AIG announced its plan to sell its independent broker/dealers back around October 2008. Six months later, nothing has changed—except that reps we spoke to are even more frustrated. Some say they are ready to bolt.
Art Tambaro, CEO of Royal Alliance Associates, one of the three AIG broker/dealers, sent a letter to Royal Alliance-affiliated advisors today updating them on the progress of the sale—or lack of. Advisors say they were expecting a major update at the end of the first quarter, but Tambaro’s letter didn’t provide any material news. “The update was that there is no update,” says one Royal Alliance rep. “We still don’t have a buyer. We still don’t have a deal.”
The unit is called, AIG Retirement Services. It is comprised of the firm’s three b/ds: AIG Financial Advisors (recently renamed SagePoint Financial), Royal Alliance and FSC Securities/Advantage Capital, all of which are being shopped.
AIG Retirement Services, 2008 # Producing Reps Average Annual Advisor Production
SagePoint Financial 2,799 $129,980
Royal Alliance 2,030 205,080
FSC Securities/Advantage Capital 1,444 211,690
Source: Company reports and industry recruiters
As early as December, there were talks of a possible sale to private equity firms. That did not happen. Most recently, Ameriprise was reported to be considering a purchase of the b/ds but dropped out of the bidding. “Now, there’s a whole lot of nothing going on. [AIG] made noise about the offers that were lining up, but not much is happening now,” says Brian Hamburger of Hamburger Law Firm, and founder and managing director of MarketCounsel, a regulatory and compliance consulting firm.
Embarrassment By Association
Apparently, it’s not good for business to be associated with a parent company called AIG. Sources say there appears to be much movement among reps at the firms. “I’m not at the point of grumpiness. I’ve been waiting it out. Now it’s April 1 and those bozos still can’t figure anything out,” says one Royal Alliance rep with about $400 million in client assets. When asked about moving to another b/d, the advisor says, “Some of my friends have left Royal already. My close friends are still here, and we’ll all move together if it comes to that.”
One recruiter who works with independent reps says FAs at the AIG b/ds are getting restless and frustrated with the lack of answers. When news of AIG selling the b/ds first broke, recruiters said there was an influx of reps looking to leave the firm. When news of the $165 million bonus story hit, even more AIG-affiliated advisors began to call his recruiting firm, he says. “Once the bonus problem reared, reps started looking to get out again. I have about $55 million in production from AIG b/ds wanting to leave,” he adds.
Phoenix-based, SagePoint is bleeding the most reps, according to the recruiter. The b/d, which was formerly known as AIG Financial Advisors, was renamed in January in an effort to distance itself from the tarnished brand.
On the other hand, reps affiliated with Royal Alliance are having a harder time parting with their b/d. Reps at Royal are accustomed to payout of about 90 to 95 percent. “You have reps getting 95 percent going to a new b/d saying, ‘I want 95-percent plus some transition money.’ That’s a tough deal to get done,” says one recruiter.
AIG did not respond to calls.