OK here I go. It's a long read, but this is my experience with the company:
MY DREAM:
I've been wanting to get into the financial services industry for four years. I started off by opening a discount brokerage account with TD Waterhouse, and traded some stock online. I loved it.
A few years later I went to university and received my commercial accounting certificate, but I was getting pretty impatient, so I went to known & reputable companies like Clarica, Edward Jones, CIBC (One of the "Big 5" banks in Canada), and a couple small time companies as well.
All of my interviews went very well, but I was still going to school full time for my BBA in Accounting. They all turned me away for the same two reasons: 1) I could not work full time right away; 2) I didn't own a vehicle at the time.
One day I encountered a WFG Associate, and I told him that I wanted to do the Canadian Securities Course (can sell mutual funds, stocks, bonds etc. as well it's a prerequisite for the CFP preparation program from the Canadian Securities Institute). He gave me his card and told me that he might be able to help me out with that.
BELLS & WHISTLES:
I showed up for their recruiting drive at a local hotel. I would have to say that I'm a very intelligent person, in the top 10% in school, have an IQ of 136, and love thinking up strategies during accounting classes - one instructor said I'd make an excellent accountant, another said I'll be in jail someday (I like thinking of how new concepts I learn can be tied in with others to manipulate reports -- I should have been an auditor). So it's gonna take a lot to fool me.
Anyways, I show up for their 'group interview' and the whole time I was thinking "what is going on here? " Here they were barely mentioning strategies which will finance peoples' retirement tax-free, and talking about the rule of 72, as if just because they know it, they can randomly pull a rate of return out of thin air, and awe people with the compoundings.
By the end of the introduction, which they call a Corporate Overview by the way, I was more confused and terribly skeptical of the company. I did set up an appointment for a follow-up interview, however.
DON'T NEED A RESUME:
I showed up for the interview, and unlike all the other ones I went to, I DELIBERATELY did NOT bring a RESUME. I thought I'd get some questions answered, and carry on with another interview later on. I wanted to test these guys. The interview went awesome, the Marketing Director and I really liked each other, and there was no mentioning of a resume whatsoever. I did end up paying the $125, and being a university student, I really didn't appreciate it.
I guess Marketing Directors can't put their money where their mouth is. Risk & Return? Risk $125 to gain a good, motivated employee? I would. ESPECIALLY if they allegedly earn over $100, 000/yr. They do, they really do, but it's GROSS income... more to follow on that one.
PRODUCTS & COMPENSATION:
I went to training which did cover a couple of strategies, their two flagship strategies: 1) Universal Life Policy 2) HELOC - Home Equity Line of Credit (home loan/investment strategy to hopefully reduce the time required to payoff a home) In a nutshell: Leveraging. Ok not bad, being who I am I naturally started working with them, and using good ol' MS Excel to play with numbers. Both are good strategies, so long as a rate of return of 8% or greater is achieved.
All other training that I have attended has been "recruit, recruit, recruit." I'm no big city lawyer, but I am a number nut, so if I need 3 fully "trained" subordinates of which need 3 subordinates, in order to get to Marketing Director, that's 10 people for 1 MD. The MD & 9 underlings.
Now for the MD (assuming he/she does all the business themselves) will get paid 70% of 84% of the commission given to AEGON (bought out WMA and renamed it to WFG) by doing business with companies such as Equitable Life and Franklin Templeton. So in order for a MD to make their magical $100k, they would have to sell approximately $3.4 Million in Mutual funds.
Considering MDs don't do that much business themselves, their closest overide amount is 20% not the 70%, so the MD's underlings would have to put forward about $10 Million in sales in order for the MD to hit the $100k mark. Now the problem is that in order to come up with $10M, is that the client base is going to have to be quite extensive, and there needs to be a large population base to derive from.
The only way they can pull it off is to have underlings. Hence the necessity for them to always be recruiting, and playing the friendship/family trump card to push sales.
LACK OF FORMAL EDUCATION:
The first really major red flag was when I discovered that I was the only one in the office of about 30 people that actually went to university for _ANYTHING_ related to finance. They treated me like something really special. I tutored people, passed the IFIC & LLQP/Provincial tests with hardly any studying for the prior, and none other than the crash course for the latter (both of which most people fail). Dealing with people's money = dealing with their lives = better know what's going on.
SEVEN FIGURE INCOME: Ya, if you count the cents :)
The second red flag was the MDs boasting their incomes. Unless the MD is really up there, or has lots of minions, they scrape by. The top ones earn upto and over $1, 000, 000 / yr. No joke.
When I was told that one of them paid a mere $20k in income tax last year, right then and there I knew there were a lot of hidden expenses that no-one is mentioning. I know how the tax system works, afterall I studied it, and even wrote an MS Excel workbook that does my income tax for me - all the forms & everything. The MD still made a decent wage, but didn't NET anywhere near what he was claiming. For an Associate office fees are $40/month, but for a MD they're $1000. My immediate MD nickels and dimes, so I know he doesn't make too much. Financial freedom eh? Nickel & diming.
BACKGROUND CHECK/CONTRACT:
I am also one of the few in my office that fully read the contract. The contract dictates that all associates are independent contractors, along with a bunch of sub paras covering WFG founders' butts. Being an independent contractor I can understand paying for my own licensing, and background check. The strange thing is that when it came to get my life insurance license, I still had to get ANOTHER background check done at the local RCMP detachment for $30, even though I requested that head office forward the alleged $125 one to me.
The $125 is therefore NOT for a background check at all. **If it is, I suggest that WFG PROVES IT to all future recruits by giving them a copy of the background check. Bringing back being an independent contractor, why is it that 1) as a "dedicated member" I can "only market WFG products and services" and 2) I cannot negotiate a commission rate? Isn't that what contractors do? Negotiate?
LICENSING TEST RESULTS:
Another thing that bothered me is that once I passed the IFIC exam (to get licensed for mutual funds), they wanted extra copies of my passing grade for them to keep. So that raises the question of when I do walk away, will I get them back so I can continue on with my dream career? Or do I have to do it again? I still haven't received my official life insurance exam marks (they were mailed to the office instead of home -- oops).
LAS VEGAS: "CONVENTION OF CHAMPIONS"
The massive Rah-Rah gathering to say YEAAAY look at my MD's MD's MD! He's making $1M per year! Spend $1000 to see how your hard work makes everyone else money! Nuff said? Good.
GET LOTS OF POINTS & GO TO HAWAII & BARBADOS!
Ok, 1 point = $1 of commission paid to people after AEGON takes 16% right from the get go. So a mutual fund will pay out a 5% commission, of which Aegon takes 0.8% leaving 4.2% for everyone else. Because WFG IS a MLM, the 4.2% gets divided up between around ten people. The Associate who actually did the business at an Associate's pay rate would get 30% of the 4.2% so 1.26% a little bit more than a quarter.
After working their way up the ranks to MD, and then out performing MDs to get to Hawaii, they think it's wonderful that they get an annual trip. Well shucks, Hawaii is really costing them a couple hundred thousand dollars, because that's how much they've thrown upstairs to get to where they are. AND why the top dogs make all the big bucks. Pretty crappy isn't it?
Work your butt off studying, paying for everything yourself, sit through mind boggling boring corporate overviews, establish establish your clientele, and then 3/4 of your earnings goes upstairs right off the bat. THAT DOESN'T SOUND LIKE WORKING FOR YOURSELF!
BEST FOR THE CLIENT: YA RIGHT!
For those who don't know, with Franklin Templeton there's generally two fund series A & F. A class takes an extra 1% MER per year to pay the selling agent's company a renewal fee. Therefore, if there was a sincere intention to sell the best product, they should sell Series F funds. IRP (Universal Life Policy) also takes 2.45% extra MER off as well. So if you're writer claims 8% per annum rate of return, tell 'em to stuff it and redo the numbers for a 6% rate of return.
WHY AM I WRITING THIS: I WANT TO LET PEOPLE KNOW, AND I WANT CHANGE!
1) The compensation that people get should be the same across the board. AEGON does deserve to get a percentage in order to facilitate the running of the company. That being said, independent offices should be run by Aegon, and Associates should work directly for Aegon, and not under X, under Y, under Z, etc.
2) The compensation that people should receive should be 75% of the commission paid out by other companies. So a mutual fund transaction should pay 3.75% instead of a MAX of 2.99% as a MD.
3) A proper training program should be established. A systematic program with a training schedule, instructed by CFPs.
4) There should not be so much recruiting. The only reason why people recruit in this business is to make money off of their subordinates. Normally other people in the same field is considered competition. Not everyone has the opportunity to make $100k per year, there just isn't the population base in Canada to sustain that amount of wealth.
5) Only 10% of the associates are able to attain the position of MD according to current guidelines.
6) Educational requirement. No brainer.
CONCLUSION
Don't bother with this company, the only way to make money is to be an MD, but everyone wants to be one, but the fact is -numbers don't lie- MAXIMUM 1 in 10 can become an MD. In short: move on. If you want to get into financial services, find something else.
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