Lightyear Capital to Offer Retention Deals to AIG Advisers
January 26 2016 - 7:15PM
Dow Jones News
By Veronica Dagher and Michael Wursthorn
Private-equity firm Lightyear Capital Group LLC plans to offer
retention deals to many of the more than 5,000 independent advisers
who work with AIG Advisor Group.
On Tuesday American International Group announced the sale of
AIG Advisor Group to Lightyear Capital and PSP Investments, the
Canadian pension investment manager. Terms of the deal weren't
disclosed.
Executives from Lightyear declined to share terms of the
retention deals. They will start their conversations with advisers
on Wednesday, the firm said.
The AIG unit's four brokerages--FSC Securities Corp., Royal
Alliance Associates, SagePoint Financial and Woodbury Financial
Services--provide customer-account custody and other services to
advisers who aren't employees but rather own their own
businesses.
Financial packages that encourage advisers to stay at a firm for
several years are typical at the largest brokerages, whose
financial advisers are employees. They are generally less common
and smaller at brokerages that service independent advisers,
industry recruiters say.
Advisers at those smaller firms "are evaluating their choices
constantly, " and a firm's resources are "what often keeps them in
their seats," said Danny Sarch, a financial-adviser recruiter for
Leitner Sarch Consultants in White Plains, N.Y.
Meanwhile, an executive named Tuesday to oversee the brokerage
unit being sold by AIG said she doesn't expect the transaction to
bring big changes to the advisers who work with the firm.
Advisers tend to brace for changes when a brokerage company is
sold or there is a management shake-up. But the AIG Advisor Group
sale won't have a big day-to-day impact on advisers, said Valerie
Brown, the incoming executive chairman. Under its new ownership,
the firm will invest in technology, add products and help advisers
better serve clients, Ms. Brown said.
Ms. Brown is a former chief executive officer of Cetera
Financial Group, another brokerage network.
Erica McGinnis will continue as chief executive officer of AIG
Advisor Group.
Lightyear has more experience in the wealth-management space
than most private-equity firms. Lightyear Chairman and Founder
Donald Marron had been chief executive of PaineWebber Group Inc., a
major brokerage that was acquired by UBS AG in 2000 for $10.8
billion. Leaning on Mr. Marron's expertise, Lightyear used some of
its capital in 2010 to buy three brokerages from ING Group NV to
form Cetera Financial Group. Lightyear sold Cetera to RCS Capital
Corp. in 2014.
Mr. Marron said that while his focus will be investing in the
existing AIG Advisor Group business, he would consider making more
acquisitions of brokerages in the future. "Every firm wants to
expand. It's a matter of timing," he said.
Write to Veronica Dagher at veronica.dagher@wsj.com and Michael
Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
January 26, 2016 19:00 ET (00:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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