[MoneyGuy]

One of my favourite topics. So many financial questions that I should start a thread – I’m a financial planner, ask me anything. No worries, I won’t do that.

Primerica is not a scam, which implies something illegal or improper. However, they are a shoddy financial services organization. They are a pyramid organization. I don’t mind Amway but selling financial security through poorly trained goofs is way different than selling soap.

This rant will get a little long so I hope you can stick it out.

Their schtick is buy term insurance and invest the difference. That’s correct about 96% of the time, but occasionally a different product fills the need. These goofs are brainwashed into a one-size-fits-all strategy. It’s not so.

I’m dealing with a client right now what has a delicate tax situation. I’m not a tax expert and am always careful not to pretend to be one, but I can give the client good advice and some good ideas. Those Primerica goofs have no idea about any of these things.

What they don’t know would be funny if it was not so scary. I’ve taken over accounts from Primerica “planners” where bad advice cause significant tax problems. For example, non-registered switches between investments. If you sell one non-reg investment to buy another, it’s usually a taxable event. If you know that, you’re already one up on many Primerica goofs because many of them don’t seem to grasp that simple concept. There are strategies that you can use to allow you to move from one non-reg investment to another without having a tax bill. Usually, these goofs don’t seem to know what those are.

I’ve seen other cases where bad advice has caused problems for the client. Sometimes those problems have been severe. I know of a case where a young fellow joined Primerica and started to call people he knew. (Sit down, because this one will make the little hairs on the back of your neck stand up.) His parents were newly retired and living on a fixed, modest income. Back in 2000 (you’ll remember when the market peaked, right), eager to get a nice commission, he sold his parents on the idea of leveraging (borrowing to invest).

Anyway, he showed his parents the dizzying returns of the last few years prior to 2000. When you can borrow money at 4-5% and get returns of 15-20%, it’s a no-brainer, right. Well, his parents borrowed 250K and then the market tanked. Big time! The parents got frantic when things tumbled to around 175K but held on on the advice of the son, who didn’t know much more than the parents. The investments kept falling and finally they sold out at around. The rookie planner (now out of the business) earned his 10K commission but his folks lost 100K plus interest paid. I know this case because I know the fund company rep who was called in to try salvage the situation, but there is nothing that can be done at that point.

Primerica goofs think they know everything but really know very little. In fact, they’re armed and dangerous. It’s like giving a 10-year-old a driver’s license because he knows where the gas pedal is and then letting him drive in city traffic.

For anyone who has basic needs (maybe a small RRSP), they can do little damage. But if you need any advice at all, you’re already outgrown Primerica.

They provide very biased advice. They push overpriced insurance. Call them and get a quote on $400,000 of term insurance and then visit an independent broker and compare prices. You’ll be shocked.

Their meetings are supposed to be training, but they’re rah-rah sales events. Attend one and you’ll feel like you’ve attended a religious revival meeting. They think they’ve found God but belong to a cult.

They actively discourage legitimate training. The Certified Financial Planner designation is the recognized standard, yet virtually no Primerica people are CRPs. The reason is that getting the CFP is difficult and it takes time away from what they’re supposed to be doing – recruiting and training recruits. If you know nothing you don’t really know how ignorant you are.

Unless you have very small assets and don’t need real advice, stay clear of these goofs. And don’t get work for them. Most new Primerica folks are out of the business in two years. The occasional person does very well with them but I don’t know how they can look themselves in the mirror each morning. I couldn’t, and didn’t so I left. You see, I was one of those goofs. Now I’m with a legitimate firm and I respect myself.

If anyone here is with Primerica, shame.

/rant over – thanks for reading