Have you ever wondered why real estate and insurance brokers are universally accepted as a legitimate business, yet many people consider MLM a scam?
To be quite frank with you, all three of these business models have a lot in common.
In fact, they have more in common than you might think.
There are a few differences, but not many.
Let’s dive into the topic.
WHAT MLM, REAL ESTATE AND INSURANCE HAVE IN COMMON
All are referral based.
All have a very high turnover or failure rate. Just ask any real estate or insurance broker how many agents they have to recruit to find a producer!
The numbers are mind boggling.
All of these business models encourage you, or at least let you (the the broker) recruit others.
All of these business models let you (the broker) earn overrides and commissions off of others.
The only major difference between the three (that I have found) is that the insurance and real estate brokers have a higher start up cost, require licensing from the state, and have an introductory training program.
MLM doesn’t have those requirements.
It’s a lot easier (and cheaper) to become a MLM Rep than become an insurance broker or real estate broker.
That’s why I think it is so lucrative.
REAL ESTATE AGENTS AND BROKERS
Most people would agree that being a real estate broker is more lucrative than just being an agent.
As an agent, you only get paid off your own personal production.
As a broker, you can typically be an agent AND recruit other agents.
Real estate brokers recruit agents to work for them. These agents are independent contractors.
They are their own boss, but get support and training from the broker.
The brokers earn a commission from each one of their agent’s sales.
More agents equals more sales!
BAM!
Leverage at its finest.
In some real estate companies, real estate brokers will recruit agents who eventually become brokers themselves.
In most cases, the original broker earns an override off of ALL of their own agents AND the agents their own brokers recruited.
That sounds very similar to network marketing, in my opinion.
The only downfall for the real estate broker is that their best people typically leave, branch out on their own and become the competition..
When that happens, they stop earning money from that person’s efforts.
Even worse, they now must COMPETE with that person.
It’s like they trained their own competition.
Not so in network marketing.
INSURANCE AGENTS AND BROKERS
Insurance frequently works the same way as real estate.
Being a broker is much more lucrative than just being an agent.
As an agent, you are limited to your own personal production.
As a broker, you have LEVERAGE.
I once worked with a life insurance company.
I was recruited and trained by the insurance broker. He owned the local office.
When I started, about 50 of us started at the same time.
We had all been recruited from a newspaper ad.
Most of these folks only sold one or two policies and quit (including myself).
Probably 90% quit.
Some did really well.
A couple became brokers themselves (within the same office) and went on and recruited their own agents.
In all cases, the original broker benefited from it.
He made money from everyone’s efforts!
In a couple instances, the top producers left to go work with other insurance companies.
When this happened, the broker no longer earned overrides on those agent’s future sales.
Basically, he trained the competition.
I’m glad network marketing doesn’t work that way.
THE BEAUTY OF MLM
I love MLM.
I really do.
When you truly “get it” you will love it too.
It’s about helping people.
It’s about finding and developing leaders.
The only way to succeed is to help others succeed.
You can’t say that in most other industries.
Most industries are cut throat. It’s a dog eat dog world.
In network marketing, we get to earn residual income without investing a bunch of money.
We get a free mentor.
We get free training.
Our upline only makes money when we do.
It’s beautiful when you stop and think about it.
Plus, we don’t have huge start up costs.
We have a very low monthly overhead.
We don’t have to be licensed by the state.
It’s awesome!
WHAT OTHERS ARE SAYING
“The biggest difference between being a real estate agent or insurance agent and a distributor for a network marketing company is that real estate agents and insurance agents have a license.
Not that either of the licenses are hard to get, but it shows that the state is monitoring
them and regulating them.
It does take time to take the necessary classes, study for the test and then pass the test to get their license.
There are also continuing education classes that any agent has to take and fees to pay along the way in order to keep their license.
State laws regulate agents in both areas.
Any major infraction could result in the loss of their license.
Some would argue that network marketing is regulated by the federal government.
To that, I would say that it’s more of an oversight than it being regulatory in nature.
Yes, the government has “gone after” some network marketing companies, but it very rare that they prosecute an individual network marketer.
The history of network marketing is very colorful.
The people who were in the business in the 1960’s gave network marketing a black eye that it has never really recovered from.
They chased, begged and bugged people to join their businesses.
There aren’t very many people who like being chased by someone who has the vigilance of a used car salesman.
In the past, many network marketing companies allowed distributors to “buy their way” to higher ranks in the company’s compensation plan.
Unfortunately, this led to distributors having garages full of products that they couldn’t sell.
You won’t find real estate agents or insurance agents with a garage full of anything.
The public seems to be very aware of those horror stories.
I don’t know what percentage of real estate or insurance agents make $100,000 per year, but I know that the network marketing companies will admit that their “success numbers” are very low.
They can twist the numbers to make them say that about 1 in 10,000 people will reach the
top level in their compensation plan.
That’s as good as they can make it look.
I believe that the success rate is much lower than that.
I would estimate that the actually number is probably 1 in 50,000.
In my opinion, network marketers have done this to the industry and they will have to fix the problem themselves. I wish them the best of luck with that!”
~ Author, Richard Brokenshire
FINAL THOUGHTS
Real estate, insurance and network marketing are ALL real businesses.
MLM is a real business if you treat it that way.
Let the haters hate.
Once you realize what you have your hands on you know it is a gift.
Go do something with that gift.
What are your thoughts? Leave a comment below to share your thoughts. I look forward to hearing from you.
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Sincerely,
Chuck Holmes
Network Marketing Professional (21+ years)
Top Recruiter & Top Rep
mrchuckholmes@gmail.com
You know Chuck, I had never even thought of the similarities between MLM, Insurance and Real Estate…but you sure made a great point. Very seldom in MLM do we train our own competition. We are all on the same team instead of fighting against each other.
MLM is a real business opportunity. I believe the only reason people have looked down upon it is because of those who have used the system to scam people. If a person would research the business before joining, they would be able to get a good clue if it is a scam. Also, there have been scam insurance agents and scam real estate agents.
I believe the attitude toward MLM is slowly changing thanks to websites such as yours. Keep up the great work of educating people!
I’m glad I could be of help to you Greg.