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.