World Financial Group Research Papers

It's a multi-level marketing business and the downline, new recruits, and trainees do the grunt work by bringing in the fresh new recruits from their warm markets. The upline gets to profit if they close during KTPs (kitchen table presentations) in the name of "training."¬† All you do is observe and take copious notes during the KTPs. There's a business ettiquet called "finder fees" when a person gives referrals to a business respectful businesses will pay "finders fees" for the referrals. At WFG as a new recuit without a liscence you get no "finders fees" just training. So not only are new recruits and trainees paying for everything, have to become clients themselves (not mandatory according to WFG internal affairs personnel), going broke for meal exchanges (buying gift cards to the upline), volunteering their time during presentations, paying for team shirts, paying for business tickets and conferences, giving away their warm market referrals freely, by the time they are ready to be agents on their own they have a cold market (strangers) left and have to prospect in that market. Even when a new recruit is ready to sell and met all requirements their upline will have the final say if she/he is ready. If you are not coachable and haven't done the above they will not let you go into the field. They will also make money from your new recruits. Once it is all said and done and you are in the field, your upline will continue to get paid from all your sells and your team's sells, this is called "overrides" and they get 10-15% of commissions. If you sell life insurance and a client  more... changes their mind and no longer want the life insurance if its less than 13 months YOU will be charged back the commission you get. This is called a "charge back". Agents don't like it and will use the "mastery of words" to convince clients to wait a little longer and give the life insurance a change because you never know if you'll need it. After the 13 months agents don't care if you keep it or not.  less

Cons

new agents don't completely understand the system, no sells no commission, upline has full control, no co-owner of the bussiness

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.  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 as part of the recruitment process is an activity you need to duplicate. 

If they don't keep recruiting, they risk their business dying
In the WFG systems manual, they will tell associates that they need to focus on recruiting and 'fast starting' their recruits, because it helps grow the network. There is more to it than this though.  You need to keep recruiting to replace people who drop out.

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 recruiting drive.  

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 'taprooting'.  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 learn that the system isn't what you thought it would be.

World Financial Group expects a large number of associates to quit.  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.

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.  World Financial Group is admitting that their system has a track record which makes quitting predictable...

WFG is a system which people will drop out of.  So to build your team you need to work extra hard to find people who won't quit.  Finding good recruits is like a lottery system, WFG will prospect anyone and everyone, that way they might get a few people who don't quit. The image below is a table from the leadership manual, which illustrates their expectations for recruitment and retention:

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