Consultant or Salesman – Know the Difference!

This blog is a direct result of a backlash of an event by between Studentischer Börsenverein Magdeburg e.V. (SBM e.V.) and a dubious finance consultancy and is, in hindsight, long overdue. The scandal revolved around allegations against the company that had partnered with SBM e.V. and involved the terms “scam”, “pyramid scheme”, “frivolous” and “leeches”. Similar controversies stretch back through the history of SBM e.V., whenever it entered into contact with similar pseudo-consultancies.

We will not name the companies by name for legal reasons, but here are some articles mentioning the organizations this post is about:

It is high time we showcase their key traits from the recollections of ex-associates, who had shared their experience with SBM. We want to ensure that none of these companies will ever get close to SBM e.V. again.

Rotten Sales Practices

Wealth, success, and independence, no matter your social background, education or prior experience! Usually unrealistic, these promises serve to entice individuals to join quickly without fully understanding the commitments and risks involved. Recruitment & marketing events often focus more on appealing to emotions and dreams rather than providing clear and transparent information about the business model, designed to create excitement and urgency.

Here is a basic sales pitch:
“I have a friend who knows someone who told me about this new cool insurance law. I am not supposed to tell you, but I thought of our recent conversation and am aware of your current financial distress. Because we are friends, I’d like to do what I can. It is usually reserved for specific target groups, but I found someone who can make it work for you. Normally he does not schedule meetings spontaneously, but he owes me and says you can join him tomorrow evening. Would you be interested?”

Wow! You are so lucky to have this opportunistic advisor with such a great network by your side! It would be mad to not take up the offer!

Unfortunately, most products and advice sold by these companies actually underperform and are seldom the optimal solution clients need. There is a fundamental misalignment in incentives. Salesmen under these schemes are not paid by the hour, but by commissions received from the provider of the sold product. However, what the client needs is not necessarily what pays the highest commission. So clever salesmanship is needed to convince the customer of the overpriced product, involving a tonne of unconstrained positivity, characterising the profession.

Success Cults

Cult-like characteristics, fostering an environment of dependency and loyalty amongst members are the norm. The lines between customers, colleagues, and friends are blurred. You get encouraged to exploit your personal relationships to make a sale until your family and friends finally dismiss you.

However, this wont be a problem, as you gradually replace your social circle with huge “team building exercises” and crazy “incentive trips”. You go to bars, Starbucks, concerts, vacations, sports events and clubs with your colleagues and customers, promoting a toxic success culture in the process: Constantly share your success stories, brag about your biggest sales, declare your “independence” with pride, wear shiny suits and drive shiny cars, show off your offices with dart-rooms and new coffee machines to friends and family and constantly tell everyone and their mother that they, too, could enjoy these freedoms!

More effort and money is invested in binding recruits to the company than actual training. Weeks of masterclasses often contain not a single finance topic! Rather, these masterclasses are full of fun team activities and bonding games, carefully designed to open you up to group dynamics. After a while, you are locked in emotionally, and any attempt at leaving the system will be a hard psychological test.

Pyramid Schemes

The people least interested in seeing you leave are the ones who acquired you, since they get a part of the earnings you generate. They wont tell you that of course. That would be admitting the pyramid structure. You will receive concerned phone calls, asking whether you are alright. You will get invited to coffee chats to “build you up” (a codeword in the industry for resetting your moral standards). You will be told to not leave your current, promising path because of some silly self-doubt.

They will tell you that you are great, that you have potential! They will immerse you in an environment of positivity and opportunity! And you will be very intrigued by that environment, until you realize that they say that to everyone, for positivity is a bigger sales driver than the lacking quality of whatever overpriced crap is sold here.

Should you leave this pyramid scheme regardless of the social pressure, be ready to lose a majority of the money you made, as your contract (which you have hastily signed over pizza and beer) is guaranteed to have some financial “safeties” attached. In fact, many customers as well as employees lose money in the end. Despite the debilitating contract however, you are officially “self-employed”. Not just because it sounds better on LinkedIn, but primarily because the company will not take any responsibility for the questionable insurance or financial advice you sell, and will not protect you from lawsuits of enraged customers.

By the way, lets clear up some terminology commonly used in the industry:
There are no employees, everyone is “self-employed”, as there are no bosses, only “coaches”. Interns have internships, while “talents” visit “masterclasses”. Meetings are for losers, we like to do “get-togethers”. Colleagues and clients are “friends and family” with whom you go to part… ähm, I mean “team-buildings and incentive trips”. “Network-marketing” and “success culture” are euphemisms for trust abuse and peer pressure. Mix all that with a few buzzwords, platitudes and empty signifiers from social media, and you are the perfect “consultant”, code for salesman.

Why did SBM e.V. not learn from its mistakes?

SBM e.V. is lead by ambitious, young students eager to conquer the world. It is this exact demographic, that makes the best salesmen and most eager networkers and are especially effective in infiltrating campus life. Flocking over the finance club like vultures, pseudo-advisors explore any opportunity of getting into the university and reaching dozens of potential recruits for their pyramid scheme.

The average tenure within the SBM e.V. team lasts less than two years. Exactly the time it takes to learn the tricks these organizations employ to quickly convince students of hosting events with them. Just as the current board learns from its mistakes, the slate is wiped clean with a new leadership, with no experience and open to any event opportunity. Making events requires a comprehensive, quality network that takes more than two years to build. Alas, pyramid schemes are always among the first contact points for the new leadership, because of their natural omnipresence.

This brings us to the main reason for publishing this post. The authors want to ensure, that future generations of SBM e.V. leadership and especially enterprising students do not commit their mistakes. The glamorous lifestyle, great promises and smiling faces stand upon unscrupulous and cultlike structures. You may gain additional CV entries, but recruiters of reputable firms will see them as red flags. You may learn a lot, but at the bitter price of your reputation, moral standards and true friends and family. You may become an outstanding salesman. So outstanding in fact, that you could sell the biggest bullshit to anyone!

But this is not what you studied so hard for. Selling bullshit is easy. Creating something of actual value is much more difficult, and the only thing SBM e.V. should be promoting.