Is World Financial Group (WFG) an MLM or Scam? [Review]

World Financial Group is a company that uses multi-level marketing (MLM) to sell financial planning tools. The original idea was to help baby boomers plan for their retirements and enjoy their lives.

Instead of following Primerica’s strategy, they decided to focus on variable universal life insurance, which includes both insurance and an investment component.

Now, here’s the big question: Is World Financial Group a legit MLM or a pyramid scheme? We’ll get into that. And hey, we’ll also fill you in on a better way to make money from home.

Who Am I?

Hey there! I’m Benjamin, the person behind MLM Scam Insider. I used to be a sales rep at an MLM company, so I’ve seen both the good and bad sides of the MLM world.

After college, I joined HSBC as a relationship manager. Unfortunately, I got laid off due to some silly mistakes, and I felt pretty hopeless. During this tough time, a friend suggested I join his team.

He flaunted his success on Instagram with a Lamborghini (later, I discovered he had just rented it), so I believed I could attain the same. I purchased a starter kit from him and became a distributor. However, being a sales representative at an MLM company wasn’t what I had anticipated – it felt like a pyramid scheme. Uncomfortable with the idea of pitching to my friends and family, I only managed to sell a few starter kits.

Fortunately, I discovered how to make money blogging during Covid. So I soon quit my job as a sales rep and focused on my blog about budgeting, later selling it for $170k. Now, I’m a full-time internet entrepreneur running several blogs, including this one.

My goal is to provide you with honest reviews of various MLM companies, using my personal experiences to help you understand what’s really happening. I have connections with friends in the network marketing industry, and my team and I have spoken with different MLM distributors to give you the inside scoop.

What is World Financial Group?

World Financial Group (WFG) is a company that operates in the financial and insurance services sector. Based in Johns Creek, Georgia, near Atlanta, WFG follows a multi-level marketing model. This means that it sells investment, insurance, and various financial products through a network of distributors.

WFG is wholly owned by Aegon, a Dutch life insurance multinational. In the United States, it primarily operates under the Transamerica brand. The company’s reach extends to the United States, Canada, and Puerto Rico.

Associates at World Financial Group earn compensation by selling financial services products. Additionally, they receive commission overrides from people they sponsor into the company. This commission structure forms part of WFG’s business model.

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Who is the Founder of World Financial Group?

The founder of World Financial Group (WFG) is Hubert Humphrey. He started World Marketing Alliance (WMA), the predecessor of WFG, after leaving Primerica in 1991. Originally named Alexander, Inc., it was later renamed World Marketing Alliance.

Hubert Humphrey initially developed the Business Format System (BFS) during his time at A.L. Williams, and he continued to refine this methodology at WMA.

WMA held its first convention in Las Vegas in 1992, attended by about 2,000 associates. On March 23, 1998, the WMA Executive World Headquarters opened in Duluth, Georgia, with a 100,000-square-foot building housing 500+ employees. In June 2001, AEGON purchased select assets of WMA and renamed it World Financial Group, Inc.

As of 2022, there are around 53,200 independent life insurance agents associated with WFGIA (World Financial Group Insurance Agency) in the United States, along with its affiliated insurance agency operating in Canada.

Is World Financial Group an MLM?

Yes, World Financial Group is an MLM company. In MLMs, you don’t get a salary but earn money by recruiting others. You get a percentage of their sales and recruits, creating a multi-level commission setup.

Your “downline” is people you recruit, and your “upline” is the person who recruited you. The goal is to expand your downline, making a pyramid where those at the top earn the most.

World Financial Group works like this:

New recruits are given a two-part sales system. First, they offer investing, insurance, and financial planning services to clients through partnerships with many financial companies. The second part is more controversial: recruits need to bring in others to work under them.

Most WFG agents focus on recruiting rather than selling products or services for higher earnings.

For example, in World Financial Group, recruiting ten people can earn you up to $1,100. 

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Is World Financial Group a Pyramid Scheme?

No, World Financial Group is not a pyramid scheme. Pyramid schemes almost never sell valuable goods or services, and their only source of revenue is from recruiting new members and soliciting more money from current members.

In a pyramid scheme, people are required to pay a fee to join the organization, and the organization rewards them with a portion of the funds raised from each additional member they recruit.

The directors of the scheme receive a portion of these payments, and the scam is profitable for them regardless of whether they do any work, while those at the bottom usually lose money.

Though WFG does encourage recruitment as part of its MLM model, it also place a significant emphasis on product sales and offers genuine financial products or services to customers.

Learn more about the differences between MLM and pyramid scheme. 

Why is WFG’s Indexed Universal Life a Controversial Product?

WFG’s Indexed Universal Life (IUL) is a controversial product for a few reasons.

On the positive side, it offers principal protection due to the insurance component, and the proceeds can be used for retirement or passed on to heirs without taxes.

However, there are downsides. These policies are often complex, with high fees, making them challenging for many people to grasp. For many investors, choosing index funds or other conventional options might lead to better financial outcomes.

We found that WFG promotes these products because of the high commissions they generate, potentially at the expense of clients.

Unlike some financial service companies that offer lead generation services, WFG follows a different approach. They encourage recruits to begin by selling products to family and friends through their Fast Start process.

The idea is that if agents do well for these initial contacts, word of mouth will bring in a steady stream of new business.

WFG Compensation Plan

World Financial Group uses a Multi-Level Marketing (MLM) approach, which means you can earn money not only from your own sales but also from your team’s sales. 

Here’s how the payment system at World Financial Group works:

1. Direct Commissions: You earn commissions based on the financial products you sell to customers. The more you sell, the more you earn in commissions.

2. Overrides: As you build a team of associates, you also earn overrides. Overrides are a percentage of the commissions generated by your team members’ sales. 

3. Bonuses: World Financial Group offers various bonuses when you achieve specific goals, like reaching certain levels within the company or meeting sales targets. These bonuses can be an extra source of income.

How Much Can You Make at WFG?

The average World Financial Group salary ranges from approximately $41,303 per year for an Associate to $143,077 per year for an Insurance Broker.

The catch is reaching the higher salary levels, which is a bit controversial.

WFG encourages its associates to recruit new agents aggressively. They reward this with higher commissions. New agents start at the Training Associate level, earning a 25% commission. Once a Training Associate recruits three people, they become an Associate with a 35% commission.

To reach higher levels, like Marketing Director (50% commission), and Senior Marketing Director (65% commission), agents need to recruit more people. WFG also shares a portion of commissions generated by those under them, increasing at each level.

In one word, WFG focuses too much on recruiting and not enough on selling financial products. Their emphasis on multi-level marketing leads to a culture where agents may mislead recruits about the potential benefits and drawbacks of such an arrangement.

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Pros and Cons of WFG MLM

The Pros

• WFG offers a range of financial products and services, which can provide associates with multiple income streams. 
• Some associates have achieved substantial income levels within WFG by building large teams and effectively selling financial products.
• World Financial Group emphasizes training and development for its associates.
• As an independent associate, you have the flexibility to set your own schedule and work at your own pace. 
• You have the opportunity to run your own business, make decisions, and build a team.

The Cons

• Success in WFG often hinges on recruitment. Associates who fail to keep recruiting new members to build their downlines usually can’t make a living. 
• MLMs, including WFG, tend to have high attrition rates, with many associates leaving the business within a relatively short period. 
• In some regions, there may be a saturation of WFG associates, leading to increased competition for customers and recruits.
• WFG encourages associates to sell products and recruit primarily within their personal networks, including friends and family. This can strain relationships and lead to discomfort.
• The complexity of the WFG compensation plan can lead to confusion and misinterpretation among new associates.
• WFG has faced sanctions due to rogue agents breaking rules. Its network-first approach discourages reporting bad behavior, causing more regulatory issues.
• WFG’s universal life product, which pays the most commission, isn’t suitable for most of WFG’s clients. They would be better off buying term-life insurance. 

Is World Financial Group a Scam?

World Financial Group is not a scam. It’s a real financial services company that offers various financial products and services to people.

Here’s the deal: Associates at World Financial Group can make money through commissions from sales and recruiting others, using a multi-level marketing (MLM) structure.

However, WFG has had legal issues over the years:

In November 1998, WMA was fined $100,000 for not properly supervising its sales agents. Clients lost nearly $2 million in unregistered investments.

In 2000, WMA faced another fine of $125,000 for failing to report nearly 900 customer complaints.

In 2008, some customers openly criticized the company, claiming significant losses due to WFG agents selling inappropriate investments.

WFG has also faced fines in Canada, including an $865,000 penalty when 12 former agents falsified Know Your Client information on 95 documents in Mississauga.

Should You Join WFG?

After looking closely at World Financial Group, I don’t recommend joining to make money. It’s tough at the beginning to find prospects and recruiters, and relying on family and friends to join can be awkward.

What makes it worse is the pressure to buy Business Support Material from your upline, adding to your expenses when you’re already struggling to recruit. Sadly, stats show that 99% of MLM participants break even or lose money, according to an FTC case study.

People in these MLM-type businesses often feel pressured to succeed, leading many to leave. If you want to make money with flexibility, consider starting your own online business. You get to choose what to promote without someone dictating it to you.

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Other MLM Opportunities

Here are the other MLM companies we have reviewed:

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