NEW YORK - Continuing its makeover, Lincoln Financial Advisors Corp. of Fort Wayne, Ind., last month cut into its senior- and mid-level management at its 37 regional offices.
Sources inside and outside the company said the layoffs, which were first announced in May and took place June 8, affected between 60 and 70 people, including five managing directors as well as marketing staffers and back-office personnel who dealt directly with financial planners.
Meanwhile, some registered representatives and financial planners are becoming disgruntled with the cutback in services, industry recruiters said. Some have recently left, and more are looking, recruiters said.
A Lincoln spokeswoman, Priscilla Brown, downplayed the recent cutbacks. In an e-mail response to questions, she wrote: "LFA retains a higher level of management and planning support than the industry in general, including planning design and support, training through our own LFA/Sagemark University, field leadership and technology. We intend to maintain this high level of support."
Since 2003, Lincoln Financial Advisors has gone through a wide restructuring, changing management and payout structure. Like many other insurance company-owned broker-dealers, the firm has consistently lost money, and Lincoln has made changes in an attempt to stem those losses.
Lincoln is one of the largest insurer-owned independent contractor broker-dealers. Last year, it had $383.6 million in revenue, and it has about 2,100 affiliated registered representatives.
Recruiters questioned the cutback in services, particularly in marketing, as the firm has used such amenities to distinguish itself from its peers as a wealth manager.
"Everyone knows who to call for support and each support person in the organization has a specific chain of backup people, leading up to a senior manager, to ensure that clients' needs are met expeditiously," Ms. Brown wrote.
"Planner retention and productivity levels remained strong through the last reporting period," Ms. Brown, wrote, adding that she could not cite specifics as financial results will soon be made public.
Jonathan Henschen, president of Henschen & Associates, a recruiter for independent broker-dealers in Marine on St. Croix, Minn., said continued cutbacks in service are likely to cause an exodus of reps.
"If they keep it up, it will just accelerate," he said.
The cutbacks come at a firm where the payout for financial planners and registered representatives was changed at the beginning of the year, Mr. Henschen noted. He said it is in the range of 50% to 70%. Many other firms offer a payout between 80% and 90%, and some are higher.
Some advisers simply have been disgruntled with the changes, said one former Lincoln staffer, who asked not to be identified.
The staff cutbacks came because "the firm went back to the drawing board because planners didn't like the changes," the staffer said. "As a result, [Lincoln] needed more money, so they laid people off."
Lincoln Financial Advisors has been reinventing itself since 2003.
At that time, Robert W. Dineen, a veteran of Merrill Lynch & Co. Inc. of New York, became its CEO.
Mr. Dineen was out of the country traveling last week, Ms. Brown wrote, and was not available to comment.
Other insurance company-owned broker-dealers have recently been restructuring as well. But Mr. Dineen has made broad changes, most notably eliminating a chummy culture that was based on a different agreement or deal with each financial planner.
Under Mr. Dineen, Lincoln Financial Advisors has changed the payout and created a standard contract for each financial planner. It has also eliminated redundancies at the regional offices.
For some planners, this has been hard to swallow, the ex-employee said.
"Before, it was a parental relationship, with private deals and handshakes," the former employee said. Planners "were used to being coddled. Now, everything has to be on the even up."
And if results don't improve for some managing directors, more layoffs are possible, with those who are successful gaining more territory, said the ex-Lincoln employee.