by Bruce Kelly and featured in Investment News
New York – One growing insurance-owned broker-dealer says that it is the human touch that keeps and attracts registered representatives.
The market is such that “with meaningful reps, they want to find a home and stay there,” said Brian Murphy, chief executive of Woodbury (Minn.) Financial Services Inc.
Since its parent, The Hartford (Conn.) Financial Services Group Inc., acquired broker-dealer Fortis Investments Inc. of Boston almost five years ago, Woodbury has grown at a rate of 15% annually, he said, reaching about $175 million in gross revenue last year.
The firm has nearly 2,100 affiliated registered reps and 200 employees. The reps hail from other independent-contractor firms, with several large-producing groups scheduled to join Woodbury this month, Mr. Murphy said, adding that reps both join and stay for the support, the products and the technology.
“At the same time, we have a rep-first mentality here,” he said.
Woodbury is marketing itself well, said one industry recruiter, but the back office has been scaled back since the Fortis acquisition.“The mood of the back-office people is not good,” said Jonathan Henschen, president of Henschen & Associates, a recruiting firm in Marine on St. Croix, Minn. He at one time worked at Fortis. “They’ve done a good job of growing,” Mr. Henschen said, adding that, like some insurance-company-owned broker-dealers, the firm encourages its reps to conduct a certain percentage of their insurance business in Hartford products.
Such pressure is typical at independent-contractor broker-dealers owned by insurance companies, one analyst said.
“If reps join insurance broker-dealers, they need to recognize that affiliation has to mean something,” said Matt Lynch, a director at Moss Adams LLP of Seattle. He added that he does not know the details of the relationship between Hartford and Woodbury, saying only that Hartford has “terrific” products for reps.
Mr. Murphy said that reps “are not pushed to sell any manufacturers’ products.” He also said that after initially reducing head count after the Fortis acquisition, the firm has been increasing its staff over the past two years and expects to hire more people this year.
One rep said he feels no pressure at all to sell Hartford products from Woodbury.
“Nobody’s ever put a quota” on his practice, said Marc Minor, president of Legacy Consulting Group in Peoria, Ill.
“There’s no bias that way. Woodbury is very sensitive” to the stigma of pushing its reps to sell proprietary products, he said.
Mr. Minor’s firm, which became affiliated with Woodbury two and a half years ago, has doubled in assets since it joined Woodbury and now has about $350 million in assets under management.
One benefit the firm offers is more oversight and compliance while allowing advisers such as Mr. Minor to hang on to their current payout, he said.
“Woodbury has very deep pockets,” Mr. Minor said.
One adviser who joined Woodbury in the summer of 2004 from New York Life Securities Inc. heaped praise on the firm.
“Now I’m no longer seen as only a life insurance agent,” said Bobby Blanco, managing member of Capital Wealth Management LLC in El Paso, Texas, which has more than $5 million in assets under management.
He said that NYLife Securities has a limited platform and cumbersome compliance.”Woodbury’s compliance works toward helping us, versus opposing us,” Mr. Blanco said.New York Life, meanwhile, has been working on its compliance programs for its reps, said Gerard Rocchi, senior vice president.
“Some of these programs have been upgraded and enhanced in the last 24 months to keep pace with the changes in the regulatory environment, and we’ve worked closely with our representatives to make sure they are properly updated on the changes.”