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  "documentTitle": "Aegon Ltd. (AEG)",
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  "authorName": "Spruce Point Capital Management",
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  "presentationDate": "2024-12-16 00:00:00",
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      "text": "The vast majority of WFG's recruits ultimately drop out; WFG documents we've reviewed suggests that churn in many WFG organizations is 96%-99%.",
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      "text": "agent churn rate: 96%-99%",
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      "text": "WFG puts in fine print on its website the fact that WFG agents actually earned roughly $6,500 on average in calendar year 2023 (down 12% from 2022). However, because this figure is an average of all WFG agents, we believe it may not be an accurate reflection of what a newly licensed WFG agent may earn, as the figure averages in the highest-earners at the top of the organization. This figure also doesn't factor in the more than $1,000 it costs recruits to become a licensed agent for WFG. The vast majority of WFG's recruits ultimately drop out; WFG documents we've reviewed suggests that churn in many WFG organizations is 96%-99%.",
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      "text": "While MLM's are technically legal, pyramid schemes are not. To be clear, we believe AEG operates an extremely aggressive MLM and is not a pyramid scheme. However, there are some areas where WFG could implement more conservative practices to dispel repeated allegations that it is a pyramid scheme. For starters, MLM organizations are not allowed to make extravagant promises to recruits about their potential earnings if they were to join the organization. We believe that WFG's compensation brochure use outlier cases to describe what a potential WFG agent could earn. Based on data reported by Aegon, the average licensed WFG agent produces just 0.4 sales per month. However, WFG's compensation brochure describes what an agent could earn if they made 5 personal sales per month, or roughly 12.5x what the average WFG agent actually sells. The recruit we sent through the process was also provided an illustration of 4 sales per month. We believe this could be considered an extravagant illustration about earnings potential.",
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      "text": "We are also concerned with the evidence we've seen which suggests a significant portion of WFG agents' sales may be either to themselves or their own downline agents. Such behavior walks a perilous tightrope around the FTC's definition of a pyramid scheme. In fact, we have uncovered WFG recruiting documents that encourage agents to \"become clients\" and to help new recruits \"become clients\", highlighting that this is not simply one-off behavior but is codified into WFG's recruiting and sales programming. WFG has publicly stated it is not a pyramid scheme, perhaps in response to frequent questions and concerns about its business model and allegations made in a recent lawsuit.",
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      "text": "We estimate that recruiting is responsible for generating millions in profit for the Company. We uncovered WFG's top 25 recruiting teams for 2021, which recruited a combined 390K members in 2021, equating to ~$50M of fees paid to WFG. Our research suggests that recruiting is heavily emphasized within WFG's system; it is one of the only ways for agents to advance and earn bonuses. Not only that, but to be promoted to Senior Marketing Director (\"SMD\") an agent must give up their most profitable downline to their upline as part of the WFG's \"Builders Exchange Program\".",
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