Woodbury Financial could pay advisers to stay despite not having buyer
Woodbury Financial is said to be readying retention bonuses to preserve firm's value despite not having a buyer lined up
Put on the block last month, Woodbury Financial Service Inc., with 1,600 reps and advisers, is planning to take the highly unusual step of offering its advisers bonuses to stay in their seats before the independent broker-dealer has even found a buyer. It was not clear, however, whether all or only larger producers would be offered the bonuses.
The details of the potential package have not been revealed, but Woodbury reps and advisers expect an announcement shortly, according to sources inside and outside the firm.
Woodbury is determined to keep its advisers and staff in place, thus protecting the value of the franchise, one adviser said. “My own personal feeling is that Woodbury will retain the culture and the people,” said Mary Sterk, who is an affiliated representative with Woodbury and president of Sterk Financial Services Inc. Woodbury “has not released details [of bonuses] yet, but I keep hearing that something is coming soon, maybe in the next couple of weeks,” said Ms. Sterk, a leading producer at the firm.
The Hartford Financial Services Group Inc.’s decision to sell Woodbury Financial Services Inc. makes it the third insurance company this year to move to exit the indie B-D space.
Such “stay” or retention bonuses are typically announced after the announcement of a buyer, not before, and the broker-dealer buyer pays such bonuses. Among independent broker-dealers, those retention packages have no clear formula and can range anywhere from five percent to 25% of advisers’ “trailing twelve,” or fees and commission produced in the prior year.
At the moment, Woodbury is sitting on a pile of cash, which it could tap to pay brokers’ bonuses, a recruiter noted. According to the most recent annual audited financial report it filed with the Securities and Exchange Commission, the firm has $58.7 million in cash on its balance sheet. It reported total revenue of $254.7 million in 2011, and a small net loss of $18,000.
A Woodbury spokesman, Bob DeMallie, said the firm would not comment about speculation surrounding retention packages.
In recent comments, chief executive, Pat McEvoy indicated he is optimistic about the prospects of hanging onto the firm’s affiliated reps and advisers. “We are very pleased and encouraged by the reaction we have received from our reps,” he said. “The vast majority of our reps have told us they are committed to staying with Woodbury through the transition.”
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