Some of Advisor Group's more than 7,000 brokers and financial advisers are underwhelmed by the broker-dealer network's offer of various cash awards and bonuses designed to keep them happy and in their seats as the firm adjusts to new ownership.
"I think I'll have some of my advisers thumb their noses at this offer," said one head of a large branch at an Advisor Group broker-dealer. "The loyalty awards are small and the duration, five years, is a long time."
First a
nnounced in May, Reverence Capital Partners, a
private equity shop, last month completed its acquisition of 75% of the broker-dealer network from Lightyear Capital, PSP investors and others. Financial terms of the deal were not disclosed, but market sources
had privately pegged the price tag for Advisor Group at close to $2.3 billion.
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When such transactions occur, it is typical for the buying group to offer financial advisers various types of bonuses or incentives to make the change as smooth as possible. In the case of Advisor Group, advisers do not have to deal with strains such as filling out new account forms for clients, known as "repapering" client accounts, or adjust to new management or firm procedures.
But the current market has shifted, with large competitors of Advisor Group, including
LPL Financial,
selectively offering recruiting bonuses that are larger than those traditionally made by independent broker-dealers.
The Advisor Group bonus, dubbed its Advisor Appreciation Program, has four different parts: small cash payments for advisers who produce annual fees and commissions of $250,000 to $600,000; five-year forgivable notes ranging from 5.5% to 10% of annual and fee for advisers who generate above that amount; an opportunity for some larger advisers who are accredited investors to buy equity in the new company; and extra compensation for advisers who bring in new assets.
Some advisers began receiving their formal notice of the awards and bonus offers this week.
"Advisor Group has some solid producing advisers and even those people aren't getting a great deal," said Casey Knight, executive vice president and managing director at ESP Financial Search, a recruiting firm.
"My pipeline right now is full of Advisor Group brokers and advisers," he said. "But I'm still talking to many of them who say they will sign the deal and stick around for three or five years. It's the path of least resistance."
One Advisor Group adviser, Debra Brennan Tagg, president of Brennan Financial Services in Dallas, said she was pleased with the offer and the direction of the broker-dealer network.
"The recent transition is the least painful thing we have gone through, and there wasn't anything for me to do," said Ms. Tagg, who Advisor Group made available to
InvestmentNews for an interview. She added that she was pleased with the deal but declined to state the specific offer she had received.
Meanwhile, Advisor Group CEO Jamie Price said that advisers and employees had invested $50 million into the company, and the amount of awards and incentives to advisers was more than the last time the firm was sold, which was in 2016 when Lightyear bought it from the giant insurer American International Group.
He has spent much of the summer meeting advisers during an ongoing roadshow, he said. "Are ther some people who feel left out," he asked. "I'm sure there are. But on the road the feedback from advisers has been overwhelmingly positive."
The four broker-dealers in the Advisor Group network are: FSC Securities Corp., Royal Alliance Associates Inc., SagePoint Financial Inc. and Woodbury Financial. According to
InvestmentNews data, the four combined to produce $1.7 billion in total revenue last year.
