Woodbury reps set to cash in: recruiters
August 23, 2012
by Bruce Kelly, Investment News
Management to double down on bonuses for reps at former Hartford Financial B-D; ‘world of difference’
A number of Woodbury Financial Services reps and advisers will soon see a cash mini-bonanza. This comes after the announcement last month that the retirement business and broker-dealer arm of American International Group Inc. was buying the firm.
According to industry recruiters, many of the 1,400 Woodbury reps have recently been approached by management to discuss deals commonly known as “stay” or retention packages. The terms are essentially a doubling of a stay bonus that many reps received in the spring, recruiters said.Giving reps stay bonuses while a broker-dealer was on the block was considered highly unusual at the time but also a smart way to keep brokers from leaving before a sale was announced.
The first part of the bonus came after Woodbury’s parent company, The Hartford Financial Services Group Inc., said in March that it intended to sell Woodbury as part of a company restructuring.
Hartford spokesman Robert DeMallie said he had no comment about the bonuses.
AIG spokeswoman Linda Malamut said that she had no knowledge of bonuses and that AIG’s acquisition of Woodbury had not been finalized. When the deal was announced last month, AIG indicated the transaction would be completed by the end of the year.
Under this plan, a Woodbury rep generating about $220,000 in fees and commissions annually received a bonus of 15%, or $33,000, in the spring; that same rep would receive another $33,000 under deals being discussed now, according to Jonathan Henschen, an industry recruiter who has discussed the Woodbury bonus plan with several reps. The brokers’ bonuses are in the form of “forgivable notes” that expire after about 30 months, Mr. Henschen said. “This is a pretty effective retention bonus,” he said, particularly as some advisers were still skittish about the AIG-owned network, called the Advisor Group. AIG received money from the federal government under the Troubled Asset Relief Program. Even though AIG has repaid that money, he said, reps in general have remained leery of joining. Two rounds of bonuses to Woodbury advisers should calm some advisers, Mr. Henschen said. “Money overcomes a multitude of sins.”The second round has made a difference for many reps, said Jodie Papike, executive vice president at recruiting firm Cross-Search.
“That extra kicker made a world of difference for many advisers who had made back-up plans” to leave Woodbury, she said. “It forced many to re-examine those contingency plans.”
Both Mr. Henschen and Ms. Papike said that this month the Advisor Group had shown Woodbury brokers new technology that would be available to them after the acquisition, and those advisers were impressed.
The Advisor Group has 4,800 reps and advisers with three different broker-dealers: SagePoint Financial Inc.; Royal Alliance Associates and FSC Securities Corp.