Wow! I have got a story for you guys today.
Last week I was contacted by one of my Facebook friends via Messenger. I knew she’d been reading my blog for a while because I happened to notice when she joined my email list. (I’m not a stalker, I swear! In fact, if you decide to join my email list too, I promise not to call you out on it. ;))
When she messaged me, she told me how impactful and helpful my blog had been for her family. They were working hard to improve their finances.
So flattering, right?!
She went on to say that she really wanted to connect me with a friend of hers who also runs a personal finance business. She thought we could work together to help even more people.
“Great!” I said. “When can we meet?”
“How about now?” she said.
Red flag. It’s 9:45 pm and she wanted me to join them on a Zoom meeting. (If you haven’t heard of Zoom, it’s kind of like Skype.)
After telling her no, because I was literally in my pajamas in bed, we set a meeting for the next day.
How I Almost Got Sucked into a Personal Finance MLM
(Side Note: In case you’re wondering what in the heck an MLM is, it’s a multi-level marketing company. These are the companies famous for having “home parties”, “classes”, etc. in order to sell you products or get you to join in by having your own “small business”.)
I’ll admit it. Since I’m still in the throes of working hard to make a pivot toward growing my own blog and community without giving up too much of my client work, I have way more work to do than hours in the day. So, I probably should have said no to begin with, before I even found out they were trying to suck me into their personal finance MLM.
But I didn’t.
Yes, I should’ve done my homework and researched him more before getting on the call. Then I might have found out it was an MLM sales call before it wasted an entire hour of my day.
But I didn’t.
So, I got on the call at 2:30 and hoped that it wouldn’t take more than half an hour for my friend to connect me with this guy.
It seemed legit at first. Until he decided to share his screen with me and it was clearly a sales pitch slideshow.
If they were merely trying to sell me a product that would “change my life” that would be one thing. But, the fact that there is now a personal finance MLM out there made me furious.
Why MLMs are Bad News
Any company presented as a Direct Selling or Multi-level Marketing company is a scam in my opinion.
According to the FTC, an MLM may or may not be a pyramid scheme depending on how their salespeople earn money.
If the money earned is based on sales, it’s a legit MLM. But, if the money earned is based on the people recruited to join your team, it’s probably not. It could be a pyramid scheme.
However, the legit MLMs are still almost always bad news for your personal finances, even though they are usually presented as a way to get ahead financially.
Sure, there are rare examples of people who make tons of money from selling MLM products (and recruiting new people to join their team). But, the majority of people actually lose money if they participate in these “opportunities”.
For example, my friend and fellow blogger, Lauren Greutman, talks all about this in her book, The Recovering Spender.
She lost tens of thousands of dollars. Plus, she had her car repossessed by the MLM, because she wasn’t selling or recruiting enough to keep it.
Why a Personal Finance MLM is Worse News
The fact that the Financial Fitness program is being sold to people as a way for them to learn about money, get out of debt, etc. is what makes me the most angry.
Their target customer is someone who is already bad with money. They are desperate to change their finances. This desperation makes them extra vulnerable to the company’s marketing pitch.
Before they know it, they’ll have signed up not only for the 47 step program to fix their finances, but also to “join the team” and “easily earn thousands each month”.
(Seriously, a 47 step program?? Even a money nerd PF blogger wouldn’t read a 47 step program. Who has time for that?!)
How the Financial Fitness Program Works
Unlike many MLMs, the Financial Fitness Program is offered as a one-time purchase for $120. For that price, you get a book, workbook, audio lessons, and a super fancy Financial Fitness decal to display that you were taken advantage of by this company. (Eye roll!)
You can choose to receive this program with physical or digital copies. Or if you pay $180, you can get both.
Looking at their website, they also offer several add-on products too.
They also offer:
- Financial Fitness Bullion Reserve – A monthly subscription service encouraging you to invest in gold. The minimum monthly cost for one unit is $52.75.
- Wealth Habits – A 12 month audio program. You can pay monthly for $12, or pay $120 up-front.
- Beyond Financial Fitness – Includes a book, workbook, audio lessons, two DVDs, a bookmark AND a decal. Again this is $120 for digital or physical, or $180 for both.
- Financial Fitness Services – An app to help protect your identity, provide legal services (?), track spending, gain financial literacy, and save money. The monthly subscription is $60.
- Financial Fitness Master Class – Includes 6 hours of video content, 15 audio lessons, a workbook, and a decal. Again this is $120 for digital or physical, or $180 for both.
Plus, all of the Financial Fitness programs and products are owned by LIFE Leadership. This company also offers lots of other “personal development” programs and products, too.
My bet is, once you buy the first product, the basic $120 Financial Fitness program, they won’t stop hounding you to join the team, or buy more products, especially the monthly subscription services, like the app.
The app alone will cost you $720 a year! Compare that several other tools you can use to do the same thing for FREE, like Mint, or Personal Capital. Obviously the Financial Fitness program and products are designed to make them money, not to actually help you improve your finances or they wouldn’t cost $720 a year.
**All of this information is from their website. But, I’m not going to give them the SEO benefit of a link from my website. Plus, I 100% do NOT recommend this product, so I don’t want to link to it!
Why Was I Targeted by This MLM?
For the life of me, I can’t figure out why I was targeted as someone who might be interested in this program and “business opportunity”.
Yes, I am still in debt. But, I already have the tools I need to get out of it. If I didn’t, would my business be earning over $10,000 per month sharing my knowledge and skills in personal finance with others? Would I be making $2,400 worth of financial progress each month by saving and paying off debt? Hell no!
I almost had to chuckle when I was being pitched. It was clear that I know more about business AND personal finance than they do! But of course, they just wanted me to combine this wonderful product with the things I’m already doing to spread financial literacy. Ha!
Perhaps it’s because I’ve already been sucked into an MLM (or two) before. I readily admit that I used to sell cosmetics as a side hustle for one of the oldest, most well-known MLMs out there. I still use their products today and I am technically an “active consultant” for more than one MLM.
However, I don’t actually use these MLMs to make money anymore. I quickly realized it was a waste of my time and money. Plus, I wasn’t comfortable being a pushy sales person to all of my friends and family. I didn’t want to be always asking them to buy my products or join my team.
3 Reasons an MLM Is Not a Real Business
This has already been percolating in my head for a while. Every time I get on Facebook, I’m bombarded by friends who have joined the flavor of the month MLM and are sharing it LOUDLY on social media. Is it just me or is it god damned annoying?
I get that these people want to make money on their own terms. They want to work from home and have flexibility to be there for their families while still earning an income. But, nine times out of ten, an MLM is not the way to do it.
Mostly this is because being in an MLM is not the same has running your own business. Here are 3 reasons why an MLM is not a real business, no matter which one you’re in.
1. You Have No Control Over Business Decisions
Guess what? When you sign up for an MLM, you sign a contract. The contract you sign has specific rules that you must follow if you want to be a salesperson for that particular company.
If you violate these rules, you can be kicked out. They set the rules for how you can market and sell products, what products are introduced, which are discontinued, how you can recruit new members for your team, and more.
If you have a real business, you get to control these things.
2. You Have No Control Over Pricing
An MLM may tell it’s salespeople that they can individually decide if and when they want to offer sales and discounts to their customers. But because of the high wholesale cost of the products, and the low markup to get to the suggested retail price, most salespeople are backed into a corner.
You can’t offer much of a sale to your customers if the markup is only 25%. If you give any kind of discount, you’ll be barely breaking even.
Plus, the marketing materials printed by the company for you to use have the retail price plastered all over them. So, you can’t increase the markup very easily either. Even if you tried sell the products for more money, customers could always find the product cheaper elsewhere due to #3. This gives them no good reason to buy from you.
3. The Law of Supply and Demand Isn’t Followed
Have you ever thought it was strange that MLMs encourage you to recruit as many of your customers as possible to try and turn them into team members? Before long you won’t have any paying customers left to buy your products!
Plus, because of the high turnover of these companies, you can almost always find their products for sale on eBay, Amazon, and in Facebook Buy/Sell/Trade groups. Bargain savvy customers are likely to turn there for cheaper products these days. All it takes is a quick search on your smartphone. As a bonus, buying the products there means they won’t have to deal with a pushy MLM salesperson either.
There are many other reasons why MLMs are not real businesses, but I can’t list them all unless I turn this post into a novel. 🙂 The point is, if you really want to be an entrepreneur, start your own business instead.
Does the Financial Fitness program actually work? Are the lessons really able to help people get their finances in order? I’ll admit it, I don’t know the answers to those questions.
If the product can truly help people with their money, that’s great! However, there are plenty of other sources of personal finance information available that are far cheaper. Plus, they won’t try to suck you into an MLM that’s going to cause you to go broke instead of helping you achieve financial freedom.
PS – I thought pretty seriously about sending an invoice to my friend for the hour of my time that they wasted, especially since she made a point to say the meeting would be “worthy of my time”. Clearly, it wasn’t!