Family FinanceFinancial MindsetsReflections

The Wonder Bank Epidermic: Ignorance or Greed?

Yesterday, I was invited to join another multi-level marketing program. Lovely idea, enormous returns, philanthropic motivations, yet surprisingly it left me angry. Okay, maybe not so surprising, since I had always taken a position on such initiatives and wonder banks in general.

The older generation may have experienced the era of the wonder banks more than many of us today. Back in the days, you gave some money to an individual or organisation who promised you unbelievable returns in a short time – unbelievable until you actually see a reflection of your money working for you in your bank account.

The excitement is contagious! You instantly become an Evangelist, telling everyone around you about how real this venture is. Then, genuinely or not (though, who cares? The money is in your account not theirs), they are happy for you and jokingly ask that you ‘settle’ them from your bounty.

The more ‘business-oriented’ ones among your newly discovered fans pull you aside and ask you to ‘link them up’. No, they don’t ask like those who only needed you to settle them. They actually beg you to show them the way to start making ‘residual income’ like you. Well, dear reader, you know how the story plays on, don’t you?

My intention is not to criticize those who have devised ingenious means to help some people earn money. Far from it. In fact, I applaud these ones on engaging their minds to create something for the benefit of those who didn’t donate any grey matter to their thinking exercise. Then, I give my attention to those who sit back as the idle middlemen looking to make profit.

It’s great to deny yourself of some comfort and save up some money with which to invest and earn passive income. Have you considered, though, that:

1. Your integrity is at stake: Your success at such initiatives is usually hinged on introducing people to the network. This means the creator of the network, who knows nothing of what you have invested in building that relationship until now, is empowered to ruin your good name, if s/he so decides. He only needs to disappear into thin air and you could never go to your network with a business idea again.

2. Your family estate is at risk: Think of the fact that it’s easier to convince your siblings, cousins and in-laws to “register under you”. They’re the ones who are likely to be with you when you got the first credit alert, now? So, if the venture fails, all the monies that could’ve been used to uplift your family out of poverty dries up in one location. Wouldn’t your family benefit more from pooling resources together and then creating a business out of your human and material resources?

3. Your colleagues are your competitors: In a traditional business model, when your colleague makes a sale, everyone in the organisation benefits. This is because the profit earned goes into a central purse from which (in the most basic sense) salaries are paid. With multi-level marketing programs, however, the sale of a product by those in the same organisation as you is potentially taking money away from you – money that you could’ve earned and earned commissions, too. I have heard of 2 people from the same organisation fighting in the presence of the customer on who the customer should buy the product from. Talk about a waste of marketing efforts.

4. Your mind may not be extensively engaged: True, you stay up all night, strategizing on where your potential customers are, what to say to them to get their attention, how to conduct yourself to convince them you’re in it for their good and not just your own profit, etc. Have you considered, though, that you are passionate about another person’s creation? What if you were also in a position to create a similar product or service? Could it be that you have become mentally lazy because of the profits you have been making (almost) automatically?

5. Your financial muscles are not being stretched: Making money is as much a science as it is an art. While there are principles to follow, there is also a learning curve, usually based on personal experiences. Your mind needs to be empowered to be able to accommodate the money that’s suddenly available to you.

Financial Illiterate

Because you didn’t ‘work hard’ for the money, however, you miss out on this. The money that’s given to you as commission, afterall, is simply a percentage of what your siblings, cousins and in-laws paid to join the network.

While many people have attributed the success of wonder banks to greed on the part of their customers, I want to believe it’s more a case of financial illiteracy.

What do you think?

Olubunmi Samuel-Adeyemi
LIMER™ Personal Finance Coach


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