Is Transamerica / WFG a pyramid scheme?

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I have received many questions from people about getting into financial industry after being approached by a friend or family member about joining Transamerica / WFG. They are scared and search

internet to read more about it and find many websites claiming that Transamerica / WFG is a pyramid scheme.

So I have decided to write this article to clear up some confusion and show all of the good, the bad and the ugly about this organization.

The good:

No, it is not a pyramid scheme. The layout of this organization is Multi-Level Marketing. Basically you get commission on your sales and a little bit of commission from sales of people you brought in to organization under you.

Many Brick-and-mortar  organizations are setup similar way. In car dealerships, sales people get commission while sales managers get pay based on their sales people performance and on top of that general manager gets pay based on the entire dealership which is service and sales.

The products that are sold through Transamerica / WFG are good quality financial products from many known organizations, like Voya, Nationwide, Prudential and many more top tier organizations.

The Bad:

Transamerica / WFG organization is focusing on associates recruiting more and more associates and not on sales of products. Associates are told that in order to survive in this organization, they need to go deep and wide with their recruits and no big pressure is put on sales. Also, as far as sales training, it is minimal so many associates are not very informed on the products they are selling, which make associates tell wrong information to customers.

The Ugly:

The organization is setup in such a way that is is very hard for an associate to make it in the business.

Before one can become an associate, one must setup 10 ‘Field Training” appointments with their friends and family. The appointment will be conducted by the up-line associate (licensed associate that brought this person into organization). Any sale resulting from the appointment will be credited to up-line associate. Up-line associate might split commission with trainee, but client credit will be given to up-line. Basically one must give up 10 of their prime contacts to their up-line even before one is allowed to become associate.

Once one becomes an associate, commissions are very..very low until one starts to build their down-line organization. That is why organization pushes one to bring in more and more new associates.

The worst part is the once one builds their down-line organization big enough, one is promoted to SMD (Senior Marketing Director). But before one can be promoted to SMD, one must give up one of their legs to their up-line SMD, it is called Exchange Leg. You might ask, what is a leg; Leg is a team under you. Basically if you bring in Johnny to a team, you have an associate under you. But if Johnny brings in someone under him, that is now considered a leg. So if you have a best friend that is a master sales person and he build very successful leg under you, you will have to give that up to your up-line SMD.

So in conclusion, it is not a pyramid scheme, but success cards are stocked against you with the way the organization is setup. But if you survive giving away your 10 best prospects at the start and later giving away your best performing leg during SMD promotion, you might have a shot of success. But most people don’t get that far.

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