AIG to pour more money into Advisor Group, Benmosche says

The public will reap a profit as the U.S. government sells off the remainder of its holdings in American International Group Inc., chief executive Robert H. Benmosche said today.
“I’ve said publicly, ‘We could earn $6 billion to $8 billion,’” the CEO said at an Insured Retirement Institute conference in Washington. “If the government sold all those shares at the low end of the range, they get a profit of about $2 billion.” If the share price is over $30 a piece, the government will only add to its profit, and could make as much as $16 billion from its sale of the shares, Mr. Benmosche said.
“From the taxpayers’ point of view, it’s a fair exchange — maybe it’s a little too good — but the company would not be here if not for the government stepping in,” he said.
As far as the thwarted sale of Advisor Group, which is made up of Royal Alliance Associates Inc., FSC Securities Corp. and SagePoint Financial Inc., Mr. Benmosche recalled a conversation he had over dinner with Larry Roth, chief executive of Advisor Group.
“With Larry, there were two things: We’re going to sell things for the right price, and he was a distributor for SunAmerica [Financial Group],” Mr. Benmosche said. “We wanted to send a message to the organization that we’re going to prepare for the future.”
Advisor Group sold SunAmerica’s products at a time when many other broker-dealers had suspended sales. To motivate the best producers, Mr. Benmosche advocated the infamous California spa trip. “We told everybody we’re going to the spa, and that set a tone in the whole company,” he said.
Mr. Benmosche said that AIG expects to invest more money into Advisor Group in order to improve technology at the three broker-dealers.
As far as retaining producers at Advisor Group, Mr. Benmosche recalled his time at PaineWebber Inc. in 1982, when attempted to lure a producer from another firm. That adviser told him a story of PaineWebber’s research desk putting him on hold during a phone call. The anecdote was a lesson in keeping advisers happy.
“He is telling me this story, ‘Bob, when I call anyone at Bache [& Co.], they s—t whenever I call; when I call PaineWebber, nobody’s going to know who I am,’” Mr. Benmosche said. “You have to make people feel good about where they are. If they feel at home, they’ll stay at home,” he added.
The best advisers head for the door “when you don’t give them the support, when you spend too much time on the low producer and not enough on the high producer,” Mr. Benmosche said. “Larry’s challenge is to make sure that every broker feels at home.”

Related Topics: American International Group (AIG)