World Financial Group

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World Financial Group logo

World Financial Group (WFG), is one of the fastest growing financial services distribution and marketing organization in North America ^{[citation needed]}. As an organization, its focus is mainly on bringing financial management strategies of the wealthy to the middle income markets in the United States, Canada and other countries including China. This is done through a network of 50,000 associates, of whom 8,500 are licensed also as securities brokers registered with the co-owned World Group Securities, Inc. Its business model is a hybrid of many but is most closely identified with part agency model and part network marketing.

Financial service products provided include investments, insurance (life, critical illness, health, and disability), annuities, and mortgages.

In Canada, WFG operates under two names: World Financial Group Insurance Agency of Canada Inc., which offers life insurance and segregated funds, is regulated at a provincial level; WFG Securities of Canada Inc. is regulated at a federal level and offers mutual funds. WFG Securities of Canada Inc. is a member of Investment Funds Institute of Canada and Mutual Funds Dealers Association of Canada.

The company is a member of AEGON, the Dutch multinational insurance company and owner of many US insurance companies (i.e. Transamerica, Western Reserve Life Assurance, Monumental Life Insurance Company, etc. ). WFG's headquarters are in Duluth, Georgia.

1 History
2 Criticism and Praise
3 Industry Outlook
4 External links
5 References

[edit] History

World Financial Group was formed in 2001 from the select purchase of assets by AEGON from the now defunct World Marketing Alliance(WMA). The former company was founded in 1991 by Hubert Humphrey, who subsequently founded World Leadership Group.

[edit] Criticism and Praise

A Money Magazine report generally critical towards Humphrey and WMA was published in 2000. Humphrey ceased his involvement with the creation of World Financial Group after the sale of chosen assets to AEGON in 2001. Since that time the company has vastly improved with far better compliance under Aegon's supervision (as evidenced by a decline in penalties and fines imposed by the NASD). Proponents of WFG and the changes that have occurred point to a recent (Aug 2006) survey taken by Investment Executive, Canada's leading newspaper for financial advisors, ranked WFG as the top-rated MGA and the top firm overall.

WFG highlights they do not have products of their own, but are agents for major institutions. Proponents view this as an important factor in WFG's success as they are able to choose products for clients from an array of sources rather than from a single source, or their own.

Critics and proponents say that WFG's business model is unusual, relative to the established industry.

Criticisms are focused on several issues, including specific agents that aggressively misuse the model. In particular, critics site an over emphasis in their personal experience on recruitment by particular agents and groups.. Critics suggest the industry and marketplace are well served by existing business models .

Critics also claim that the World Financial Group a pyramid scheme [1]. Many ex-employees mention that the WFG is not like their competitors in that they do not pay their associates salaries, but instead have them rely on commission at the same time invest $1,000 for licensing and classes. [2]

Proponents note that a balanced approach including recruitment allows WFG to broaden their operations in an industry whose marketplace is growingly hetrogeneous and insufficiently served by the older institutional models. They point to the growth of WFG in contrast to much of the industry. They suggest the established industry continue to experience transitional sales force issues and flat growth, as the established business models continue to compete over the traditional markets of the industry. In contrast World Financial Group argues their model allows them the ability to compete in traditional markets, and additionally better access and penetration into overlooked markets.

Industry statistics and history of growth suggests this model is producing long term sustainable growth for World Financial Group.

[edit] Industry Outlook

Industry statistics and studies demonstrate that established industry models are largely forced to focus on higher net worth clients.

Industry studies have shown there is a need for change in existing established organisations.

Growth of the finacial services, insurance and financialplanning industry continues, and is forecasted to do so. The market need is growing with aging Baby boomers requiring estate planning and the Echo Boom needing financial and tax planning.

Statistics show industry growth will not keep pace with the market need.

Studies and industry analysis have predicted the standard industry models are largely incapable of adjusting their marketing and distribution models to meet the growing need.

Forecasts predict a growing shortage of services relative to the need for service and education in the financial services industry. This shortage will be felt most in the underserved middle income market.