get into financial planning then this is a way to do so, but should not be the only opportunity you look at.

WFG focuses on people who are 'new to the industry' and tell you that there is 'no experience in financial services necessary'. They are proud that many recruits are 'first generation Americans'. They use these as selling points, but we see them as red flags.

They don't want people who have financial services experience because they are more likely to know how the industry works. This makes them less likely to believe that this is a miracle key to financial freedom. They will also have a better understanding of products so maybe they won't like the ones which WFG asks them to buy as part of the sign up process.

First generation Americans, or immigrants, are less likely to have previously owned investments or insurance in America. This means they too are more likely to accept the expensive high commission products without questioning whether they are the right choice or not.

World Financial Group will tell you that because of their 'team' MLM structure there is no competition. This is completely untrue. There are 1,000s of other companies selling financial planning products. Every one of them is your competition. To make things worse, every WFG associate who is not directly below you in the system is also your competition. Every time they find a new prospect, that's one more person who you will never be in your team.

If you want to be a financial planner, then get the education and start applying for a normal job. If there are no jobs available, then maybe give WFG a shot because the one thing they do have going is that they will give you a chance. Make sure that you have a system for finding your own customers and selling financial products. At the end of the day sales is the only way you will make money in WFG (or with most commission based financial planning roles)

It is also important to remember that this is a sales job. We found a review by an existing WFG member, where she admits that after almost 4 years in WFG she’s not suited for it. She explains that to be successful in WFG, you need to be a ‘hustler’.

Being a hustler means seeing everyone you meet as a potential recruit. You need to find a way to turn every relationship you have, into a potential lead for your downline. Not everyone is comfortable trying to sell and recruit their friends and family members.

Even if you are willing to sell to your warm market, you should be careful because trying to recruit your friends can damage your friendship.

We have also written a review of Primerica

What are your thoughts? Have you joined WFG or thinking of joining? We'd love you hear from you in the comments section below. You can join disqus or comment as a guest

For more posts like this, look at our list of mlm reviews.