PFS reps stand to pick up stock awards from Primerica IPO

Registered representatives at PFS Investments Inc. will pick up some extra pay from the firm’s public offering, according to a prospectus filing with the Securities and Exchange Commission.
PFS is the broker-dealer of Primerica Inc., the unit that was spun off of Citigroup Inc. in an initial public offering Thursday.
The filing, which was submitted yesterday, indicates that Primerica will distribute about 5 million shares in common stock to certain employees, including officers and sales force leaders. Of that, some 255,836 shares will be issued when the restricted stock awards held by employees and sales reps under the Citi Stock Award Program and the Citi Capital Accumulation Program for PFS reps are converted into Primerica equity awards.
The unit brought in some $314 million in commissions and fee revenue last year, continuing a steady decline from the previous two years: In 2008, it generated $415 million in revenue, down from 2008’s figure of $455 million.
The firm has about 100,000 reps in its sales force. The producers tend to skew toward the lower end of gross dealer concession, making about $20,000 to $70,000 in production, recruiters said.
In its March 31 prospectus, Primerica did not indicate which of its sales force leaders will be getting the stock awards. It’s questionable just how lucrative an equity award can be for a broker-dealer that’s gone public, recruiter Jon Henschen noted.
Most non-insurance broker-dealers operate at 2% to 5% profitability after they pay off their expenses.
Stock companies, however, aim for returns of 15% to 20%. To do so, commissions to reps will have to come down, Mr. Henschen said.
“If you do that at a broker-dealer where the profitability runs at 3% to 5%, it means the expenses are above average, and the payouts to the reps are below average,” he said.