MLM Financial Services: Size
Available information suggests that the number of financial advisors in the United States MLM-model financial advisory space is in the region of 163,809. This is based on the assumption that Primerica, World Financial Group, and Transamerica Financial Group Division have the lion's share of the market. While the total number of clients could not be reliably determined given the limited information on the subject, available figures suggest that the number of active client accounts is less than 10 million. The historical growth of Primerica's number of representatives and clients suggests as well, that the total number of advisors and clients in the market is likely to grow in subsequent years.
As information on MLM-model financial advisory services is scarce and credible reports or articles covering the topic are unavailable, we looked at the three sample companies provided, Primerica, World Financial Group, and Transamerica Financial Group Division, and gathered insights from these companies' disclosures. We scoured these companies' websites for information on the number of financial advisors and the number of clients. There were differences in labels, with Primerica calling its advisors sales representatives and the World Financial Group calling its advisors entrepreneurs, but overall, we were able to find the companies' current number of advisors and clients. To determine if the number will likely grow in the future, we referred to Primerica's historical data. As Primerica is a public company, its most important metrics, including the number of representatives and clients, are readily available. Please note that we searched for similar companies and these three companies' competitors, as Primerica, World Financial Group, and Transamerica Financial Group Division are likely not the only players in the space. The companies that turned up, however, are non-MLM insurance companies, so we assume that the three companies have the lion's share of the market and their performance is indicative of the market's performance.
NUMBER OF ADVISORS
130,736 + 60,301 + 3,339 = 194,376
Neither Primerica nor the World Financial Group have disclosed the number of financial advisors they currently have in the United States, but given that at the end of 2016, 97,827 of 116,827 Primerica's sales representatives were based in the United States, we estimate that the United States accounts for 84% of the sales force.
97,827 / 116,827 x 100% = 84%
Applying this percentage to the sales forces of Primerica and World Financial Group, we estimate that Primerica and World Financial Group have 109,818 sales representatives and 50,652 entrepreneurs, respectively, in the United States.
130,736 x 84% = 109,818
60,301 x 84% = 50,652
Summing up Primerica, World Financial Group, and Transamerica Financial Advisors's sales forces in the United States, we get 163,809 representatives, entrepreneurs, or advisors.
109,818 + 50,652 + 3,339 = 163,809
NUMBER OF CLIENTS
Primerica has more than two million client investment accounts and around five million lives insured as of December 31, 2018. Meanwhile, the World Financial Group has disclosed that, in 2017, it had helped 415,497 families "prepare for a better financial future." It also disclosed that it has helped a total of around 3.5 million families since 2001. Transamerica Financial Advisors, on the other hand, has disclosed that it has over 300,000 customer accounts as of January 2019. Unfortunately, as far as Primerica and World Financial Group are concerned, we have no means of isolating the portion accounted for by the United States. The numbers reported by Primerica and World Financial Group are inclusive of both the United States and Canada. Also, as the numbers disclosed by the three companies are in different units, we could not add them up.
INDICATORS OF GROWTH
While there are no reports in the public domain that readily provide how the number of clients or advisors will grow, the historical growth of Primerica's number of clients and representatives offers some insights. Given that Primerica appears to be the largest of these MLM financial services organizations, its numbers may be indicative of the overall market in the country. Primerica's latest annual report shows that its number of sales representatives in North America has grown steadily in the past five years. As can be seen below, the company's number of sales representatives had increased from 98,358 in 2014 to 130,736 in 2018. This means that the number of sales representatives had grown at a CAGR of 7.4% during the period 2014-2018.
CAGR = ((130,736/98,358)^(1/4)-1) x 100% = 7.4%
This may be a sign that the overall number of advisors in the United States market for MLM-model financial advisory services is on track to grow in subsequent years. Primerica's number of clients in the past five years has increased as well, with the number of lives insured growing from over 4.3 million in 2014 to around five million in 2018. Primerica's number of client investment accounts had grown too from around two million in 2014 to more than two million in 2018.
For comparison purposes, the number of employees in the United States financial planning and advice industry grew at a CAGR of 2.8% in the past five years, according to IBISWorld. Employees, in the context of IBISWorld's report, may pertain to office employees, however, as financial advisors are typically independent contractors.