Last week's layoffs and consolidation of key areas of operation at the three broker-dealers of the AIG Advisor Group only add to the confusion and uncertainty surrounding the network's future and the fate of its more than 6,000 representatives and financial advisers, sources said.
The AIG Advisor Group network of broker-dealers cut about 10% of its employee work force last Wednesday, consolidating operations in key back-office areas such as licensing and registration, and handing out 70 pink slips. That has an impact on recruiting advisers, observers said.
Even though the changes appear to be limited to the back office, they are far from "invisible," said one adviser affiliated with an AIG -broker-dealer, who asked not to be identified.
"There's a flip side. No one can replace someone who knew you," the adviser said, adding that those kinds of personal relationships between advisers and back-office staff are essential to expedite work.
"Few aspects of consolidation have worked in the past," the adviser said. "It's understandable to cut costs, but you need to have people in place who know you."
The cost cutting comes as AIG Advisor Group's parent company, American International Group Inc. of New York, is furiously trying to shed assets and business lines in order to raise money to pay back the federal government.
COMPLETED SALE
Last week, AIG completed the sale of its wealth management arm, AIG Private Bank Ltd., to Aabar Investments PJSC of Abu Dhabi, United Arab Emirates. The deal was announced in December.
Under terms of the agreement, Aabar paid about $253 million and assumed about $55 million of intracompany loans outstanding to AIG Private Bank.
The three broker-dealers that make up the AIG Advisor Group — FSC Securities Corp. of Atlanta, Royal Alliance Associates Inc. of New York and SagePoint Financial Inc. of Phoenix — are among the businesses that AIG is looking to shed.
One noteworthy change is to close the licensing and registration departments for Royal Alliance and SagePoint Financial, and consolidate that operation into FSC Securities.
What isn't clear is whether the job cuts and consolidation of operations means the three broker-dealers could be consolidated under one name or keep their identities and simply share the back-office services, said one industry source, who asked not to be identified.
This is more bad news for reps and advisers affiliated with an AIG broker-dealer, said another industry source, who also asked not to be identified. Layoffs at the broker-dealer could have an impact on service for advisers, and the AIG name is toxic in the marketplace right now, the source said.
"We regret having to announce any action that affects dedicated employees who have made substantial contributions to our success," Larry Roth, AIG Advisor Group's chief executive, wrote in an e-mail. "We remain focused on our advisers and are confident they will continue to receive superior services and support from our broker-dealers."
E-mail Bruce Kelly at [email protected].
