Primerica Financial Services
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Primerica Financial Services (PFS) is a wholly owned subsidiary of Citigroup, which engages in direct marketing of financial services, notably term life insurance, long term care insurance, mortgage refinancing, mutual fund investing, and prepaid legal services.
History
Founded February 10, 1977, the company was originally called A.L. Williams after its founder, Art Williams. Their business model closely resembles the real estate structure but models itself after a modified form of a general agency. A.L. Williams marketed term insurance for Massachusetts Indemnity Life Insurance company (MILICO).In the mid-1980s the owner of American Canning company, Jerry Tsai, unsuccessfully attempted to convince Art Williams to sell his company. Unable to purchase A.L. Williams, Tsai purchased MILCO, whose term insurance A.L. Williams marketed. Later, the company was renamed Primerica. Sanford I. Weil of Citigroup, later purchased both Primerica and A.L. Williams.
The division was named "Primerica Financial Services" and the Smith Barney investment company became part of the portfolio. Weill's company Commercial Credit then purchased Primerica in 1988, for $1.5 billion. In 1992, Weill paid $722 million to buy a 27 percent share of Travelers Insurance, and Primerica adopted the Travelers familiar "red umbrella" logo as part of their own. By the end of 1993, the merged company was known as Travelers Group Inc., and was wholly owned by Weill. In September 1997, Travelers acquired Salomon Inc. (parent company of Salomon Brothers Inc.), and merged it with its own investment arm to create Salomon Smith Barney (later reverted to Smith Barney).
In April 1998 Travelers Group announced the merger of Travelers and Citicorp. This resulted in net assets of $1.484 trillion, according to audited balance sheets. In 2002, Travelers Property Casualty became a separate company, and Travelers Life & Annuity remained part of Citigroup Inc.[link]
Primerica is now officially the cross marketing arm of Citigroup. Though American in origin, the company now has branches in Puerto Rico, Canada, the United Kingdom, Spain, and Japan, and plans for further worldwide growth.
Debt Strategies
Save Money And Reduce Taxes
Save Money And Reduce Taxes ($MART) is the refinancing program offered exclusively to Primerica Financial Services by Citicorp Trust Bank, fsb. The $MART loan is a type of simple interest daily amortizing loan. Primerica agents are trained to compare total interest expense of the $MART loan versus competing options. The industry likes to focus the consumer's attention almost entirely on the interest rate and the monthly payment, whereas Primerica representatives are trained to focus on the total cost of the loan (total interest expressed as a dollar amount) and the client's "debt freedom date". The loan program is aggressively marketed as a debt elimination program because the program is structured for the consumer to get out of debt faster with the lowest total cost. If the client can get out of debt sooner, that will free up money which can be invested so the client can retire sooner and/or better.
History
$MART became available to Primerica clients in the early 1990s in Commercial Credit branches. In the early days of the program, Primerica representatives would accompany their clients to a Commercial Credit office, help them fill out a "$MART application" and await a credit decision. As the program grew, however, senior management in both Primerica and Citigroup realized its revenue potential. By the late 1990s, $MART business had been removed from Commercial Credit offices and placed in its own proprietary "Solution Centers," which were scattered across the United States. As part of this transition, the $MART loan program was given its own identity within Citigroup as Traveler's Bank & Trust, and clients no longer needed to visit a Commercial Credit (by that time CitiFinancial) branch office. In 2002, Traveler’s Bank & Trust changed its name to Citicorp Trust Bank, fsb. $MART business peaked with the refinance boom in 2003; Citicorp Trust Bank reported a record volume of $699 million in closed loans.Product
The $MART loan product is a comparatively simple product for the mortgage industry. Citicorp Trust Bank offers fixed rate mortgage loans up to 30-years. Every client is encouraged to make biweekly payments using the Equity Builder, a complementary auto-draft program. Those who choose the Equity Builder receive a .25% reduction in their interest rate. All closing costs are rolled into the loan, which means that the client never has to pay more out of their budget - they just make their regular monthly payment. There are no penalties for accelerated payments, but most other lenders will charge a set up fee and a monthly fee for this service. The $MART solution is designed for those that wish to pay off their mortgage and shows a detailed amortized schedule prior to any loan documents being drawn. Most banks focus on refinancing, pulling equity out of the home, interest only loans, equity lines of credit and ARM's.....all these products keep consumers tied to a bank forever. The language in which "Primericans" speak is foreign to most people, because the focus is ownership. The average consumer is lead to believe that they can never own their home. If one compares the amount of interest a borrower pays over the life time of a mortgage after several refinances, all the refinance charges and fees, to a $MART loan which is designed to be the last loan the borrower will ever have ($MART loans are never sold to other banks), hands down, the $MART is the better solution.
Notable Members
Many individuals were instrumental in helping the operation grow. Marge Magner (CEO of the Global Consumer Group), Shane Rudman (Senior National Sales Director, Primerica), Brian Mehmen (National Sales Director, Primerica), and Dale Kraus (former Kansas Solution Center manager), were key figures in making the program a success.
Simple interest versus scheduled interest debate
Perhaps one of the best aspects of the $MART program are the benefits of its "simple interest" over rivals' "scheduled interest" method of calculating interest payments. Many pockets of the Primerica field force persist in marketing the benefit of the program. With $MART, a partial payment is credited upon receipt. However, this difference does not create a sufficiently significant advantage for the client that it should be the focus of discussion with potential borrowers.
Primerica's Press
Primerica's mission statement is "to help families become fully-protected, debt-free and financially independent." Primerica is in the best position to educate consumers about finance because they offer mortgage products, life insurance (income protection), and investments, wrapped in a directive document called the Financial Needs Analysis (FNA). Other companies usually charge $500-$5000 for the same FNA which Primerica does for free. The central idea behind the FNA is to eliminate debt, and increase investments for a comfortable retirement and lifestyle appropriate to what the client wants. As age and investments increase, the need for life insurance decreases. This is called the Theory of Decreasing Responsibility. The FNA can be updated - at no charge - when life changes occur, keeping the consumer's goal of being financially independent up to date.The company's intent is to use their products as stepping-stones to move all clients out of debt and into appropriate savings and investment vehicles (including retirement funds and college funds), thus building up enough wealth so that the need for insurances and repeated refinancing is eliminated. Primerica caters to small (working class and middle class) investors, not requiring a large amount of money up front to open an account. In practice, some agents focus solely on the cornerstone life insurance business and do not become securities-licensed. Consumers should know that each Primerica branch has, by law, at least a handful of securities-licensed representatives and should feel free to insist that the "buy term and invest the difference" philosophy is fully enacted by appropriate agents.
Criticisms of Primerica
Allegations that Primerica exists primarily to gather new recruits rather than provide financial services are common. When recruited, Primerica charges a $199 fee to help pay for state licensing fees which cost a total of $600-700.
The recruiting system of the company is also part of the criticism regarding Primerica Financial Services. In certain offices (all of which are independently operated), people who think they are coming for a paid position interview discover that they are at a business opportunity meeting about the company.
External links
- [Primerica Financial Services]
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