Primerica makes its pitch

Primerica executives repeat that mantra at meetings in Canada and in company marketing. Chairman and chief executive officer Joseph Plumeri and other executives hammer the message repeatedly in sales productions laced with Biblical imagery and motivational hyperbole.

Primerica was one of the top performers in IE’s Planners’ report card. While the company has the support of its representatives, its style of management and other factors have put it at odds with critics and rivals.

Typically, each Primerica recruit enlists additional recruits who then enlist others. A new agent introduces a personal contact as a sales prospect to a field trainer who then makes the sales pitch. A sale means a commission divided among everyone connected to the agent, starting with the trainer and working back through the recruiting chain.

‘Let’s say I know you and I’m trying to recruit you,’ explains David Stephenson, a former Primerica national training director. ‘What I really want is the list of who you know. If I’m following their system under the guise of training, I’m going to get you to take me to some of your best friends,’ says Stephenson, now president of Barrie, Ont.-based Stephenson & Associates.

‘As a trainer I would get a commission and pay you a little of it as a training allowance.’

Historically, representatives of Primerica and predecessor company A. L. Williams, have worked the formula with blue-collar families. ‘We do have a unique approach,’ says Glenn Williams, president and chief executive officer of Primerica Financial Services Canada, which is broadly perceived as tightly controlled by Plumeri from Primerica’s Atlanta, Ga. head office. ‘We have built the largest distribution system in the in-home, across-the-kitchen-table delivery business.’

‘Hype and rah rah’

Stephenson says the system rests on ‘hype and rah rah. You get people all excited. Basically what it does is gets their eye off the ball.

‘They try to get you to focus on recruiting people, not on going out and making sales and building a client base.’

Williams rejects the career-agent label, but the Primerica contract stipulates representatives can only sell Primerica products and those of companies with whom it has distribution agreements.

The company has not released 1998 sales totals, but Williams says the approach yielded $8 billion in new face amount insurance last year. He does not provide an average sales figure for the 5,000 life-licensed agents, 3,200 of whom also have mutual fund licences.

Alastair Rickard, editor of the Canadian Journal of Life Insurance has studied the company since the mid-1980s and says that throughout that period, average income has been the anomaly in sales figures. ‘This is the question I’ve never seen an answer for …. How many people have they recruited through the organization?’

As well as multi-level marketing, Primerica parts company with rival insurers on other contentious issues, including rejection of credible professional designations, a policy its critics say neatly complements the low commissions and unorthodox marketing.

With some exceptions, training consists solely of its in-house courses.

Primerica endorses continuing education requirements for its salespeople, but its agents received the largest single number of suspensions for failure to comply with these requirements last year. Its educational materials mimic parts of the Chartered Financial Planning curriculum, but Williams denies the usefulness of the CFP or any other designation. ‘There have been people with professional designations that provided some of the products… we feel are inappropriate for the consumer.’

In Primerica’s lexicon, ‘inappropriate’ means all life insurance products outside of term insurance. ‘We are the ‘buy term and invest the difference’ crusaders. We are anti-whole life, universal life and variable life. We don’t believe in mixing your insurance and your investments,’ Williams says. ‘Universal life is a step in the right direction, but clearly still a very expensive and not very efficient use of your investment dollars.’

The policy means its agents cannot sell insurance products for tax or estate planning. It also amounts to a kind of Achilles heel, since the company has preached the flaws of other life products for decades and could not reverse itself without a huge loss of credibility. Moreover, it exposes the company to increasing competition from bank insurance arms, direct and Internet marketers and Internet markets since term insurance is the most easily marketed product in these channels.

It has consistently attracted criticism from competitors, partially because of the attention drawn to flaws in early versions of universal and whole life. It also spared the company from the vanishing premiums fiasco and the flaws found in universal life projections, although more by happenstance than by clever planning.

Primerica’s leading U.S. critic calls it corporate hypocrisy. Primerica’s ultimate parent is Citigroup, whose other units include Travelers Life & Annuity, which sells numerous types of life insurance besides term life. At another unit, Salomon Smith Barney, brokers sell permanent life insurance. ‘If this is a good product and appropriate product for customers of Salomon Smith Barney and Travelers, why is it such a terrible product that should not be owned for the customers of Primerica?’ says Al Press, a writer and general agent emeritus at Guardian Life in New York, who has followed the firm since 1984.

Part-time help

Rival insurers also question the company’s use of part-time salespeople. Outside of Saskatchewan, the practice is illegal except under certain situations. But there are still frequent allegations that the company breaches the regulations and continues hiring part-timers. What is unclear, is whether the company sanctions the practice or local managers simply look the other way.

Another Primerica approach has come under fire. The aggressive sales philosophy of A. L. Williams and Primerica has sometimes meant confrontations between a client’s current agent and a Primerica agent looking to replace an existing policy with term insurance. In the past two years, Primerica has tempered the tactic, but complaints continue.

Meanwhile, the recruitment is going into overdrive; plans are to double its agency force to 10,000 and the number of locations to about 700 from 350 within five years. Those numbers would make it a distribution behemoth, but Primerica also plans to increase its roster of debt management products manufactured by Citibank Canada. Citibank recently sold its Canadian branches to Canada Trust and will focus on providing products for Primerica. Coming products include chequing accounts with products such as guaranteed investment certificates. The company also has a family of segregated funds managed by Mackenzie Funds and a family of mutual funds based on the fund of funds concept. They all consist of AGF funds, but the company has no immediate plans to increase its proprietary funds.