Multi-Level Marketing and Financial Products; The Danger of buying from Relatives October 29, 2011Posted by shaferfinancial in Finance.
Tags: Buying Financial Products from a relative, Multi-level marketing and financial products, Put real experts on your team
There are companies out there which, as part of their business model, garner amateurs to sell their products. This is not a new phenomenon and it is based on pure cynicism. Real Estate Brokers [not all] have for years recruited gullible people, convinced them to pay to get their RE license, and then banked on the majority of them selling a house or two to relatives, friends, or neighbors before dropping out of the real estate business. These brokers laugh all the way to the bank. And yes 1 out of about 200 people end up with a profitable real estate career. But other companies in the financial services field have upped the ante. Using a multilevel marketing strategy they recruit folks, most of whom are financially unsuccessful, to sell complicated insurance and investment products. Some of these companies are fortune 500 companies. Most make a huge profit from this model. But do you really want to purchase complicated financial products from folks who have no clue how they work? Millions of people do. And they pay an extreme price for it.
I recently counseled a person to simply write a $10,000 check to a relative trying to sell them an EIUL product and let me structure the products correctly using a good performing policy. I calculated that this could save this person several hundred thousand dollars over her lifetime. This was done tongue-in-cheek, but really if you want to help out a relative limit your losses!
Bottom line, despite the current anger against all elites, some people really do have a level of experience and a moral compass such that you want them on your team. Whether it is investment real estate, equities or life insurance, buy from someone that knows what they are doing.