Why Life Coaching is a Ponzi Scheme

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It has taken me a good while to write about this because I have felt like a total douche for months now. I think the initial impact has worn off or maybe it is that I finally paid off that embarrassingly large amount of money.

I have a problem…I still haven’t figured out what that problem is, I just do not feel comfortable in what I do. I can’t really put my finger on it. Is it the entitlement that I grew up with?…haha, that was a joke. If you have read any of this blog you would know I grew up pretty poor. I was intelligent, though. I did get a sense of entitlement from school for being advanced. I was one of those special kids who got to leave class on special field trips and do extra work for the sheer fun of it. I literally read the encyclopedia as a child for the fun learning factor it entailed.

Anyway, my problem that I keep running into is, “What am I supposed to be doing in this world?” I could go back to school. I could do many things. Currently I am still painting and sculpting, but those things do not really make “enough” money to help support a family of six.

Amongst all of my pondering about my soul’s purpose in this life, I was hooked and reeled into what I would consider the new pyramid scheme…Life Coaching.

Yes, Life Coaching is a ponzi/pyramid scheme. It is and I admit that I made a mistake and spent an exorbitant amount of money to have someone else tell me what I already knew. I was left with not only still wondering about my life’s path, but now stuck with more bills. I wanted desperately to invest in myself. I wanted the money to be well spent. I want a lot of things out of life, but I can not make this coaching thing into something that it is not. I am not really sure what I was supposed to get out of all of this.

Well, I know I was supposed to have a six figure income by the end of the year…
that is if I wanted to real some other seeking and pondering people into my lair and stick them with the same high priced money making opportunities.

I have a heart and I just couldn’t see myself deliberately taking advantage of someone’s foils. It isn’t in me. This is one of the reason that I stopped selling insurance and got out of sale’s of any sort. One of the reasons I couldn’t use my college degree and go into public relations and marketing. I am not a manipulator, and especially not for greed. How I got reeled into making 6 figures a year still behooves me. Maybe Mercury was in retrograde.

Let’s begin and see if the program I signed up for is in actuality a pyramid scheme:

The federal government wants to warn everyone about pyramid schemes….(ha, that was not a joke. One of the worst pyramid schemes in my opinion is the Federal Reserve Bank. You’d think our government would take their own advice, but I digress)

The following is the Federal Trade Commission’s guidelines to spot a pyramid scheme: (My reflections of my life coaching experience are in green)

1. No demonstrated revenue from retail sales. Ask to see documents, such as financial statements audited by a certified public accountant (CPA), showing that the MLM company generates revenue from selling its products or services to people outside the program.
(There were no products to buy, but her service provided was to figure out what service, services, and/or products that I should provide. She was going to help me get deep inside and figure out what needed changing to make me make money. Her main clientele is mainly other coaches.)

2. Buy-in required. The goal of an MLM program is to sell products. Be careful if you are required to pay a buy-in to participate in the program, even if the buy-in is a nominal one-time or recurring fee (e.g., $10 or $10/month).
(Well, I have to pay my life coach $5700 for an all day exclusive deep intensive where we will find out what my problem is and how do I go about fixing said problem. (once it’s figured out) It is sort of like free-lance psychology with no licenses or government involvement. Sort of cash under the table therapy.) *I have just now re-questioned my whole existence at this little nugget of wisdom that just surfaced. What the hell was I thinking? Oh, I wasn’t thinking. I was being emotional and had no rational thoughts.

3. Complex commission structure. Be concerned unless commissions are based on products or services that you or your recruits sell to people outside the program. If you do not understand how you will be compensated, be cautious.
(I only get payed if I create something of value from within my broken little lost soul that others are willing to pay $2500 or $3000 or whatever figure I want to put on the price tag. This number depends upon just how much money that I want to make. I am thoroughly encouraged to make 6 figures or more by my coach.)

4. Emphasis on recruiting. If a program primarily focuses on recruiting others to join the program for a fee, it is likely a pyramid scheme. Be skeptical if you will receive more compensation for recruiting others than for product sales.
(I learned after my intensive that the majority of my income will need to come from the reoccurring payments from my clientele as a monthly service that I will provide. After I have served them with the initial service I must then get them to sign up for a monthly community. I was of course asked to join her service which would set me back $700 monthly. I declined.)

5. No genuine product or service. MLM programs involve selling a genuine product or service to people who are not in the program. Exercise caution if there is no underlying product or service being sold to others, or if what is being sold is speculative or appears inappropriately priced.
(I was taught throughout my intensive upon how to create my service and coached on what to charge for that service. I was taught to charge $1000 or $1500 more than what I really wanted to make so that I could “offer” an exclusive discount to the would be client. I learned this along with more secrets of closing a sale, which included the phrase, “Will that be Visa or Mastercard.” I am reminded of my marketing courses in college.)

I may have been robbed.

After the high of all the fabulous information I received during my intensive wore off, I was left with a huge credit card bill, a semi-viable “program” to sell along with now wondering if I needed to pursue a graduate degree in family therapy. I do think there are good coaches out there and genuine people helping others, but I think I may have gotten mixed up with the Egyptian variety. Please learn from my mistake and be less emotional and more rational when it comes to choosing mentors.
I did get very creative during this time and revamped my art website, created a newsletter, and began thinking more about marketing. My coach was not thrilled by these extra outlets of energy, but I was loving the thought of creating more art. Creating art isn’t what was brought out in my intensive as a viable money making option, though. I was encouraged to create a day intensive that could use art but needed to have more structure and support for my client.
I did create and put together an awesome way to help others get some creative juices flowing or encourage more creativity in their lives. I have some cool exercises and thought experiments. I even tested stuff out on my husband and children. These are things that I have done to help myself when in a creative jam. Some is information that I have collected from many different sources plus life experience. There are methods that I have used for creating. I have many loads of notebooks filled with creative ideas. My problem I suppose is finding time for the execution of my ideas.
My problem may be narrowing down my passions in life.
I most likely will never sell my “program/intensive” but I may just try and post some of it in these next few days to help and encourage others.
No high price tags here.

Here is another warning for coaches out there, and a better explanation of my conclusions on life coaching.

I may have been robbed.

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13 thoughts on “Why Life Coaching is a Ponzi Scheme

  1. Thanks for sharing your experiences here. I am sorry you invested so much money in what may have been illegal or at minimum an unethical enterprise. I am a LSW with 2 graduate degrees and I remember feeling similar to you about selling or manipulating in therapy. I mentioned it often to one of my professors. She explained that there is manipulation in therapy but it is part of the therapeutic process. This is too involved to explain in a comment, but suffice it to say my distaste for sales and marketing were similar to yours. Now with a blog and fledgling astrology practice I am challenged to forge ahead with sales and marketing.

    i actually think you got a lot of value from the intensive, but not in the form you expected 🙂

    peace, Linda

    • Thanks for your thoughts. I do believe that I did benefit from the intensive in many ways and hope to carry that forward. I did find out, albeit the hard way, that I would need to act unethically to move forward with the success that my coach promised. I of course would rather starve than act unethically to gain a dime.

  2. I’m sorry this was your experience. It’s an issue that’s bothered me for a lot of years now. So a longer comment than I’d normally post (it stirs the ‘rant’ button!).

    Ouch … $5700 for an ‘all day intensive’, plus all of the proprietary commission-generating rules? You ask yourself how you got reeled in, and talk about how the approach taught didn’t sync with your sense of ethics, integrity, or compassion.

    Those sorts of folks use neuromarketing, which is designed and intended to ‘go under the radar’ of the conscious mind, stimulate fear/scarcity (amygdala-limbic) thinking that overrides the higher thought — yes, there’s an actual neuroscience to it (and unfortunately psychiatrists and neuroscientists consulted to help create it). Even when you’re aware of it, you feel yourself being reeled in (‘press the fear button’ is a neuromarketing tactic).

    They’re profit machines without a whole lot of integrity — or what the movie Grosse Pointe Blank humorously referred to as “a certain moral flexibility” — so it’s really good to be aware of the neuromarketing tactics.

    As you say, there are integrity centered advisors, coaches, etc. out there, but this is why I’ve hesitated to use ‘coach’ even as it’s become ‘THE term’ (used to be advisor or consultant). And ‘life coach’ … ?

    I do genuinely hope your investment in yourself brings bountiful returns in ways that feel a lot better for you. Maybe it’s something to highlight — an integrity centered coach in contrast to the example you’ve experienced and shared?

    Blessings,
    Jamie

    • Thank you for your thoughtful and informative comment. I did receive a “special one time only discount” which knocked off a few thousand dollars, but sadly being trained in this type of marketing did not make me immune to its effectiveness. It all began with a lovely free seminar that pushed the ole emotional centers and got my heart a flutter. I just hope my experience can help others. I do know I have created some positive energy outflow from the whole experience.

  3. I have been hurt by association. I have worked as a cook most of my life, for a bit as a dairy farmer , and most recently as a writer. Being a cook ingrained in me that you get money for what’s on the plate.Being a dairy farmer showed me that if you want a little cram, you need to cope with a lot of poop. Being a writer taught me that you can make money at doing what you love, but my editor taught me that you only get paid if you punch the keys and get the words on the page. Money from nothing was not in my universe. It pains me to say, but my brilliant wife has a natural affection for, actually an addiction to, anything resembling a Ponzi scheme. My wife spent THOUSANDS of dollars on a course in coaching (not even life coaching). She spent countless hours working on free gifts, packages, price structures, marketing, website….everything leading up to the sale. She created a package. Either I didn’t have the patience or the intellect to understand what was in the package, but it seemed like a big git-wrapped box with an enormous bow, but nuffin inside da box. She paid thousands of dollars expecting to get paid many more thousands of dollars to coach others to be coaches just like her. Yeah, it is clearly a Ponzi scheme, though I keep looking for the school/owner/wizard of Oz to be listed under ‘Scam”. I think it is the case of the emperor’s new clothes and after getting stung, none of the graduates want to admit how badly they got suckered in. But my wife is a brilliant Harvard graduate with a masters degree. Well, come to think of it, I don’t think she ever made back all the money her parents spent on college. Hy! Why is university considered a Ponzi scheme.

    • I am sorry to hear about your wife. Admitting our faults is the first step to gaining new ground. I am currently writing and do love it!
      Universities seem very similar to Ponzi schemes and they are becoming more of a bubble as well…it may just burst one day. There are going to be so many graduates and not enough jobs, but continually mounding student debt. The semester that I graduated with my Bachelor’s I had class with individuals who could not construct a proper sentence. How does one make it to their senior year in a major university and not know how to construct a proper sentence? They keep paying tuition is my answer.

  4. I know someone that got involved with ‘Prolympian’ The “CEO’ is so unprofessional and has made promises that never materializes: a website that is ‘coming next week’, (‘the terrible website developer didnt complete it as promised’) level one training certification that no one has achieved because the requirements are always changing. Huge contracts with thousands of clients that has yet to be seen.
    CEO Karen Sabourin did however just buy a new house.

  5. Hi there,

    I am sorry to hear about your experience. I accidentally stumbled on your blog post while trying to google whether a particular life/business coaching company and its services, are a pyramid scheme.

    Unfortunately, after much research, I still have no answer to this question. But I have spoken at length about this self employment opportunity with them and its products and services do appear to be genuine.

    But due to the high cost of the financial buy in, as well as the small community in which I live in that I believe has no desire for these types of products/services – in other words, the ROI is minimal and/or non existing in my little town, I have decided not to pursue this opportunity and have advised them of my decision as well as my reasoning for this. It’s just ill advised financially as well as with no guranteed return, not just revenue but making a profit and a establishing a successful business in this community in which I live, is far from a reality as I have seen so many potential good business models/ideas failing, when they should at least have some modicum of success.

    I also wanted a steady stable income in a town that has very little in terms of employment – rather, they have very little need for my skill set, experiences and qualifications it seems. I am a PR and marketing professional who is an experienced recruiter to boot, as well as an administration professional – but obviously my skills are not in any demand it seems. Never mind, I digress….

    I just wanted to get back to my own experience with a life coaching entrepreneurship – I just don’t share your sentiments that this is a pyramid scheme as such, in this instance, as the focus was not on recruiting other potential coaches. Instead, the focus was on gaining and generating paying clients with a lot of non-traditional marketing and offering life and business coaching programmes and tips on how to run your own successful coaching business.

    However, I do know the pitfalls of running or attempting to run a successful coaching business all too well. My own sister-in-law does it in a large city in Australia currently – although, not well by her own admission. Although she is in a city with wider potential and population than where I am, small town NZ – she is a strong marketer who has put herself consistently out there and she is soooo chirpy all the time that at times it can be a tad nauseating. Even she who has been in this business for almost 3 years is struggling to get the return she has invested in and just generating very little profit. It took her over 6 months to generate her first paying client, which occurred after having to give away many ‘freebies’ – which would have meant she lost so much time and money.

    As much as I admire her perseverance and tenacity, and I do genuinely wish her success – I can’t help but wonder, whether it is worth it and even really useful to the clients genuinely. I see a lot of recommendations and testimonials about her services from her clients on her social media and websites – but her clients are in a constant, perpetual state of positivity just like her – which does appear ‘forced and fake’ to myself, my husband and a lot of our friends and family. They go by the mantra, ‘anything is possible, if you can dream it, you can create it, visualise your dream and work to make it happen’ etc. which is not really helping. Anyone who has a brain know we have to work hard to achieve something we want and take away negativity and focus on eliminating your barriers, etc. i.e. you really don’t need the services of a life or business coach to make that happen.

    But this constant selling of a dream that is intangible and sometimes just not realistic or feasible to achieve with all this wishy-washy ‘ Tony Robbins type boundless energy and positivity’ feels like a marketing strategy that is akin to snake oil marketing with a smidgen of neuromarketing as mentioned above in a previous post.

    So to that end, I do share your views and concerns that I myself is not a manipulator that want to sell these types of dreams, knowing that it may not financially or personally benefit a client. In fact, if anything, this is nothing more than having your own personal cheerleading squad that any caring relative or family member or friend can do to a client – as long as they are honest about the client’s personal demons and barriers to success.

    So given my personal ethics and integrity would be questioned as well as the fact that my own financial gain would be minimal if at all, as well as the unaffordable and ill-advised high start up costs, I have decided to forego this ‘opportunity’.

    I am still skeptical about the whole industry. I do believe there are genuine life and business coaches who do want to see their clients succeed – but to be honest, these people and services shouldn’t exist or cost clients so much. Of course, life and business coaches around the world will justify these costs by saying even more intangible promises including trying unethical emotional marketing tactics such as “are you not worth it, or do you believe that your financial/business success is not worth at least this cost?” types of questions. That is the definition of emotive and exploitative marketing at its finest, selling a pipe dream, that may or may not be realistic, feasible or financially sustainable. It is no wonder people do genuinely believe that this is a pyramid scheme, including my husband (a view that I still do not share, as there are genuine coaches within the industry that I have had the pleasure of meeting and even having been to workshops thanks to my former employers), due to the lack of guranteed and tangible results and success in running a business as this – or even getting your own life coach to turn your life around, when you can do that yourself at no cost.

    I would like to invite you to listen to a podcast by Jo Casey and Andrea Owen, titled “Is the Coaching Industry a Pyramid Scheme?” which best answers the question. Both of these ladies are life coaches running their own successful coaching businesses. However, please don’t be deterred as this is a truly unbiased, raw and BS-free podcast that genuinely answers the questions. Simply their advice is ‘if it sounds too good to be true, it usually is’ which is about as real as it gets. I stumbled upon this podcast by accident myself, just the same way that I stumbled upon your blog post. Funny that.

    Here is the link to this podcast: http://www.jocasey.com/is_the_coaching_industry_a_pyramid_scheme/

    (If it doesn’t work, simply copy and paste the URL on your browser and find it, as this is a free podcast.)

    So I hope you take the time to listen to this podcast before casting any further judgements. Thank you for reading my long winded post and thank you for an insightful read.

    Frustrated

    • Thank you for the well thought out comment. I do not believe all life coaching is a ponzi scheme, but the ones that do use neuromarketing and the like to bring in clientele as well as telling them to turn around and use the same tactics on others to generate business are.
      I was just frustrated. Having a marketing and PR background I still allowed myself to get wrapped up in this. It definitely was a pipe dream.
      In the real world, though, it did encourage me to get back to school. Currently I am pursuing a nursing degree. I intend to get my Nurse Practitioner license specializing in Psychology. I would definitely feel much more comfortable charging people money in a regulated market where the client has more guarantee of what their getting for thier money.

      I will check out the podcast.

  6. Nice article. A lot of people have these types of experiences with so called “self help.” The reason we seldom hear about it is that so many people feel shame for getting scammed or worse, thinking that they themselves are the problem and that’s why it didn’t work out. One common idea the gurus bring to the table is “if people don’t succeed with my program, Its they lacked the follow through and didn’t work hard enough.” You learn not only their phony techniques, but who to blame when it doesn’t work out! I had a pretty serious brush with all of this nearly ten years ago, right after a bad breakup and feeling vulnerable. I actually still feel bad about every dollar and minute I wasted. It’s not a proud time for me, but it did make me more curious about the human condition and how people manage to get manipulated. I took special interested in cults and ultimately, like yourself became interested in becoming a therapist to help protect and treat people subjected to these charlatans. I graduate with my masters in counseling psychology in two months. I’m hoping to work with people subjected to religious abuse and help protect the public from all the scammers that wish to separate them from their money.

    • Thanks for sharing a bit of your experience. I am glad there are others out there who want to look out for and assist those who may be prey to these people. I was definitely treated harshly, which to any other person may have dejected them and made them believe failure was all their fault. I’m too hard headed for that, and maybe too great an ego to allow it.
      Congrats on pushing through and getting the degree!
      I can proudly say I am currently halfway through my first semester of Nursing school. I am projected to graduate with my BSN in the fall of 2018. Good Luck in your future career.

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