After buying AIG Advisor Group, Lightyear's Marron looking for more acquisitions

Private equity chairman brings back Valerie Brown to help run independent broker-dealer

Jan 26, 2016 @ 1:52 pm

By Christine Idzelis

Less than two years after selling Cetera Financial Group, Donald Marron's Lightyear Capital is back in the independent broker-dealer space, announcing a deal on Tuesday to buy American International Group Inc.'s Advisor Group.

And he might not be done.

In an interview Tuesday morning, Mr. Marron said the broker-dealer would look to make more acquisitions, along with adding new investment products and services for its network of more than 5,200 independent advisers.

There's “enormous demand and need for advice for people” left on their own to prepare for retirement as companies shifted away from providing pension plans, said Mr. Marron, chairman and founder of private-equity firm Lightyear Capital.

Lightyear is buying AIG Advisor Group with Canadian pension manager PSP Investments.

AIG Advisor Group, with $160 billion in client assets, is changing owners amid increasing regulatory scrutiny of the brokerage industry. While the business will keep AIG as a distribution partner and Erica McGinnis as its chief executive officer, Lightyear has turned to Valerie Brown — the former CEO of Cetera — to fill the position of chairman.

“Once the transaction is completed, it will become a standalone, independent firm,” said Ms. Brown. That means the broker-dealer can focus all its “energy” on its network of advisers, she said.

The AIG Advisor Group network consists of four broker-dealers: FSC Securities Corp., Royal Alliance Associates Inc., SagePoint Financial Inc. and Woodbury Financial Services Inc.

During an investor presentation Tuesday, AIG's CEO Peter Hancock cited the proposed Department of Labor's fiduciary rule as a reason for unloading the broker-dealer unit. “It's a business we are not the best owner of, in light of potential Department of Labor rules,” he said.

The proposed DOL rules, which would raise investment advice standards for retirement accounts, is meant to protect investors from conflicted advice. Opponents worry about the increased liability risk and regulatory costs for brokers.

Mr. Marron, 81, has a long career in financial services. He was the chairman and CEO of brokerage firm PaineWebber for 20 years before its merger with UBS Group AG in 2000, according to Lightyear's website.

In 2010, Lightyear bought Cetera, an independent broker-dealer, building the business in part through acquisitions, according to Ms. Brown. After the company was sold to Nicholas Schorsch's RCS Capital Corp. in 2014, Larry Roth replaced Ms. Brown as CEO.

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