After yesterday’s $320 million IPO, Primerica, Inc.–formerly part of Citi–released about 21 million shares of common stock onto the NYSE. The shares were priced at $15 at opening today, and have since gone up.
Outside of speculating on Primerica’s stock values, why should you be interested in Primerica? Because it’s a multilevel marketing scheme. Business Insider took an in-depth look at what–and who–Primerica actually is:
Primerica employs, according to their prospectus, over 100,000 representatives who go out and sell financial products like term life insurance, mutual funds, life insurance, and annuities. Almost all the products offered by Primerica are from Citigroup, its corporate parent. All the mutual funds and annuities are sold through Primerica’s licensed broker/dealer subsidiary, PFS Investments.
The goal is for the rep to push these products in a “warm market,” which includes your family and friends who you’d be more comfortable selling to. The rep receives a commission for these sales and his recruiter, recruiter’s recruiter and so on all receive a portion of the sale. Reps are encouraged to recruit more people to continue bringing in sales and revenue.
According to Primerica, these 100,000 reps make on average, $5,156 a year. Hardly enough to do anything with let alone live on. Higher ups who run district sales offices are called RVPs or regional vice presidents. They make significantly more money. Know why? Primerica employs an 11-tier upside system in which you get a kickback of commissions from your recruits, your recruit’s recruits, and so on up until the 11th level. (This information can be found on page 112 of the prospectus.)
Local Primerica offices are actually located in peoples’ homes, according to the article. Of Primerica’s $168 million in income last year, an estimated $30 million came from its own reps, who pay enrollment fees and monthly fees.
That’s no reason not to invest. Avon, another MLM, has done quite well during its lifetime as a public company. It is, however, worth knowing what Primerica is.