One on One: "Americans have a greater, more urgent need to invest for retirement than ever before"

With about 9,000 brokers spread across six separate independent broker-dealers, Jay S. Wintrob wants to keep each of them happy – and productive.

No doubt, during the down market of the past three years, that hasn’t always been easy.

Mr. Wintrob, who is president and chief executive of AIG SunAmerica Inc. in Los Angeles and executive vice president, retirement savings, with parent company American International Group Inc. of New York, is also the head of AIG Advisor Group Inc., the broker dealer network comprising Advantage Capital Corp. and FSC Securities Corp. in Atlanta, Royal Alliance Associates Inc. in New York, Sentra Securities Corp. and Spelman & Co. Inc. in San Diego, and SunAmerica Securities Inc. in Phoenix.

All recently have been consolidating back-office, recruiting and compliance services. But Mr. Wintrob, 46, says he will keep brokers producing by giving them “unparalleled” service.

“He’s always focused on that goal,” says Mark Goldberg, president and chief executive of Royal Alliance.

Mr. Wintrob knows both the products and how to distribute them, Mr. Goldberg says.

“There aren’t a lot of people who have that command of all the aspects of our business,” he adds.

Q What is the overall plan for the brokerage network? How is the consolidation going?

A There’s no consolidation; we’re centralizing.

Our primary plan ever since we were acquired by AIG in 1999, first, has been to improve the quality and consistency of the broker-dealers through centralization. Second, develop additional technologies and give registered representatives a better array of products. That makes them run their business more efficiently. And third, develop an umbrella marketing name, the AIG Advisor Group, to show that they are affiliated with AIG.

Over the last 18 months, we’ve seen significant strides in streamlining network functions. We’ve fully or partially centralized marketing, recruiting practices, product due diligence and research.

Legal compliance, licensing and supervising all have been centralized. Technology infrastructure also has been centralized.

Q Why are you making all these moves?

A We wanted to extend the best to all the firms. Some of the talent we have in some firms is better than at others, so we put them in positions of authority across the broker-dealers. We wanted to make the AIG Advisor Group’s broker-dealers more efficient and take advantage of size and economies of scale.

The plan and goals in many ways are very much the same goals we’ve had for years – to provide financial advisers with a level of customer service that’s unparalleled in firms. All other issues and challenges, if we do that well, will all resolve themselves. For example, FSC earned the broker-dealer-of-the-year award last year from Investment Advisor magazine. We’re starting to achieve more awards like that.

This is a business that’s all about the registered representatives and their clients. We’re here to serve the registered representatives. Our broker-dealers have the most reps that produce more than $100,000 per rep. They also produce more gross revenue.

Q How are the six broker-dealers doing? Are they making or losing money?

A Total commission income is up versus last year. And most importantly, over the first quarter, gross dealer concession recruited into the firm is ahead 30% versus last year. It’s the result of a lot of different efforts. We’re focused on recruitment activity.

Americans have a greater, more urgent need to invest for retirement than ever before. Whatever their retirement needs were three years ago, they are probably twice what they were. More consumers than ever before want face-to-face financial advice. They want to interact with someone they trust.

The fact is that greater numbers of financial advisers are leaving traditional securities firms than ever before. The reasons? Increased production requirements and the overhang of regulatory investigations. And there’s always a desire to earn a higher payout.

There are advances in technology that allow registered reps to do in an independent broker-dealer what they could do in a traditional securities firm, and that’s fee-based sales or do business in commission, combined with a higher payout.

Q You recently changed your recruiting strategy from a national effort to a firm-by-firm effort. What happened?

A We tried to have individuals sitting in one location recruiting for each of the firms. Now people are focused on one or two of the firms. It’s a change internally. For example, the person sitting in Phoenix is recruiting for SunAmerica and Sentra/Spelman.

We think we’ll recruit more-productive reps this way. Before that change occurred in our internal organization, our gross dealer concession was up 30%.

Q Why change it then?

A We can do better. It’s not a change in policy; it’s a matter of who’s focusing on what. It’s the same high-quality people and marketing. We’re just trying to focus them more. If it’s not successful, we’ll go back to another approach.

Q If I am a broker who charges fees, what is the advantage of AIG?

A I think there’s a number of advantages. The most salient is the investment adviser platform Vision 20-20 Advisor. I think it’s the most robust and advanced of any independent firm.

I can’t speak to the specifics to each of our competitors, but I can speak to ours. It has state-of-the-art technology and is broad based, with over 100 outside money managers.

Vision 20-20 Advisor was developed with advisers. They were selected from broker-dealers, the most successful reps.

Later this year, we’re adding variable annuities.

Q How is the new “transition suite” program doing?

A It’s going very well. There’s one [center] in San Diego, one in New York, with plans to add a third, potentially in Phoenix or Atlanta.

Basically, one of the challenges for brokers looking to go independent is setting up an office, purchasing software, and sometimes those details are quite imposing.

We have two transition suites. Let us handle your back offices for your practice for a transitional period, and you take a modestly reduced payout for a time, and we’ll provide administration and technology support to establish your practice as an independent contractor. It takes six to nine to 12 months, depending on the independent contractor. The early returns are promising.

The real impact in terms of gross dealer concession will show up in the second or third quarter.

Q Are you seeing interest from wirehouse brokers?

A We’re seeing increased interest from that source and also independents.

But definitely, the focus has been the traditional securities firm – and not only the nationals, but regional firms. The brokers all can relate to the concept of a halfway house.

Q What do you think about the securities settlement between the regulators and the big Wall Street firms?

A I wish I could tell you there’s a silver bullet here, but there’s not. Peoples’ trust was violated. It’s going to take an extraordinary period of time to earn that back.

Q There has been change at the top, with Kevin Hart leaving last spring as president and CEO of the group, then known as SunAmerica Financial Network, and then John Graf changing roles to head up AIG’s international retirement savings unit. Will you stick around?

A I’ve been here for 17 years and [was] responsible for broker-dealer operations in the period that preceded Kevin Hart and John Graf.

We have three presidents at the individual broker-dealers, with 51 years of [combined] experience, and no changes are planned there.

It’s been an incredibly stable organization. Going forward, I certainly plan to be here. We have a lot to accomplish.

SNAPSHOT

Jay S. Wintrob, 46, president of AIG SunAmerica Inc. in Los Angeles since 2000 and chief executive since 2001; and executive vice president, retirement savings, with parent company American International Group Inc. of New York and head of the AIG Advisor Group, since 2002

Career: 1998-2001, chief operating officer, AIG SunAmerica; 1994-2000, president, SunAmerica Investments Inc. in Los Angeles; 1995-98, vice chairman; 1991-95, executive vice president; 1989-91, senior vice president; 1987-89, assistant to the chairman; 1982-87, associate, O’Melveny & Myers LLP in Los Angeles

Education: bachelor’s degree in political science (1979), and law degree (1982), University of California, Berkeley