In a huge blow to SagePoint Financial Inc., one of three broker-dealers that make up the
AIG Advisor Group Inc., its largest branch of representatives and financial advisers is walking out the door following a bitter dispute over the latter's role and future at SagePoint.
The branch, Regal Financial Group LLC, has about 100 advisers and generated $9 million in fees and commissions last year, said chairman, J. Lawrence Taunt, who resigned from SagePoint Feb. 12. The departing advisers and reps represent about 5% of SagePoint's overall head count of 2,039.
SagePoint — until last year
AIG Financial Advisors Inc. — was hard-hit after the credit crisis and the federal bailout of its parent company, American International Group Inc. Brokers disenchanted with the
AIG name on their business cards fled: The firm's head count dropped 23% from the end of 2008 through the end of last year.
Mr. Taunt's beef with SagePoint, however, wasn't over its name or the legacy of its parent company. Instead, the dispute centered on SagePoint's interference with Regal Financial's intention to form its own broker-dealer, he said last week.
SagePoint “tried to make life difficult” for Regal, Mr. Taunt said, including launching an internal investigation against Regal, withholding bonus money and soliciting its advisers. The SagePoint investigation focused on digital privacy concerns of a system that Regal purchased on the recommendation of SagePoint, he said.
Linda Skolnick, an
AIG Advisor Group spokeswoman, didn't return calls seeking comment.
Mr. Taunt is now affiliated with American Portfolios Financial Services Inc., which has agreed to work with Regal as it creates its own broker-dealer. He said that he expects most of Regal's 100 reps and advisers to join him.
BAD ENDING
When he resigned from SagePoint, Mr. Taunt made clear his bitter disappointment with SagePoint.
In a letter obtained by
InvestmentNews, he, along with Regal president John Kailunas II, wrote to Jeffrey Auld, president and chief executive of SagePoint, that after failed negotiations with SagePoint, they were “being thrown away.”
“You ask concessions of us, yet offer nothing of real value in return. It is a pathetic way to end a 10-year, very successful relationship,” according to the letter.
“We have become your largest, fastest-growing and most profitable organization over the last 10 years, yet virtually no attempt has been made to retain our business. On the contrary, we have been pushed out, disrespected and virtually ignored,” according to the letter.
E-mail Bruce Kelly at [email protected].
